Regulatory Assets, Liabilities, And Balancing Accounts

12 Months Ended

Dec. 31, 2014

Regulatory Assets, Liabilities, And Balancing Accounts

NOTE 3: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS

Regulatory Assets

Long-term regulatory assets are comprised of the following:

	Balance at December 31,				Recovery
(in millions)	2014		2013		Period
Pension benefits ⁽¹⁾	$	2,347	$	1,444	N/A⁽⁴⁾
Deferred income taxes⁽¹⁾		2,390		1,835	47 years
Utility retained generation⁽²⁾		456		503	11 years
Environmental compliance costs ⁽¹⁾		717		628	32 years
Price risk management ⁽¹⁾		127		106	10 years
Electromechanical meters ⁽³⁾		70		135	2 years
Unamortized loss, net of gain, on reacquired debt ⁽¹⁾		113		135	12 years
Other		102		127	Various
Total long-term regulatory assets	$	6,322	$	4,913

⁽¹⁾ Represents the cumulative differences between amounts recognized for ratemaking purposes and amounts recognized in accordance with GAAP. Pension benefits also includes amounts that otherwise would be recorded to accumulated other comprehensive income/loss in the Consolidated Balance Sheets. (See Note 11 below.)

⁽²⁾ In connection with the settlement agreement entered into among PG&E Corporation, the Utility, and the CPUC in 2003 to resolve the Utility's proceeding under Chapter 11, the CPUC authorized the Utility to recover $1.2 billion of costs related to the Utility's retained generation assets. The individual components of these regulatory assets are being amortized over the respective lives of the underlying generation facilities, consistent with the period over which the related revenues are recognized.

⁽³⁾ Represents the expected future recovery of the net book value of electromechanical meters that were replaced with SmartMeter™ devices.

⁽⁴⁾ The Utility expects to continuously recover pension benefits.

In general, the Utility does not earn a return on regulatory assets if the related costs do not accrue interest. Accordingly, the Utility earns a return only on its regulatory assets for retained generation, regulatory assets for electromechanical meters, and regulatory assets for unamortized loss, net of gain, on reacquired debt.

Regulatory Liabilities

Long-term regulatory liabilities are comprised of the following:

	Balance at December 31,
(in millions)	2014		2013
Cost of removal obligations ⁽¹⁾	$	4,211	$	3,844
Recoveries in excess of AROs ⁽²⁾		754		748
Public purpose programs⁽³⁾		701		587
Other		624		481
Total long-term regulatory liabilities	$	6,290	$	5,660

⁽¹⁾ Represents the cumulative differences between asset removal costs recorded and amounts collected in rates for expected asset removal costs.

⁽²⁾ Represents the cumulative differences between ARO expenses and amounts collected in rates primarily for the decommissioning of the Utility's nuclear generation facilities. Decommissioning costs recovered through rates are primarily placed in nuclear decommissioning trusts. This regulatory liability also represents the deferral of realized and unrealized gains and losses on the nuclear decommissioning trust investments. (See Note 10 below.)

⁽³⁾ Represents amounts received from customers designated for public purpose program costs expected to be incurred beyond the next 12 months, primarily related to energy efficiency programs.

Regulatory Balancing Accounts

The Utility's recovery of revenue requirements and costs is generally decoupled from the volume of sales. The Utility tracks (1) differences between the Utility's authorized revenue requirement and actual customer billings, and (2) differences between incurred costs and customer billings. To the extent these differences are probable of recovery or refund over the next 12 months, the Utility records a current regulatory balancing account receivable or payable. Regulatory balancing accounts that the Utility expects to collect or refund over a period exceeding 12 months are recorded as other noncurrent assets - regulatory assets or noncurrent liabilities - regulatory liabilities, respectively, in the Consolidated Balance Sheets.

The Utility sells and delivers electricity and natural gas. The Utility also administers public purpose programs, primarily related to customer energy efficiency programs. The balancing accounts associated with these items will fluctuate during the year based on seasonal electric and gas usage and the timing of when costs are incurred and customer revenues are collected.

Current regulatory balancing accounts receivable and payable are comprised of the following:

	Receivable
	Balance at December 31,
(in millions)	2014		2013
Electric distribution	$	344	$	102
Utility generation		261		57
Gas distribution		566		70
Energy procurement		608		410
Public purpose programs		109		56
Other		378		429
Total regulatory balancing accounts receivable	$	2,266	$	1,124

	Payable
	Balance at December 31,
(in millions)	2014		2013
Energy procurement	$	188	$	298
Public purpose programs		154		171
Other ⁽¹⁾		748		539
Total regulatory balancing accounts payable	$	1,090	$	1,008

⁽¹⁾ At December 31, 2014, Other regulatory balancing accounts payable mostly includes energy supplier settlements. (See Note 12 for additional details.)