UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C., 20549 | |||||||||||||
FORM | |||||||||||||
(Mark One) | |||||||||||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||||
For the quarterly period ended | |||||||||||||
OR | |||||||||||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||||
For the transition period from ___________ to __________ | |||||||||||||
Commission File Number | Exact Name of Registrant as Specified in its Charter | State or Other Jurisdiction of Incorporation | IRS Employer Identification Number | ||||||||||
PG&E Corporation | |||||||||||||
Pacific Gas and Electric Company | |||||||||||||
PG&E Corporation | Pacific Gas and Electric Company | ||||||||||||
Address of principal executive offices, including zip code | |||||||||||||
PG&E Corporation | Pacific Gas and Electric Company | ||||||||||||
Registrant’s telephone number, including area code |
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | |||||||||||
PG&E Corporation: | ☒ | ☐ | No | ||||||||
Pacific Gas and Electric Company: | ☒ | ☐ | No | ||||||||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). | |||||||||||
PG&E Corporation: | ☒ | ☐ | No | ||||||||
Pacific Gas and Electric Company: | ☒ | ☐ | No |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | ||||||||||
PG&E Corporation: | ☒ | ☐ | Accelerated filer | |||||||
☐ | Non-accelerated filer | |||||||||
Smaller reporting company | Emerging growth company | |||||||||
Pacific Gas and Electric Company: | ☐ | Large accelerated filer | ☐ | Accelerated filer | ||||||
☒ | ||||||||||
Smaller reporting company | Emerging growth company | |||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ||||||||||
PG&E Corporation: | ☐ | |||||||||
Pacific Gas and Electric Company: | ☐ | |||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | ||||||||||
PG&E Corporation: | Yes | ☒ | No | |||||||
Pacific Gas and Electric Company: | Yes | ☒ | No |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. | |||||||||
Common stock outstanding as of August 2, 2019: | |||||||||
PG&E Corporation: | |||||||||
Pacific Gas and Electric Company: | |||||||||
2018 Form 10-K | PG&E Corporation and Pacific Gas and Electric Company’s combined Annual Report on Form 10-K for the year ended December 31, 2018 |
2019 Wildfire Safety Plan | the wildfire mitigation plan for 2019 submitted by the Utility to the CPUC pursuant to SB 901 |
AB | Assembly Bill |
ALJ | administrative law judge |
ARO | asset retirement obligation |
ASU | accounting standard update issued by the FASB (see below) |
Bankruptcy Code | the United States Bankruptcy Code |
Bankruptcy Court | the U.S. Bankruptcy Court for the Northern District of California |
CAISO | California Independent System Operator |
Cal Fire | California Department of Forestry and Fire Protection |
CCA | Community Choice Aggregator |
CCPA | California Consumer Privacy Act of 2018 |
CEC | California Energy Resources Conservation and Development Commission |
CEMA | Catastrophic Event Memorandum Account |
Chapter 11 | chapter 11 of title 11 of the U.S. Code |
Chapter 11 Cases | the voluntary cases commenced by each of PG&E Corporation and the Utility under Chapter 11 on January 29, 2019 |
CPUC | California Public Utilities Commission |
CRRs | congestion revenue rights |
CWSP | Community Wildfire Safety Program |
DA | Direct Access |
DER | distributed energy resources |
Diablo Canyon | Diablo Canyon nuclear power plant |
DIP Credit Agreement | Senior Secured Superpriority Debtor in Possession Credit, Guaranty and Security Agreement, dated as of February 1, 2019, among the Utility, as borrower, PG&E Corporation, as guarantor, JPMorgan Chase Bank, N.A., as administrative agent, and Citibank, N.A., as collateral agent |
DOGGR | Division of Oil, Gas, and Geothermal Resources of the California Department of Conservation |
DRP | Distribution Resource Plan |
DTSC | Department of Toxic Substances Control |
EPS | earnings per common share |
EV | electric vehicle |
FASB | Financial Accounting Standards Board |
FERC | Federal Energy Regulatory Commission |
FHPMA | fire hazard prevention memorandum account |
FRMMA | fire risk mitigation memorandum account |
GAAP | U.S. Generally Accepted Accounting Principles |
GHG | greenhouse gas |
GRC | general rate case |
GT&S | gas transmission and storage |
HSM | hazardous substance memorandum account |
IOU(s) | investor-owned utility(ies) |
LIBOR | London Interbank Offered Rate |
LSTC | liabilities subject to compromise |
MD&A | Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in Item 2 of this Form 10-Q |
MGP(s) | manufactured gas plants |
the Monitor | third-party monitor retained as part of its compliance with the sentencing terms of the Utility’s January 27, 2017 federal criminal conviction |
NAV | net asset value |
NDCTP | Nuclear Decommissioning Cost Triennial Proceedings |
NEIL | Nuclear Electric Insurance Limited |
NRC | Nuclear Regulatory Commission |
OES | State of California Office of Emergency Services |
OII | order instituting investigation |
OIR | order instituting rulemaking |
PAO | Public Advocates Office of the California Public Utilities Commission (formerly known as Office of Ratepayer Advocates or ORA) |
PCIA | Power Charge Indifference Adjustment |
PD | proposed decision |
Petition Date | January 29, 2019 |
PFM | petition for modification |
PSA | plan support agreement |
ROE | return on equity |
ROU asset | right-of-use asset |
SB | Senate Bill |
SEC | U.S. Securities and Exchange Commission |
SED | Safety and Enforcement Division of the CPUC |
Tax Act | Tax Cuts and Jobs Act of 2017 |
TCC | Official Committee of Tort Claimants |
TE | transportation electrification |
TO | transmission owner |
TURN | The Utility Reform Network |
UCC | Official Committee of Unsecured Creditors |
USAO | United States Attorney’s Office for the Northern District of California |
Utility | Pacific Gas and Electric Company |
VIE(s) | variable interest entity(ies) |
WEMA | Wildfire Expense Memorandum Account |
Wildfire Assistance Fund | program designed to assist those displaced by the 2018 Camp fire and 2017 Northern California wildfires with the costs of temporary housing and other urgent needs |
Wildfire Fund | statewide fund established by AB 1054 that will be available for eligible electric utility companies to pay eligible claims for liabilities arising from wildfires occurring after July 12, 2019 that are caused by the applicable electric utility company’s equipment |
WPMA | wildfire plan memorandum account |
(Unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions, except per share amounts) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Operating Revenues | |||||||||||||||
Electric | $ | $ | $ | $ | |||||||||||
Natural gas | |||||||||||||||
Total operating revenues | |||||||||||||||
Operating Expenses | |||||||||||||||
Cost of electricity | |||||||||||||||
Cost of natural gas | |||||||||||||||
Operating and maintenance | |||||||||||||||
Wildfire-related claims, net of insurance recoveries | |||||||||||||||
Depreciation, amortization, and decommissioning | |||||||||||||||
Total operating expenses | |||||||||||||||
Operating Loss | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Interest income | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other income, net | |||||||||||||||
Reorganization items, net | ( | ) | ( | ) | |||||||||||
Loss Before Income Taxes | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income tax benefit | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net Loss | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Preferred stock dividend requirement of subsidiary | |||||||||||||||
Loss Attributable to Common Shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Weighted Average Common Shares Outstanding, Basic | |||||||||||||||
Weighted Average Common Shares Outstanding, Diluted | |||||||||||||||
Net Loss Per Common Share, Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Net Loss Per Common Share, Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
See accompanying Notes to the Condensed Consolidated Financial Statements. |
(Unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other Comprehensive Income | |||||||||||||||
Pension and other post-retirement benefit plans obligations (net of taxes of $0, $0, $0, and $0, at respective dates) | |||||||||||||||
Total other comprehensive income | |||||||||||||||
Comprehensive Loss | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Preferred stock dividend requirement of subsidiary | |||||||||||||||
Comprehensive Loss Attributable to Common Shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
See accompanying Notes to the Condensed Consolidated Financial Statements. |
(Unaudited) | |||||||
Balance At | |||||||
(in millions) | June 30, 2019 | December 31, 2018 | |||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable: | |||||||
Customers (net of allowance for doubtful accounts of $39 and $56 at respective dates) | |||||||
Accrued unbilled revenue | |||||||
Regulatory balancing accounts | |||||||
Other | |||||||
Regulatory assets | |||||||
Inventories: | |||||||
Gas stored underground and fuel oil | |||||||
Materials and supplies | |||||||
Income taxes receivable | |||||||
Other | |||||||
Total current assets | |||||||
Property, Plant, and Equipment | |||||||
Electric | |||||||
Gas | |||||||
Construction work in progress | |||||||
Other | |||||||
Total property, plant, and equipment | |||||||
Accumulated depreciation | ( | ) | ( | ) | |||
Net property, plant, and equipment | |||||||
Other Noncurrent Assets | |||||||
Regulatory assets | |||||||
Nuclear decommissioning trusts | |||||||
Operating lease right of use asset | — | ||||||
Income taxes receivable | |||||||
Other | |||||||
Total other noncurrent assets | |||||||
TOTAL ASSETS | $ | $ | |||||
See accompanying Notes to the Condensed Consolidated Financial Statements. |
(Unaudited) | |||||||
Balance At | |||||||
(in millions, except share amounts) | June 30, 2019 | December 31, 2018 | |||||
LIABILITIES AND EQUITY | |||||||
Current Liabilities | |||||||
Short-term borrowings | $ | $ | |||||
Long-term debt, classified as current | |||||||
Accounts payable: | |||||||
Trade creditors | |||||||
Regulatory balancing accounts | |||||||
Other | |||||||
Operating lease liabilities | — | ||||||
Disputed claims and customer refunds | |||||||
Interest payable | |||||||
Wildfire-related claims | |||||||
Other | |||||||
Total current liabilities | |||||||
Noncurrent Liabilities | |||||||
Debtor-in-possession financing | |||||||
Regulatory liabilities | |||||||
Pension and other post-retirement benefits | |||||||
Asset retirement obligations | |||||||
Deferred income taxes | |||||||
Operating lease liabilities | — | ||||||
Other | |||||||
Total noncurrent liabilities | |||||||
Liabilities Subject to Compromise | |||||||
Equity | |||||||
Shareholders’ Equity | |||||||
Common stock, no par value, authorized 800,000,000 shares; 529,223,793 and 520,338,710 shares outstanding at respective dates | |||||||
Reinvested earnings | ( | ) | ( | ) | |||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Total shareholders’ equity | |||||||
Noncontrolling Interest - Preferred Stock of Subsidiary | |||||||
Total equity | |||||||
TOTAL LIABILITIES AND EQUITY | $ | $ | |||||
See accompanying Notes to the Condensed Consolidated Financial Statements. |
(Unaudited) | |||||||
Six Months Ended June 30, | |||||||
(in millions) | 2019 | 2018 | |||||
Cash Flows from Operating Activities | |||||||
Net loss | $ | ( | ) | $ | ( | ) | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation, amortization, and decommissioning | |||||||
Allowance for equity funds used during construction | ( | ) | ( | ) | |||
Deferred income taxes and tax credits, net | ( | ) | ( | ) | |||
Reorganization items, net (Note 2) | |||||||
Other | |||||||
Effect of changes in operating assets and liabilities: | |||||||
Accounts receivable | ( | ) | ( | ) | |||
Wildfire-related insurance receivable | ( | ) | |||||
Inventories | ( | ) | ( | ) | |||
Accounts payable | |||||||
Wildfire-related claims | ( | ) | |||||
Income taxes receivable/payable | |||||||
Other current assets and liabilities | ( | ) | ( | ) | |||
Regulatory assets, liabilities, and balancing accounts, net | ( | ) | ( | ) | |||
Liabilities subject to compromise | |||||||
Other noncurrent assets and liabilities | ( | ) | |||||
Net cash provided by operating activities | |||||||
Cash Flows from Investing Activities | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Proceeds from sales and maturities of nuclear decommissioning trust investments | |||||||
Purchases of nuclear decommissioning trust investments | ( | ) | ( | ) | |||
Other | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash Flows from Financing Activities | |||||||
Proceeds from debtor-in-possession credit facility | |||||||
Repayments of debtor-in-possession credit facility | ( | ) | |||||
Debtor-in-possession credit facility debt issuance costs | ( | ) | |||||
Borrowings under revolving credit facilities | |||||||
Net repayments of commercial paper, net of discount of $1 | ( | ) | |||||
Short-term debt financing | |||||||
Short-term debt matured | ( | ) | |||||
Proceeds from issuance of long-term debt, net of discount and issuance costs | |||||||
Long-term debt matured or repurchased | ( | ) | |||||
Common stock issued | |||||||
Other | ( | ) | |||||
Net cash provided by financing activities | |||||||
Net change in cash, cash equivalents, and restricted cash | |||||||
Cash, cash equivalents, and restricted cash at January 1 | |||||||
Cash, cash equivalents, and restricted cash at June 30 | $ | $ | |||||
Less: Restricted cash and restricted cash equivalents included in other current assets | ( | ) | $ | ( | ) | ||
Cash and cash equivalents at June 30 | $ | $ |
Supplemental disclosures of cash flow information | |||||||
Cash paid for: | |||||||
Interest, net of amounts capitalized | $ | ( | ) | $ | ( | ) | |
Supplemental disclosures of noncash operating activities | |||||||
Operating lease liabilities arising from obtaining ROU assets | $ | $ | |||||
Supplemental disclosures of noncash investing and financing activities | |||||||
Capital expenditures financed through accounts payable | $ | $ | |||||
See accompanying Notes to the Condensed Consolidated Financial Statements. |
(in millions, except share amounts) | Common Stock Shares | Common Stock Amount | Reinvested Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | Non controlling Interest - Preferred Stock of Subsidiary | Total Equity | |||||||||||||||||||
Balance at December 31, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | — | |||||||||||||||||||
Common stock issued, net | — | — | — | |||||||||||||||||||||||
Stock-based compensation amortization | — | — | — | — | ||||||||||||||||||||||
Balance at March 31, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||
Net loss | — | — | ( | ) | — | ( | ) | — | ( | ) | ||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | — | |||||||||||||||||||
Common stock issued, net | — | — | — | — | — | — | ||||||||||||||||||||
Stock-based compensation amortization | — | — | — | — | ||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ |
(in millions, except share amounts) | Common Stock Shares | Common Stock Amount | Reinvested Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | Non controlling Interest - Preferred Stock of Subsidiary | Total Equity | |||||||||||||||||||
Balance at December 31, 2017 | 514,755,845 | $ | 12,632 | $ | 6,596 | $ | (8 | ) | $ | 19,220 | $ | 252 | $ | 19,472 | ||||||||||||
Net income | — | — | 445 | — | 445 | — | 445 | |||||||||||||||||||
Other comprehensive income | — | — | 5 | (5 | ) | — | — | — | ||||||||||||||||||
Common stock issued, net | 1,248,112 | 35 | — | — | 35 | — | 35 | |||||||||||||||||||
Stock-based compensation amortization | — | 34 | — | — | 34 | — | 34 | |||||||||||||||||||
Preferred stock dividend requirement of subsidiary | — | — | (3 | ) | — | (3 | ) | — | (3 | ) | ||||||||||||||||
Balance at March 31, 2018 | 516,003,957 | 12,701 | 7,043 | (13 | ) | 19,731 | 252 | 19,983 | ||||||||||||||||||
Net loss | — | — | ( | ) | — | ( | ) | — | ( | ) | ||||||||||||||||
Other comprehensive income | — | — | — | — | ||||||||||||||||||||||
Common stock issued, net | — | — | — | |||||||||||||||||||||||
Stock-based compensation amortization | — | — | — | — | ||||||||||||||||||||||
Preferred stock dividend requirement of subsidiary | — | — | ( | ) | — | ( | ) | — | ( | ) | ||||||||||||||||
Balance at June 30, 2018 | $ | $ | $ | ( | ) | $ | $ | $ |
See accompanying Notes to the Consolidated Financial Statements. |
(Unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Operating Revenues | |||||||||||||||
Electric | $ | $ | $ | $ | |||||||||||
Natural gas | |||||||||||||||
Total operating revenues | |||||||||||||||
Operating Expenses | |||||||||||||||
Cost of electricity | |||||||||||||||
Cost of natural gas | |||||||||||||||
Operating and maintenance | |||||||||||||||
Wildfire-related claims, net of insurance recoveries | |||||||||||||||
Depreciation, amortization, and decommissioning | |||||||||||||||
Total operating expenses | |||||||||||||||
Operating Loss | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Interest income | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other income, net | |||||||||||||||
Reorganization items, net | ( | ) | ( | ) | |||||||||||
Loss Before Income Taxes | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income tax benefit | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net Loss | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Preferred stock dividend requirement | |||||||||||||||
Loss Attributable to Common Stock | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
See accompanying Notes to the Condensed Consolidated Financial Statements. |
(Unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other Comprehensive Income | |||||||||||||||
Pension and other post-retirement benefit plans obligations (net of taxes of $0, $0, $0, and $0, at respective dates ) | |||||||||||||||
Total other comprehensive income | |||||||||||||||
Comprehensive Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
See accompanying Notes to the Condensed Consolidated Financial Statements. |
(Unaudited) | |||||||
Balance At | |||||||
(in millions) | June 30, 2019 | December 31, 2018 | |||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable: | |||||||
Customers (net of allowance for doubtful accounts of $39 and $56 at respective dates) | |||||||
Accrued unbilled revenue | |||||||
Regulatory balancing accounts | |||||||
Other | |||||||
Regulatory assets | |||||||
Inventories: | |||||||
Gas stored underground and fuel oil | |||||||
Materials and supplies | |||||||
Income taxes receivable | |||||||
Other | |||||||
Total current assets | |||||||
Property, Plant, and Equipment | |||||||
Electric | |||||||
Gas | |||||||
Construction work in progress | |||||||
Other | |||||||
Total property, plant, and equipment | |||||||
Accumulated depreciation | ( | ) | ( | ) | |||
Net property, plant, and equipment | |||||||
Other Noncurrent Assets | |||||||
Regulatory assets | |||||||
Nuclear decommissioning trusts | |||||||
Operating lease right of use asset | — | ||||||
Income taxes receivable | |||||||
Other | |||||||
Total other noncurrent assets | |||||||
TOTAL ASSETS | $ | $ | |||||
See accompanying Notes to the Condensed Consolidated Financial Statements. |
(Unaudited) | |||||||
Balance At | |||||||
(in millions. except share amounts) | June 30, 2019 | December 31, 2018 | |||||
LIABILITIES AND EQUITY | |||||||
Current Liabilities | |||||||
Short-term borrowings | $ | $ | |||||
Long-term debt, classified as current | |||||||
Accounts payable: | |||||||
Trade creditors | |||||||
Regulatory balancing accounts | |||||||
Other | |||||||
Operating lease liabilities | — | ||||||
Disputed claims and customer refunds | |||||||
Interest payable | |||||||
Wildfire-related claims | |||||||
Other | |||||||
Total current liabilities | |||||||
Noncurrent Liabilities | |||||||
Debtor-in-possession financing | |||||||
Regulatory liabilities | |||||||
Pension and other post-retirement benefits | |||||||
Asset retirement obligations | |||||||
Deferred income taxes | |||||||
Operating lease liabilities | — | ||||||
Other | |||||||
Total noncurrent liabilities | |||||||
Liabilities Subject to Compromise | |||||||
Shareholders’ Equity | |||||||
Preferred stock | |||||||
Common stock, $5 par value, authorized 800,000,000 shares; 264,374,809 shares outstanding at respective dates | |||||||
Additional paid-in capital | |||||||
Reinvested earnings | |||||||
Accumulated other comprehensive income | ( | ) | ( | ) | |||
Total shareholders’ equity | |||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | |||||
See accompanying Notes to the Condensed Consolidated Financial Statements. |
(Unaudited) | |||||||
Six Months Ended June 30, | |||||||
(in millions) | 2019 | 2018 | |||||
Cash Flows from Operating Activities | |||||||
Net loss | $ | ( | ) | $ | ( | ) | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation, amortization, and decommissioning | |||||||
Allowance for equity funds used during construction | ( | ) | ( | ) | |||
Deferred income taxes and tax credits, net | ( | ) | ( | ) | |||
Reorganization items, net (Note 2) | |||||||
Other | |||||||
Effect of changes in operating assets and liabilities: | |||||||
Accounts receivable | ( | ) | ( | ) | |||
Wildfire-related insurance receivable | ( | ) | |||||
Inventories | ( | ) | ( | ) | |||
Accounts payable | |||||||
Wildfire-related claims | ( | ) | |||||
Income taxes receivable/payable | |||||||
Other current assets and liabilities | ( | ) | ( | ) | |||
Regulatory assets, liabilities, and balancing accounts, net | ( | ) | ( | ) | |||
Liabilities subject to compromise | |||||||
Other noncurrent assets and liabilities | ( | ) | |||||
Net cash provided by operating activities | |||||||
Cash Flows from Investing Activities | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Proceeds from sales and maturities of nuclear decommissioning trust investments | |||||||
Purchases of nuclear decommissioning trust investments | ( | ) | ( | ) | |||
Other | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash Flows from Financing Activities | |||||||
Proceeds from debtor-in-possession credit facility | |||||||
Repayments of debtor-in-possession credit facility | ( | ) | |||||
Debtor-in-possession credit facility debt issuance costs | ( | ) | |||||
Borrowings under revolving credit facility | |||||||
Net repayments of commercial paper, net of discount | ( | ) | |||||
Short-term debt financing | |||||||
Short-term debt matured | ( | ) | |||||
Long-term debt matured or repurchased | ( | ) | |||||
Other | ( | ) | |||||
Net cash provided by financing activities | |||||||
Net change in cash, cash equivalents, and restricted cash | |||||||
Cash, cash equivalents, and restricted cash at January 1 | |||||||
Cash, cash equivalents, and restricted cash at June 30 | $ | $ | |||||
Less: Restricted cash and restricted cash equivalents included in other current assets | ( | ) | ( | ) | |||
Cash and cash equivalents at June 30 | $ | $ |
Supplemental disclosures of cash flow information | |||||||
Cash paid for: | |||||||
Interest, net of amounts capitalized | $ | ( | ) | $ | ( | ) | |
Supplemental disclosures of noncash operating activities | |||||||
Operating lease liabilities arising from obtaining ROU assets | $ | $ | |||||
Supplemental disclosures of noncash investing and financing activities | |||||||
Capital expenditures financed through accounts payable | $ | $ | |||||
See accompanying Notes to the Condensed Consolidated Financial Statements. |
(in millions) | Preferred Stock | Common Stock Amount | Additional Paid-in Capital | Reinvested Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | |||||||||||||||||
Balance at December 31, 2018 | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | |||||||||||||||||
Equity contribution | — | — | — | — | — | — | |||||||||||||||||
Balance at March 31, 2019 | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Net loss | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | |||||||||||||||||
Equity contribution | — | — | — | — | — | — | |||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | $ | ( | ) | $ |
(in millions) | Preferred Stock | Common Stock Amount | Additional Paid-in Capital | Reinvested Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | |||||||||||||||||
Balance at December 31, 2017 | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||
Other comprehensive income (loss) | — | — | — | ( | ) | — | |||||||||||||||||
Equity contribution | — | — | — | — | — | — | |||||||||||||||||
Preferred stock dividend | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Balance at March 31, 2018 | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Net loss | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||
Equity contribution | — | — | — | — | — | — | |||||||||||||||||
Preferred stock dividend | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Balance at June 30, 2018 | $ | $ | $ | $ | $ | $ |
See accompanying Notes to the Consolidated Financial Statements. |
(in millions) | Utility | PG&E Corporation (1) | PG&E Corporation Consolidated | ||||||||
Financing debt (2) | $ | $ | $ | ||||||||
Wildfire-related claims (3) | |||||||||||
Trade creditors | |||||||||||
Non-qualified benefit plan | |||||||||||
2001 bankruptcy disputed claims | |||||||||||
Customer deposits & advances | |||||||||||
Other | |||||||||||
Total Liabilities Subject to Compromise | $ | $ | $ | ||||||||
Three Months Ended June 30, 2019 | |||||||||||
(in millions) | Utility | PG&E Corporation (1) | PG&E Corporation Consolidated | ||||||||
Debtor-in-possession financing costs | $ | $ | $ | ||||||||
Legal and other | |||||||||||
Interest income | ( | ) | ( | ) | ( | ) | |||||
Adjustments to LSTC | |||||||||||
Trustee fees (2) | |||||||||||
Total reorganization items, net | $ | $ | ( | ) | $ | ||||||
Petition Date Through June 30, 2019 | |||||||||||
(in millions) | Utility | PG&E Corporation (1) | PG&E Corporation Consolidated | ||||||||
Debtor-in-possession financing costs | $ | $ | $ | ||||||||
Legal and other | |||||||||||
Interest income | ( | ) | ( | ) | ( | ) | |||||
Adjustments to LSTC | |||||||||||
Trustee fees (2) | |||||||||||
Total reorganization items, net | $ | $ | $ | ||||||||
Pension Benefits | Other Benefits | ||||||||||||||
Three Months Ended June 30, | |||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Service cost for benefits earned (1) | $ | $ | $ | $ | |||||||||||
Interest cost | |||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of prior service cost | ( | ) | ( | ) | |||||||||||
Amortization of net actuarial loss | ( | ) | ( | ) | |||||||||||
Net periodic benefit cost | |||||||||||||||
Regulatory account transfer (2) | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Pension Benefits | Other Benefits | ||||||||||||||
Six Months Ended June 30, | |||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Service cost for benefits earned (1) | $ | $ | $ | $ | |||||||||||
Interest cost | |||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of prior service cost | ( | ) | ( | ) | |||||||||||
Amortization of net actuarial loss | ( | ) | ( | ) | |||||||||||
Net periodic benefit cost | |||||||||||||||
Regulatory account transfer (2) | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Pension Benefits | Other Benefits | Total | |||||||||
(in millions, net of income tax) | Three Months Ended June 30, 2019 | ||||||||||
Beginning balance | $ | ( | ) | $ | $ | ( | ) | ||||
Amounts reclassified from other comprehensive income: | |||||||||||
Amortization of prior service cost (net of taxes of $1 and $1, respectively) (1) | ( | ) | |||||||||
Amortization of net actuarial loss (net of taxes of $0 and $1, respectively) (1) | |||||||||||
Regulatory account transfer (net of taxes of $1 and $0, respectively) (1) | ( | ) | ( | ) | |||||||
Net current period other comprehensive gain (loss) | |||||||||||
Ending balance | $ | ( | ) | $ | $ | ( | ) | ||||
Pension Benefits | Other Benefits | Total | |||||||||
(in millions, net of income tax) | Three Months Ended June 30, 2018 | ||||||||||
Beginning balance | $ | ( | ) | $ | $ | ( | ) | ||||
Amounts reclassified from other comprehensive income: (1) | |||||||||||
Amortization of prior service cost (net of taxes of $1 and $1, respectively) | ( | ) | |||||||||
Amortization of net actuarial loss (net of taxes of $1 and $1, respectively) | ( | ) | |||||||||
Regulatory account transfer (net of taxes of $0 and $0, respectively) | ( | ) | ( | ) | |||||||
Net current period other comprehensive gain (loss) | |||||||||||
Ending balance | $ | ( | ) | $ | $ | ( | ) | ||||
Pension Benefits | Other Benefits | Total | |||||||||
(in millions, net of income tax) | Six Months Ended June 30, 2019 | ||||||||||
Beginning balance | $ | ( | ) | $ | $ | ( | ) | ||||
Amounts reclassified from other comprehensive income: | |||||||||||
Amortization of prior service cost (net of taxes of $1 and $2, respectively) (1) | ( | ) | |||||||||
Amortization of net actuarial loss (net of taxes of $0 and $1, respectively) (1) | ( | ) | |||||||||
Regulatory account transfer (net of taxes of $1 and $1, respectively) (1) | ( | ) | ( | ) | |||||||
Net current period other comprehensive gain (loss) | |||||||||||
Ending balance | $ | ( | ) | $ | $ | ( | ) | ||||
Pension Benefits | Other Benefits | Total | |||||||||
(in millions, net of income tax) | Six Months Ended June 30, 2018 | ||||||||||
Beginning balance | $ | ( | ) | $ | $ | ( | ) | ||||
Amounts reclassified from other comprehensive income: | |||||||||||
Amortization of prior service cost (net of taxes of $1 and $2, respectively) (1) | ( | ) | |||||||||
Amortization of net actuarial loss (net of taxes of $1 and $1, respectively) (1) | ( | ) | |||||||||
Regulatory account transfer (net of taxes of $0 and $1, respectively) (1) | ( | ) | ( | ) | |||||||
Reclassification of stranded income tax to retained earnings | ( | ) | ( | ) | |||||||
Net current period other comprehensive gain (loss) | ( | ) | ( | ) | |||||||
Ending balance | $ | ( | ) | $ | $ | ( | ) | ||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Electric | |||||||||||||||
Revenue from contracts with customers | |||||||||||||||
Residential | $ | $ | $ | $ | |||||||||||
Commercial | |||||||||||||||
Industrial | |||||||||||||||
Agricultural | |||||||||||||||
Public street and highway lighting | |||||||||||||||
Other (1) | ( | ) | ( | ) | |||||||||||
Total revenue from contracts with customers - electric | |||||||||||||||
Regulatory balancing accounts (2) | |||||||||||||||
Total electric operating revenue | $ | $ | $ | $ | |||||||||||
Natural gas | |||||||||||||||
Revenue from contracts with customers | |||||||||||||||
Residential | $ | $ | $ | $ | |||||||||||
Commercial | |||||||||||||||
Transportation service only | |||||||||||||||
Other (1) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total revenue from contracts with customers - gas | |||||||||||||||
Regulatory balancing accounts (2) | ( | ) | ( | ) | |||||||||||
Total natural gas operating revenue | |||||||||||||||
Total operating revenues | $ | $ | $ | $ | |||||||||||
(in millions) | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | |||||
Operating lease fixed cost | $ | $ | |||||
Operating lease variable cost | |||||||
Total operating lease costs | $ | $ |
(in millions) | June 30, 2019 | ||
2019 (1) | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total lease payments | |||
Less imputed interest | ( | ) | |
Total | $ | ||
(in millions) | December 31, 2018 | ||
2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total lease commitments | $ |
Asset Balance at | |||||||
(in millions) | June 30, 2019 | December 31, 2018 | |||||
Pension benefits (1) | $ | $ | |||||
Environmental compliance costs | |||||||
Utility retained generation (2) | |||||||
Price risk management | |||||||
Unamortized loss, net of gain, on reacquired debt (3) | |||||||
Catastrophic event memorandum account (4) | |||||||
Wildfire expense memorandum account (5) | |||||||
Fire hazard prevention memorandum account (6) | |||||||
Fire risk mitigation memorandum account (7) | |||||||
Other | |||||||
Total long-term regulatory assets | $ | $ | |||||
Liability Balance at | |||||||
(in millions) | June 30, 2019 | December 31, 2018 | |||||
Cost of removal obligations (1) | $ | $ | |||||
Deferred income taxes (2) | |||||||
Recoveries in excess of AROs (3) | |||||||
Public purpose programs (4) | |||||||
Employee benefit plans (5) | |||||||
Other | |||||||
Total long-term regulatory liabilities | $ | $ | |||||
Receivable Balance at | |||||||
(in millions) | June 30, 2019 | December 31, 2018 | |||||
Electric distribution | $ | $ | |||||
Electric transmission | |||||||
Utility generation | |||||||
Gas distribution and transmission | |||||||
Energy procurement | |||||||
Public purpose programs | |||||||
Other | |||||||
Total regulatory balancing accounts receivable | $ | $ |
Payable Balance at | |||||||
(in millions) | June 30, 2019 | December 31, 2018 | |||||
Electric transmission | |||||||
Gas distribution and transmission | |||||||
Energy procurement | |||||||
Public purpose programs | |||||||
Other | |||||||
Total regulatory balancing accounts payable | $ | $ |
(in millions) | Termination Date | Aggregate Limit | Term Loan Borrowings | Revolver Borrowings | Letters of Credit Outstanding | Aggregate Availability | |||||||||||||||
DIP Facilities | December 2020 | (1) | $ | $ | $ | $ | $ | ||||||||||||||
Balance at, | ||||||||||
(in millions) | Contractual Interest Rates | June 30, 2019 | December 31, 2018 | |||||||
Debt Subject to Compromise (1) | ||||||||||
PG&E Corporation | ||||||||||
Borrowings under Pre-Petition Credit Facilities | ||||||||||
PG&E Corporation Revolving Credit Facilities - Stated Maturity: 2022 | variable rate(2) | $ | $ | |||||||
Other borrowings: | ||||||||||
Term Loan - Stated Maturity: 2020 | variable rate(3) | |||||||||
Total PG&E Corporation Debt Subject to Compromise | ||||||||||
Utility | ||||||||||
Senior Notes - Stated Maturity: | ||||||||||
2020 | ||||||||||
2021 | 3.25% to 4.25% | |||||||||
2022 | ||||||||||
2023 | 3.25% to 4.25% | |||||||||
2024 through 2047 | 2.95% to 6.35% | |||||||||
Unamortized discount, net of premium and debt issuance costs | ( | ) | ||||||||
Total Senior notes, net of premium and debt issuance costs | ||||||||||
Pollution Control Bonds - Stated Maturity: | ||||||||||
Series 2008 F and 2010 E, due 2026 (4) | ||||||||||
Series 2009 A-B, due 2026 (5) | variable rate (6) | |||||||||
Series 1996 C, E, F, 1997 B due 2026 (5) | variable rate (7) | |||||||||
Total pollution control bonds | ||||||||||
Borrowings under Pre-Petition Credit Facilities | ||||||||||
Utility Revolving Credit Facilities - Stated Maturity: 2022 (8) | variable rate(9) | |||||||||
Other borrowings: | ||||||||||
Term Loan - Stated Maturity: 2019 | variable rate(10) | |||||||||
Total Borrowings under Pre-Petition Credit Facility Subject to Compromise | ||||||||||
Total Utility Debt Subject to Compromise | ||||||||||
Total PG&E Corporation Consolidated Debt Subject to Compromise | $ | $ | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions, except per share amounts) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Loss attributable to common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Weighted average common shares outstanding, basic | |||||||||||||||
Add incremental shares from assumed conversions: | |||||||||||||||
Employee share-based compensation | |||||||||||||||
Weighted average common shares outstanding, diluted | |||||||||||||||
Total loss per common share, diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Contract Volume at | ||||||||
Underlying Product | Instruments | June 30, 2019 | December 31, 2018 | |||||
Natural Gas (1) (MMBtus (2)) | Forwards, Futures and Swaps | |||||||
Options | ||||||||
Electricity (Megawatt-hours) | Forwards, Futures and Swaps | |||||||
Options | ||||||||
Congestion Revenue Rights (3) | ||||||||
Commodity Risk | |||||||||||||||
(in millions) | Gross Derivative Balance | Netting | Cash Collateral | Total Derivative Balance | |||||||||||
Current assets – other | $ | $ | ( | ) | $ | $ | |||||||||
Other noncurrent assets – other | |||||||||||||||
Current liabilities – other | ( | ) | ( | ) | |||||||||||
Noncurrent liabilities – other | ( | ) | ( | ) | |||||||||||
Total commodity risk | $ | $ | $ | $ |
Commodity Risk | |||||||||||||||
(in millions) | Gross Derivative Balance | Netting | Cash Collateral | Total Derivative Balance | |||||||||||
Current assets – other | $ | $ | ( | ) | $ | $ | |||||||||
Other noncurrent assets – other | |||||||||||||||
Current liabilities – other | ( | ) | ( | ) | |||||||||||
Noncurrent liabilities – other | ( | ) | ( | ) | |||||||||||
Total commodity risk | $ | $ | $ | $ |
• | Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
• | Level 2 – Other inputs that are directly or indirectly observable in the marketplace. |
• | Level 3 – Unobservable inputs which are supported by little or no market activities. |
Fair Value Measurements | |||||||||||||||||||
June 30, 2019 | |||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Netting (1) | Total | ||||||||||||||
Assets: | |||||||||||||||||||
Short-term investments | $ | $ | $ | $ | — | $ | |||||||||||||
Nuclear decommissioning trusts | |||||||||||||||||||
Short-term investments | — | ||||||||||||||||||
Global equity securities | — | ||||||||||||||||||
Fixed-income securities | — | ||||||||||||||||||
Assets measured at NAV | — | — | — | — | |||||||||||||||
Total nuclear decommissioning trusts (2) | — | ||||||||||||||||||
Price risk management instruments (Note 8) | |||||||||||||||||||
Electricity | |||||||||||||||||||
Gas | |||||||||||||||||||
Total price risk management instruments | |||||||||||||||||||
Rabbi trusts | |||||||||||||||||||
Fixed-income securities | — | ||||||||||||||||||
Life insurance contracts | — | ||||||||||||||||||
Total rabbi trusts | — | ||||||||||||||||||
Long-term disability trust | |||||||||||||||||||
Short-term investments | — | ||||||||||||||||||
Assets measured at NAV | — | — | — | — | |||||||||||||||
Total long-term disability trust | — | ||||||||||||||||||
TOTAL ASSETS | $ | $ | $ | $ | $ | ||||||||||||||
Liabilities: | |||||||||||||||||||
Price risk management instruments (Note 8) | |||||||||||||||||||
Electricity | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Gas | ( | ) | |||||||||||||||||
TOTAL LIABILITIES | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Fair Value Measurements | |||||||||||||||||||
December 31, 2018 | |||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Netting (1) | Total | ||||||||||||||
Assets: | |||||||||||||||||||
Short-term investments | $ | $ | $ | $ | — | $ | |||||||||||||
Nuclear decommissioning trusts | |||||||||||||||||||
Short-term investments | — | ||||||||||||||||||
Global equity securities | — | ||||||||||||||||||
Fixed-income securities | — | ||||||||||||||||||
Assets measured at NAV | — | — | — | — | |||||||||||||||
Total nuclear decommissioning trusts (2) | — | ||||||||||||||||||
Price risk management instruments (Note 8) | |||||||||||||||||||
Electricity | |||||||||||||||||||
Gas | |||||||||||||||||||
Total price risk management instruments | |||||||||||||||||||
Rabbi trusts | |||||||||||||||||||
Fixed-income securities | — | ||||||||||||||||||
Life insurance contracts | — | ||||||||||||||||||
Total rabbi trusts | — | ||||||||||||||||||
Long-term disability trust | |||||||||||||||||||
Short-term investments | — | ||||||||||||||||||
Assets measured at NAV | — | — | — | — | |||||||||||||||
Total long-term disability trust | — | ||||||||||||||||||
TOTAL ASSETS | $ | $ | $ | $ | $ | ||||||||||||||
Liabilities: | |||||||||||||||||||
Price risk management instruments (Note 8) | |||||||||||||||||||
Electricity | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Gas | |||||||||||||||||||
TOTAL LIABILITIES | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Fair Value at | ||||||||||||||
(in millions) | June 30, 2019 | |||||||||||||
Fair Value Measurement | Assets | Liabilities | Valuation Technique | Unobservable Input | Range (1) | |||||||||
Congestion revenue rights | $ | $ | Market approach | CRR auction prices | $(13.11) - 22.76 | |||||||||
Power purchase agreements | $ | $ | Discounted cash flow | Forward prices | $ 19.68 - 38.80 | |||||||||
Fair Value at | ||||||||||||||
(in millions) | December 31, 2018 | |||||||||||||
Fair Value Measurement | Assets | Liabilities | Valuation Technique | Unobservable Input | Range (1) | |||||||||
Congestion revenue rights | $ | $ | Market approach | CRR auction prices | $ (18.61) - 32.26 | |||||||||
Power purchase agreements | $ | $ | Discounted cash flow | Forward prices | $ 19.81 - 38.80 | |||||||||
Price Risk Management Instruments | |||||||
(in millions) | 2019 | 2018 | |||||
Asset (liability) balance as of April 1 | $ | $ | |||||
Net realized and unrealized gains: | |||||||
Included in regulatory assets and liabilities or balancing accounts (1) | ( | ) | ( | ) | |||
Asset (liability) balance as of June 30 | $ | $ | |||||
Price Risk Management Instruments | |||||||
(in millions) | 2019 | 2018 | |||||
Asset (liability) balance as of January 1 | $ | $ | |||||
Net realized and unrealized gains: | |||||||
Included in regulatory assets and liabilities or balancing accounts (1) | ( | ) | |||||
Asset (liability) balance as of June 30 | $ | $ | |||||
At June 30, 2019 | At December 31, 2018 | ||||||||||||||
(in millions) | Carrying Amount | Level 2 Fair Value | Carrying Amount | Level 2 Fair Value | |||||||||||
PG&E Corporation(1) | $ | $ | $ | $ | |||||||||||
Utility(1)(2) | |||||||||||||||
(in millions) | |||||||||||||||
As of June 30, 2019 | Amortized Cost | Total Unrealized Gains | Total Unrealized Losses | Total Fair Value | |||||||||||
Nuclear decommissioning trusts | |||||||||||||||
Short-term investments | $ | $ | $ | $ | |||||||||||
Global equity securities | ( | ) | |||||||||||||
Fixed-income securities | ( | ) | |||||||||||||
Total (1) | $ | $ | $ | ( | ) | $ | |||||||||
As of December 31, 2018 | |||||||||||||||
Nuclear decommissioning trusts | |||||||||||||||
Short-term investments | $ | $ | $ | $ | |||||||||||
Global equity securities | ( | ) | |||||||||||||
Fixed-income securities | ( | ) | |||||||||||||
Total (1) | $ | $ | $ | ( | ) | $ | |||||||||
As of | |||
(in millions) | June 30, 2019 | ||
Less than 1 year | $ | ||
1–5 years | |||
5–10 years | |||
More than 10 years | |||
Total maturities of fixed-income securities | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Proceeds from sales and maturities of nuclear decommissioning trust investments | $ | $ | $ | $ | |||||||||||
Gross realized gains on securities | |||||||||||||||
Gross realized losses on securities | ( | ) | ( | ) | ( | ) | ( | ) |
Balance at | |||||||
(in millions) | June 30, 2019 | December 31, 2018 | |||||
2015 Butte fire | $ | $ | |||||
2017 Northern California wildfires | |||||||
2018 Camp fire | |||||||
Total wildfire-related claims (1) | $ | $ | |||||
• | Cal Fire determined that the 2018 Camp fire was caused by electrical transmission lines owned and operated by the Utility near Pulga, California. |
• | Cal Fire identified a second ignition site and stated that the second fire was consumed by the original fire which started earlier near Pulga, California. Cal Fire stated that the cause of the second fire was determined to be “vegetation into electrical distribution lines owned and operated by” the Utility. |
• | the La Porte, McCourtney, Lobo and Honey fires “were caused by trees coming into contact with power lines,” and |
• | the Redwood, Sulphur, Cherokee, 37, Blue, Norrbom, Adobe, Partrick, Pythian, Nuns, Pocket and Atlas fires “were caused by electric power and distribution lines, conductors and the failure of power poles.” |
• | First, the Bankruptcy Court would address the legal issue of whether, pursuant to the state law doctrine of inverse condemnation, PG&E Corporation and the Utility may be held strictly liable for wildfire claims asserting property damages even where PG&E Corporation or the Utility were not negligent. |
• | Second, the Bankruptcy Court would schedule a hearing on the limited issue of causation of the Tubbs fire on October 7, 2019, or as soon as possible thereafter. |
• | Third, following the Bar Date, the Bankruptcy Court would determine the aggregate value of the wildfire claims in a hearing proposed to be scheduled for early December 2019. This phase of the estimation process would involve the resolution of questions around the likelihood of success of the wildfire claims on issues such as negligence, the recoverability of certain categories of damages and the aggregate estimate of overall damages based upon sampling of claims and expert testimony. In the motion, PG&E Corporation and the Utility indicated that they are prepared to agree that, as part of the proposed estimation process, they will not contest causation with respect to any wildfire for which Cal Fire has concluded that PG&E Corporation and the Utility are responsible, including the 2018 Camp fire and the 2017 Northern California wildfires identified above, except the Tubbs fire. |
• | the City of Clearlake, the City of Napa, the City of Santa Rosa, the County of Lake, the Lake County Sanitation District, the County of Mendocino, Napa County, the County of Nevada, the County of Sonoma, the Sonoma County Agricultural Preservation and Open Space District, the Sonoma County Community Development Commission, the Sonoma County Water Agency, the Sonoma Valley County Sanitation District and the County of Yuba (collectively, the “2017 Northern California Wildfire Public Entities”); |
• | the Town of Paradise; |
• | the County of Butte; |
• | the Paradise Recreation & Park District; |
• | the County of Yuba; and |
• | the Calaveras County Water District. |
• | following the effective date of PG&E Corporation and the Utility’s Chapter 11 plan of reorganization, PG&E Corporation and the Utility will remit a Settlement Amount (as defined below) in the amount set forth below to the applicable Supporting Public Entities in full and final satisfaction and discharge of their Public Entity Wildfire Claims, and |
• | subject to the Supporting Public Entities voting affirmatively to accept PG&E Corporation and the Utility’s Chapter 11 plan of reorganization, following the effective date of PG&E Corporation and the Utility’s Chapter 11 plan of reorganization, PG&E Corporation and the Utility will create and promptly fund $ |
• | for the 2017 Northern California Wildfire Public Entities, $ |
• | for the Town of Paradise, $ |
• | for the County of Butte, $ |
• | for the Paradise Recreation & Park District, $ |
• | for the County of Yuba, $ |
• | for the Calaveras County Water District, $ |
• | if the Federal Emergency Management Agency or the OES fails to agree that no reimbursement is required from the Supporting Public Entities on account of assistance rendered by either agency in connection with the wildfires noted above, and |
• | by any individual Supporting Public Entity, if a material amount of Third Party Claims is filed against such Supporting Public Entity and such Third Party Claims are not released pursuant to PG&E Corporation and the Utility’s Chapter 11 plan of reorganization. |
• | PG&E Corporation and the Utility do not obtain the consent, or the waiver of the lack of consent as a defense, of their insurance carriers for the policy years 2017 and 2018, |
• | the Board of Directors of either PG&E Corporation or the Utility determines in good faith that continued performance under the PSA would be inconsistent with the exercise of its fiduciary duties, and |
• | any Supporting Public Entity terminates a PSA, in which case PG&E Corporation and the Utility may terminate any other PSA. |
(in millions) | Insurance Receivable | ||
2018 Camp fire | |||
Balance at December 31, 2018 | $ | ||
Accrued insurance recoveries | |||
Reimbursements | |||
Balance at June 30, 2019 | $ | ||
2017 Northern California wildfires | |||
Balance at December 31, 2018 | $ | ||
Accrued insurance recoveries | |||
Reimbursements | |||
Balance at June 30, 2019 | $ |
• | prior to June 21, 2019, “re-inspect all of its electrical grid and remove or trim all trees that could fall onto its power lines, poles or equipment in high-wind conditions, . . . identify and fix all conductors that might swing together and arc due to slack and/or other circumstances under high-wind conditions[,] identify and fix damaged or weakened poles, transformers, fuses and other connectors [and] identify and fix any other condition anywhere in its grid similar to any condition that contributed to any previous wildfires,” |
• | “document the foregoing inspections and the work done and . . . rate each segment’s safety under various wind conditions” and |
• | at all times from and after June 21, 2019, “supply electricity only through those parts of its electrical grid it has determined to be safe under the wind conditions then prevailing.” |
• | “fully comply with all applicable laws concerning vegetation management and clearance requirements;” |
• | “fully comply with the specific targets and metrics set forth in its wildfire mitigation plan, including with respect to enhanced vegetation management;” |
• | submit to “regular, unannounced inspections” by the Monitor “of PG&E’s vegetation management efforts and equipment inspection, enhancement, and repair efforts” in connection with a requirement that the Monitor “assess PG&E’s wildfire mitigation and wildfire safety work;” |
• | “maintain traceable, verifiable, accurate, and complete records of its vegetation management efforts” and report to the Monitor monthly on its vegetation management status and progress; and |
• | “ensure that sufficient resources, financial and personnel, including contractors and employees, are allocated to achieve the foregoing” and to forgo issuing “any dividends until [the Utility] is in compliance with all applicable vegetation management requirements as set forth above.” |
Balance at | |||||||
(in millions) | June 30, 2019 | December 31, 2018 | |||||
Topock natural gas compressor station | $ | $ | |||||
Hinkley natural gas compressor station | |||||||
Former manufactured gas plant sites owned by the Utility or third parties (1) | |||||||
Utility-owned generation facilities (other than fossil fuel-fired), other facilities, and third-party disposal sites (2) | |||||||
Fossil fuel-fired generation facilities and sites (3) | |||||||
Total environmental remediation liability | $ | $ | |||||
• | the Utility’s Chapter 11 Case has been resolved pursuant to a plan of reorganization or similar document not subject to a stay; |
• | the Bankruptcy Court has determined that the resolution of the Utility’s Chapter 11 Case provides funding or otherwise provides for the satisfaction of any pre-petition wildfire claims asserted against the Utility in the Chapter 11 Case, in the amounts agreed upon in any settlement agreements, authorized by the Bankruptcy Court through an estimation process or otherwise allowed by the Bankruptcy Court; |
• | the CPUC has approved the Utility’s plan of reorganization and other documents resolving its Chapter 11 Case, including the Utility’s resulting governance structure as being acceptable in light of the Utility’s safety history, criminal probation, recent financial condition and other factors deemed relevant by the CPUC; |
• | the CPUC has determined that the Utility’s plan of reorganization and other documents resolving its Chapter 11 Case are (i) consistent with California’s climate goals as required pursuant to the California Renewables Portfolio Standard Program and related procurement requirements and (ii) neutral, on average, to the Utility’s ratepayers; and |
• | the CPUC has determined that the Utility’s plan of reorganization and other documents resolving its Chapter 11 Case recognize the contributions of ratepayers, if any, and compensate them accordingly through mechanisms approved by the CPUC, which may include sharing of value appreciation. |
• | The Outcome of the Chapter 11 Cases. For the duration of the Chapter 11 Cases, PG&E Corporation’s and the Utility’s business is subject to the risks and uncertainties of bankruptcy. For example, the Chapter 11 Cases could adversely affect the Utility’s relationships with suppliers and employees which, in turn, could adversely affect the value of the business and assets of PG&E Corporation and the Utility. PG&E Corporation and the Utility also expect to incur increased legal and other professional costs associated with the Chapter 11 Cases and the reorganization. At this time, it is not possible to predict with certainty the effect of the Chapter 11 Cases on their business or various creditors, or whether or when PG&E Corporation and the Utility will emerge from bankruptcy. PG&E Corporation’s and the Utility’s future financial condition, results of operations, liquidity and cash flows depend upon confirming, and successfully implementing, on a timely basis, a plan of reorganization. Although PG&E Corporation and the Utility have currently retained the exclusive rights to file a plan of reorganization until September 26, 2019 and to solicit acceptances thereof until November 26, 2019, the Ad Hoc Noteholder Committee and the Ad Hoc Subrogation Group have submitted motions to the Bankruptcy Court for the entry of orders terminating these exclusive rights. If these rights are terminated, there could be a material effect on PG&E Corporation’s and the Utility’s ability to achieve confirmation of a plan of reorganization that would enable PG&E Corporation and the Utility to reach their stated goals. |
• | The Utility’s Ability to Fund Ongoing Operations and Other Capital Needs. In connection with the Chapter 11 Cases, PG&E Corporation and the Utility entered into the DIP Credit Agreement, which was approved on a final basis on March 27, 2019. For the duration of the Chapter 11 Cases, PG&E Corporation and the Utility expect that the DIP Credit Agreement, together with cash on hand, cash flow from operations and distributions received from subsidiaries, will be the Utility’s primary source of capital to fund ongoing operations and other capital needs and that they will have limited, if any, access to additional financing. In the event that cash on hand, cash flow from operations, distributions received from subsidiaries, and availability under the DIP Credit Agreement are not sufficient to meet these liquidity needs, PG&E Corporation and the Utility may be required to seek additional financing, and can provide no assurance that additional financing would be available or, if available, offered on acceptable terms. The amount of any such additional financing could be limited by negative covenants in the DIP Credit Agreement, which include restrictions on PG&E Corporation’s and the Utility’s ability to, among other things, incur additional indebtedness and create liens on assets. |
• | The Impact of the 2018 Camp Fire and the 2017 Northern California Wildfires. PG&E Corporation and the Utility face several uncertainties in connection with the 2018 Camp fire and 2017 Northern California wildfires, related to: |
◦ | the amount of possible loss related to third-party claims (as of June 30, 2019, the Utility recorded total charges of $18 billion, which reflects the low end of the range of reasonably estimated losses and is subject to change based on additional information), which aggregate possible losses, if the Utility were found liable for certain or all of the costs, expenses and other losses in connection with the 2018 Camp fire and 2017 Northern California wildfires (other than potential punitive damages, fines and penalties or damages related to future claims), could exceed $30 billion; any punitive damages, fines and penalties or damages related to future claims could be material; |
◦ | whether, in light of the CPUC July 8, 2019 final decision in the Customer Harm Threshold OIR that excludes companies in Chapter 11 from accessing the Customer Harm Threshold, the Utility will be able to obtain a substantial recovery of costs related to the 2017 Northern California wildfires; |
◦ | the impact of investigations, including criminal, regulatory, and SEC investigations; |
◦ | the outcome of the 2017 Northern California Wildfires OII, and any fines or penalties that could result therefrom; |
◦ | fines or penalties, which could be material, if any regulatory or law enforcement agency were to bring an enforcement action, including a criminal proceeding, and determined that the Utility had failed to comply with applicable laws and regulations; |
◦ | the amount of damages in respect of future claims, which could be material; |
◦ | the applicability of the doctrine of inverse condemnation in the 2018 Camp fire and 2017 Northern California wildfires litigation, which the Utility intends to continue to challenge during the pendency of its Chapter 11 Case; the applicability of other theories of liability, including negligence, related to the 2018 Camp fire and 2017 Northern California wildfire claims; |
◦ | the recoverability of the above-mentioned costs, even if a court decision imposes liability under the doctrine of inverse condemnation; |
◦ | the ability of PG&E Corporation and the Utility to finance costs, expenses and other possible losses in respect of claims related to the 2018 Camp fire and the 2017 Northern California wildfires, through securitization mechanisms or otherwise, which potential financings are not addressed by AB 1054 as it only applies to future wildfires; |
◦ | the amount and recoverability of enhanced and accelerated inspection costs of the Utility’s electric transmission and distribution assets (the Utility incurred costs of $275 million and $485 million for enhanced and accelerated inspection and repair costs for the three and six months ended June 30, 2019, respectively); and |
◦ | the amount and recoverability of clean-up and repair costs (the Utility incurred costs of $989 million for clean-up and repair of the Utility’s facilities through June 30, 2019). |
• | The Uncertainties in Connection with Any Future Wildfires, Wildfire Insurance, and AB 1054. While PG&E Corporation and the Utility cannot predict the occurrence, timing or extent of damages in connection with future wildfires, factors such as environmental conditions (including weather and vegetation conditions) and the efficacy of wildfire risk mitigation initiatives are expected to influence the frequency and severity of future wildfires. Although the financial impact of future wildfires could be mitigated through insurance, the Utility may not be able to obtain sufficient wildfire insurance coverage at a reasonable cost, or at all, and any such coverage may include limitations that could result in substantial uninsured loses depending on the amount and type of damages resulting from covered events. In addition, the policy reforms contemplated by AB 1054 are likely to affect the financial impact of future wildfires on PG&E Corporation and the Utility should any such wildfires occur. The Wildfire Fund would be available to the Utility to pay eligible claims for liabilities arising from future wildfires and would serve as an alternative to traditional insurance products, provided that the Utility satisfies the numerous conditions to the Utility’s participation in the Wildfire Fund set forth in AB 1054. |
• | The Outcome of Other Enforcement, Litigation, and Regulatory Matters. The Utility’s financial results may continue to be impacted by the outcome of other current and future enforcement, litigation (to the extent not stayed as a result of the Chapter 11 Cases), and regulatory matters, including those described above as well as the outcome of the Locate and Mark OII, the outcome of the Safety Culture OII, the outcome of phase two of the ex parte OII, the sentencing terms of the Utility’s January 27, 2017 federal criminal conviction, including the oversight of the Utility’s probation and the potential recommendations by the Monitor, and potential penalties in connection with the Utility’s safety and other self-reports. (See Note 11 of the Notes to the Condensed Consolidated Financial Statements in Item 1.) |
• | The Timing and Outcome of Ratemaking Proceedings. The Utility’s financial results may be impacted by the timing and outcome of its 2019 GT&S rate case, 2020 GRC, FERC TO18, TO19, and TO20 rate cases, 2020 cost of capital proceeding, and its ability to timely recover costs not currently in rates, including costs already incurred and future costs tracked in its CEMA, WEMA, FHPMA, WPMA, and FRMMA that are incurred in connection with the Utility's 2019 Wildfire Safety Plan, the amount of which is substantial and is expected to increase. The outcome of regulatory proceedings can be affected by many factors, including intervening parties’ testimonies, potential rate impacts, the Utility’s reputation, the regulatory and political environments, and other factors. (See Notes 4 and 11 of the Notes to the Condensed Consolidated Financial Statements in Item 1 and “Regulatory Matters” below.) |
• | The Utility’s Compliance with the CPUC Capital Structure. The CPUC’s capital structure decisions require the Utility to maintain a 52% equity ratio on average over the period that the authorized capital structure is in place, and to file an application for a waiver to the capital structure condition if an adverse financial event reduces its equity ratio by 1% or more. Due to the net charges recorded in connection with the 2018 Camp fire and the 2017 Northern California wildfires as of December 31, 2018, the Utility submitted to the CPUC an application for a waiver of the capital structure condition on February 28, 2019. The waiver is subject to CPUC approval. The CPUC’s decisions state that the Utility shall not be considered in violation of these conditions during the period the waiver application is pending resolution. The Utility is unable to predict the timing and outcome of its waiver application. (See “Regulatory Matters” below.) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Consolidated Total | $ | (2,553 | ) | $ | (984 | ) | $ | (2,420 | ) | $ | (542 | ) | |||
PG&E Corporation | 1 | (4 | ) | 4 | (11 | ) | |||||||||
Utility | $ | (2,554 | ) | $ | (980 | ) | $ | (2,424 | ) | $ | (531 | ) |
Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | ||||||||||||||||||||||
Revenues/Costs: | Revenues/Costs: | ||||||||||||||||||||||
(in millions) | That Impacted Earnings | That Did Not Impact Earnings | Total Utility | That Impacted Earnings | That Did Not Impact Earnings | Total Utility | |||||||||||||||||
Electric operating revenues | $ | 1,872 | $ | 1,074 | $ | 2,946 | $ | 1,979 | $ | 1,333 | $ | 3,312 | |||||||||||
Natural gas operating revenues | 792 | 205 | 997 | 752 | 170 | 922 | |||||||||||||||||
Total operating revenues | 2,664 | 1,279 | 3,943 | 2,731 | 1,503 | 4,234 | |||||||||||||||||
Cost of electricity | — | 837 | 837 | — | 963 | 963 | |||||||||||||||||
Cost of natural gas | — | 108 | 108 | — | 79 | 79 | |||||||||||||||||
Operating and maintenance | 1,562 | 378 | 1,940 | 1,244 | 542 | 1,786 | |||||||||||||||||
Wildfire-related claims, net of insurance recoveries | 3,900 | — | 3,900 | 2,125 | — | 2,125 | |||||||||||||||||
Depreciation, amortization, and decommissioning | 796 | — | 796 | 746 | — | 746 | |||||||||||||||||
Total operating expenses | 6,258 | 1,323 | 7,581 | 4,115 | 1,584 | 5,699 | |||||||||||||||||
Operating loss | (3,594 | ) | (44 | ) | (3,638 | ) | (1,384 | ) | (81 | ) | (1,465 | ) | |||||||||||
Interest income | 22 | — | 22 | 11 | — | 11 | |||||||||||||||||
Interest expense | (60 | ) | — | (60 | ) | (222 | ) | — | (222 | ) | |||||||||||||
Other income, net | 20 | 44 | 64 | 27 | 81 | 108 | |||||||||||||||||
Reorganization items | (57 | ) | — | (57 | ) | — | — | — | |||||||||||||||
Loss before income taxes | $ | (3,669 | ) | $ | — | $ | (3,669 | ) | $ | (1,568 | ) | $ | — | $ | (1,568 | ) | |||||||
Income tax benefit (1) | (1,119 | ) | (592 | ) | |||||||||||||||||||
Net loss | (2,550 | ) | (976 | ) | |||||||||||||||||||
Preferred stock dividend requirement | 4 | 4 | |||||||||||||||||||||
Loss Attributable to Common Stock | $ | (2,554 | ) | $ | (980 | ) | |||||||||||||||||
Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | ||||||||||||||||||||||
Revenues/Costs: | Revenues/Costs: | ||||||||||||||||||||||
(in millions) | That Impacted Earnings | That Did Not Impact Earnings | Total Utility | That Impacted Earnings | That Did Not Impact Earnings | Total Utility | |||||||||||||||||
Electric operating revenues | $ | 3,786 | $ | 1,952 | $ | 5,738 | $ | 3,915 | $ | 2,348 | $ | 6,263 | |||||||||||
Natural gas operating revenues | 1,586 | 630 | 2,216 | 1,490 | 537 | 2,027 | |||||||||||||||||
Total operating revenues | 5,372 | 2,582 | 7,954 | 5,405 | 2,885 | 8,290 | |||||||||||||||||
Cost of electricity | — | 1,436 | 1,436 | — | 1,782 | 1,782 | |||||||||||||||||
Cost of natural gas | — | 447 | 447 | — | 368 | 368 | |||||||||||||||||
Operating and maintenance | 3,256 | 788 | 4,044 | 2,494 | 896 | 3,390 | |||||||||||||||||
Wildfire-related claims, net of insurance recoveries | 3,900 | — | 3,900 | 2,118 | — | 2,118 | |||||||||||||||||
Depreciation, amortization, and decommissioning | 1,593 | — | 1,593 | 1,498 | — | 1,498 | |||||||||||||||||
Total operating expenses | 8,749 | 2,671 | 11,420 | 6,110 | 3,046 | 9,156 | |||||||||||||||||
Operating loss | (3,377 | ) | (89 | ) | (3,466 | ) | (705 | ) | (161 | ) | (866 | ) | |||||||||||
Interest income | 43 | — | 43 | 20 | — | 20 | |||||||||||||||||
Interest expense | (161 | ) | — | (161 | ) | (439 | ) | — | (439 | ) | |||||||||||||
Other income, net | 41 | 89 | 130 | 56 | 161 | 217 | |||||||||||||||||
Reorganization items | (168 | ) | — | (168 | ) | — | — | — | |||||||||||||||
Loss before income taxes | $ | (3,622 | ) | $ | — | $ | (3,622 | ) | $ | (1,068 | ) | $ | — | $ | (1,068 | ) | |||||||
Income tax benefit (1) | (1,205 | ) | (544 | ) | |||||||||||||||||||
Net loss | (2,417 | ) | (524 | ) | |||||||||||||||||||
Preferred stock dividend requirement | 7 | 7 | |||||||||||||||||||||
Loss Attributable to Common Stock | $ | (2,424 | ) | $ | (531 | ) | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Federal statutory income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | |||
Increase (decrease) in income tax rate resulting from: | |||||||||||
State income tax (net of federal benefit) (1) | 7.4 | % | 8.6 | % | 7.7 | % | 11.5 | % | |||
Effect of regulatory treatment of fixed asset differences (2) | 2.3 | % | 6.2 | % | 4.6 | % | 16.8 | % | |||
Tax credits | 0.1 | % | 0.2 | % | 0.2 | % | 0.6 | % | |||
Other, net | (0.3 | )% | 1.9 | % | (0.2 | )% | 1.1 | % | |||
Effective tax rate | 30.5 | % | 37.9 | % | 33.3 | % | 51.0 | % | |||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Cost of purchased power, net (1) | $ | 796 | $ | 919 | $ | 1,295 | $ | 1,672 | |||||||
Fuel used in generation facilities | 41 | 44 | 141 | 110 | |||||||||||
Total cost of electricity | $ | 837 | $ | 963 | $ | 1,436 | $ | 1,782 | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Cost of natural gas sold | $ | 82 | $ | 53 | $ | 391 | $ | 310 | |||||||
Transportation cost of natural gas sold | 26 | 26 | 56 | 58 | |||||||||||
Total cost of natural gas | $ | 108 | $ | 79 | $ | 447 | $ | 368 | |||||||
Six Months Ended June 30, | |||||||
(in millions) | 2019 | 2018 | |||||
Net cash provided by operating activities | $ | 2,776 | $ | 2,722 | |||
Net cash used in investing activities | (2,434 | ) | (2,895 | ) | |||
Net cash provided by financing activities | 1,399 | 210 | |||||
Net change in cash, cash equivalents and restricted cash | $ | 1,741 | $ | 37 |
• | the timing and amounts of costs, including fines and penalties, that may be incurred in connection with current and future enforcement, litigation, and regulatory matters (see “Enforcement and Litigation Matters” in Note 11 of the Notes to the Condensed Consolidated Financial Statements in Item 1 and Part II, Item 1. Legal Proceedings for more information); |
• | the timing and amount of premium payments related to wildfire insurance (see “Wildfire Insurance” in Note 11 of the Notes to the Condensed Consolidated Financial Statements in Item 1 for more information); |
• | the Tax Act, which may accelerate the timing of federal tax payments and reduce revenue requirements, resulting in lower operating cash flows depending on the timing of wildfire payments; |
• | the timing and outcomes of the 2019 GT&S rate case, 2020 GRC, FERC TO18, TO19 and TO20 rate cases, 2018 CEMA filing, 2020 Cost of Capital, NDCTP, and other ratemaking and regulatory proceedings; and |
• | the timing and amount of substantially increasing costs in connection with the 2019 Wildfire Safety Plan (see “Regulatory Matters” below for more information). |
2019 Currently Authorized | 2020 Requested (as revised) | ||||||||||||||||
Cost | Capital Structure | Weighted Cost | Cost | Capital Structure | Weighted Cost | ||||||||||||
Return on common equity | 10.25 | % | 52.00 | % | 5.33 | % | 12.00 | % | 52.00 | % | 6.24 | % | |||||
Preferred stock | 5.60 | % | 1.00 | % | 0.06 | % | 5.52 | % | 0.50 | % | 0.03 | % | |||||
Long-term debt | 4.89 | % | 47.00 | % | 2.30 | % | 5.16 | % | 47.50 | % | 2.45 | % | |||||
Weighted average cost of capital | 7.69 | % | 8.72 | % |
Revenue Requirement (in millions) | Authorized in 2017 GRC and 2015 GT&S | Requested in 2020 Cost of Capital Application (as revised) | |||||
Electric generation and distribution | $ | 6,266 | $ | 6,537 | |||
Gas distribution | 1,739 | 1,813 | |||||
Gas transmission and storage | $ | 1,269 | $ | 1,320 |
Line of Business: (in millions) | Amounts Requested in the GRC Application | Amounts Currently Authorized for 2019 (1) | Increase (Decrease) to 2019 Authorized Amounts | ||||||||
Electric distribution | $ | 5,113 | $ | 4,364 | $ | 749 | |||||
Gas distribution | 2,097 | 1,963 | 134 | ||||||||
Electric generation | 2,366 | 2,191 | 175 | ||||||||
Total revenue requirements | $ | 9,576 | $ | 8,518 | $ | 1,058 | |||||
Cost Category: (in millions) | Amounts Requested in the GRC Application | Amounts Currently Authorized for 2019 (1) | Increase (Decrease) to 2019 Authorized Amounts | ||||||||
Operations and maintenance | $ | 2,156 | $ | 1,946 | $ | 210 | |||||
Customer services | 319 | 338 | (19 | ) | |||||||
Administrative and general | 1,315 | 953 | 361 | ||||||||
Less: Revenue credits | (196 | ) | (152 | ) | (44 | ) | |||||
Franchise fees, taxes other than income, and other adjustments | 236 | 181 | 55 | ||||||||
Depreciation, return, and income taxes | 5,747 | 5,252 | 495 | ||||||||
Total revenue requirements | $ | 9,576 | $ | 8,518 | $ | 1,058 | |||||
Revenue requirement drivers | Increase to 2019 Authorized Amounts | |
Community Wildfire Safety Program | 6.8 | % |
Liability insurance (1) | 3.2 | % |
Core gas and electric operations | 2.4 | % |
Total proposed revenue requirement increase | 12.4 | % |
• | a two-way electric and gas Risk Transfer Balancing Account to record the difference between the amounts adopted for liability insurance premiums and the Utility’s actual costs; this two-way account would allow the Utility to pass-through actual insurance costs for up to $2 billion in coverage and return to customers any overcollection if forecast costs exceed actuals costs; and |
• | a two-way Wildfire Safety Balancing Account to track and record actual incremental expenses and capital revenue requirements associated with the incremental costs of fire risk mitigation work that are not already addressed and recorded in another account; this would include the costs associated with overhead system hardening, enhanced vegetation management, and other incremental costs of wildfire mitigations. |
Revenue Requirement (in millions) | 2018 Currently Authorized | 2019 | 2020 | 2021 | 2022 | ||||||||||||||
Utility’s Request | $ | 1,301 | $ | 1,485 | $ | 1,595 | $ | 1,693 | $ | 1,679 | |||||||||
PD | $ | 1,301 | $ | 1,327 | $ | 1,427 | $ | 1,511 | $ | 1,575 |
• | Installing nearly 600 new, high-definition cameras, made available to Cal Fire and local fire officials, in high fire-threat areas by 2022, increasing coverage across high fire-threat areas to more than 90%; |
• | Adding approximately 1,300 additional new weather stations by 2022, at a density of one station roughly every 20 circuit miles in high fire-threat areas; |
• | Conducting enhanced safety inspections of electric infrastructure in high-fire threat areas, including approximately 735,000 electric towers and poles across approximately 5,700 transmission line miles and 25,200 distribution line miles; |
• | Further enhancing vegetation management efforts across high and extreme fire-threat areas to address vegetation that poses higher potential for wildfire risk, such as removing or trimming trees from particular “at-risk” tree species that have exhibited a higher pattern of failing; |
• | Continuing to disable automatic reclosing in high fire-threat areas during wildfire season and periods of high fire-risk and upgrading reclosers and circuit breakers in high fire-threat areas with remote control capabilities; |
• | Expanding the Public Safety Power Shutoff Program (PSPS) to include all transmission and distribution lines in Tier 2 and Tier 3 High Fire-Threat District (HFTD) areas; |
• | Installing stronger and more resilient poles and covered power lines, including targeted undergrounding, starting in areas with the highest fire risk, ultimately upgrading and strengthening approximately 7,100 miles over the next 10 years; and |
• | Partnering with additional communities in high fire-threat areas to create new resilience zones that can power central community resources during a Public Safety Power Shutoff. |
• | how to define climate change adaptation for the IOUs; |
• | the climate-driven risks facing the IOUs; |
• | data, tools, resources, and guidance to instruct utilities on how to incorporate adaptation in their existing planning and operational processes; and |
• | strategies to address climate change in CPUC proceedings, including impacts on disadvantaged communities. |
• | examining conditions in which proactive and planned de-energization is practiced; |
• | developing best practices and ensuring an orderly and effective set of criteria for evaluating de-energization programs; |
• | ensuring electric utilities coordinate with state and local level first responders, and align their systems with the Standardized Emergency Management System framework; |
• | mitigating the impact of de-energization on vulnerable populations; |
• | examining whether there are ways to reduce the need for de-energization; |
• | ensuring effective notice to affected stakeholders of possible de-energization and follow-up notice of actual de-energization; and |
• | ensuring consistency in notice and reporting of de-energization events. |
• | the Utility’s Chapter 11 Case has been resolved pursuant to a plan of reorganization or similar document not subject to a stay; |
• | the Bankruptcy Court has determined that the resolution of the Utility’s Chapter 11 Case provides funding or otherwise provides for the satisfaction of any pre-petition wildfire claims asserted against the Utility in the Chapter 11 Case, in the amounts agreed upon in any settlement agreements, authorized by the Bankruptcy Court through an estimation process or otherwise allowed by the Bankruptcy Court; |
• | the CPUC has approved the Utility’s plan of reorganization and other documents resolving its Chapter 11 Case, including the Utility’s resulting governance structure as being acceptable in light of the Utility’s safety history, criminal probation, recent financial condition and other factors deemed relevant by the CPUC; |
• | the CPUC has determined that the Utility’s plan of reorganization and other documents resolving its Chapter 11 Case are (i) consistent with California’s climate goals as required pursuant to the California Renewables Portfolio Standard Program and related procurement requirements and (ii) neutral, on average, to the Utility’s ratepayers; and |
• | the CPUC has determined that the Utility’s plan of reorganization and other documents resolving its Chapter 11 Case recognize the contributions of ratepayers, if any, and compensate them accordingly through mechanisms approved by the CPUC, which may include sharing of value appreciation. |
• | adopting benchmark values used to set the PCIA rate that more closely resemble actual market prices for resource adequacy and renewable energy credits; |
• | continuing to allow legacy utility-owned generation costs to be recovered from CCA customers; |
• | eliminating the 10-year limit on PCIA cost recovery for post-2002 utility owned generation and certain storage costs; and |
• | adding an annual true-up to the PCIA rate based on market sales. |
• | the risks and uncertainties associated with the Chapter 11 Cases, including, but not limited to, the ability to develop, consummate, and implement a plan of reorganization with respect to PG&E Corporation and the Utility, which could be adversely affected if the Exclusive Filing Period or the Exclusive Solicitation Period is terminated; the ability to develop and obtain applicable Bankruptcy Court, creditor or regulatory approvals; the effect of any alternative proposals, views or objections related to the plan of reorganization; potential complexities that may arise in connection with concurrent proceedings involving the Bankruptcy Court, the U.S. District Court, the CPUC, and the FERC; increased costs related to the Chapter 11 Cases; the ability to obtain sufficient financing sources for ongoing and future operations; disruptions to PG&E Corporation’s and the Utility’s business and operations and the potential impact on regulatory compliance; |
• | whether, in light of the CPUC July 8, 2019 final decision in the Customer Harm Threshold OIR that excludes companies in Chapter 11 from accessing the Customer Harm Threshold, the Utility will be able to obtain a substantial recovery of costs related to the 2017 Northern California wildfires; |
• | restrictions on PG&E Corporation’s and the Utility’s ability to pursue strategic and operational initiatives for the duration of the Chapter 11 Cases; |
• | PG&E Corporation’s and the Utility’s historical financial information not being indicative of future financial performance as a result of the Chapter 11 Cases; |
• | the potential delay in emergence from bankruptcy if PG&E Corporation and the Utility are not able to develop and consummate a consensual plan of reorganization and are forced to engage in a contested proceeding; |
• | the possibility that the DIP Credit Agreement is not sufficient to fund PG&E Corporation’s and the Utility’s cash requirements through their emergence from bankruptcy; |
• | the possibility that PG&E Corporation and the Utility may not be able to obtain exit financing on favorable terms or at all; |
• | the impact of AB 1054 on potential losses in connection with future wildfires; |
• | the outcome of the U.S. District Court matters and probation; |
• | the impact of the 2018 Camp fire and the 2017 Northern California wildfires, including whether the Utility will be able to timely recover costs incurred in connection with the wildfires in excess of the Utility’s currently authorized revenue requirements; the timing and outcome of the remaining wildfire investigations and the extent to which the Utility will have liability associated with these fires; the timing and amount of insurance recoveries; the timing and outcome of the 2017 Northern California Wildfires OII and potential liabilities in connection with fines or penalties that could be imposed on the Utility if the CPUC or any other law enforcement agency were to bring an enforcement action, including a criminal proceeding, and determined that the Utility failed to comply with applicable laws and regulations; |
• | the timing and outcome of any potential settlement with holders of wildfire-related claims; |
• | the ability of PG&E Corporation and the Utility to finance costs, expenses and other possible losses in respect of claims related to the 2018 Camp fire and the 2017 Northern California wildfires, through securitization mechanisms or otherwise, which potential financings are not addressed by AB 1054 as it only applies to future wildfires; |
• | the timing and outcome of claims arising from the 2015 Butte fire, including claims by the OES; the timing and outcome of any proceeding to recover related costs in excess of insurance through rates; and whether any regulatory enforcement proceedings in connection with the 2015 Butte fire will be opened and any additional fines or penalties imposed on the Utility; |
• | whether PG&E Corporation and the Utility are able to successfully challenge the application of the doctrine of inverse condemnation to the 2018 Camp fire, the 2017 Northern California wildfires and the 2015 Butte fire; |
• | the timing and outcome of future regulatory and legislative developments in connection with SB 901, including future wildfire reforms, inverse condemnation reform, and other wildfire mitigation measures or other reforms targeted at the Utility; |
• | the outcome of the Utility’s CWSP that the Utility has developed in coordination with first responders, civic and community leaders, and customers, to help reduce wildfire threats and improve safety as a result of climate-driven wildfires and extreme weather, including the Utility’s ability to comply with the targets and metrics set forth in the 2019 Wildfire Safety Plan; and the cost of the program, and the timing and outcome of any proceeding to recover such cost through rates; |
• | whether the Utility will be able to obtain full recovery of its significantly increased insurance premiums, and the timing of any such recovery; |
• | whether the Utility can obtain wildfire insurance at a reasonable cost in the future, or at all, and whether insurance coverage is adequate for future losses or claims; |
• | increased employee attrition as a result of the filing of the Chapter 11 Cases; |
• | the timing and outcomes of the 2019 GT&S rate case, 2020 GRC, FERC TO18, TO19, and TO20 rate cases, 2018 CEMA, future applications for WEMA, FHPMA and FRMMA, future cost of capital proceeding, and other ratemaking and regulatory proceedings; |
• | the outcome of the probation and the monitorship imposed by the federal court after the Utility’s conviction in the federal criminal trial in 2017, the timing and outcomes of the debarment proceeding, potential reliability penalties or sanctions from the North American Electric Reliability Corporation, the SED’s unresolved enforcement matters relating to the Utility’s compliance with natural gas-related laws and regulations, and other investigations that have been or may be commenced relating to the Utility’s compliance with natural gas- and electric- related laws and regulations, ex parte communications, and the ultimate amount of fines, penalties, and remedial costs that the Utility may incur in connection with the outcomes; |
• | the effects on PG&E Corporation’s and the Utility’s reputations caused by items such as the CPUC’s investigations of natural gas and electric incidents, the 2018 Camp fire and 2017 Northern California wildfires, locate and mark, improper communications between the CPUC and the Utility, and the Utility’s ongoing enhanced and accelerated inspection of its electric transmission and distribution assets; |
• | the implementation of the Safety Culture OII decision approved on November 29, 2018, and the outcome of the proceeding, and future legislative or regulatory actions that may be taken, such as requiring the Utility to separate its electric and natural gas businesses, or restructure into separate entities, or undertake some other corporate restructuring, or implement corporate governance changes; |
• | whether the Utility can control its costs within the authorized levels of spending, and timely recover its costs through rates; whether the Utility can continue implementing a streamlined organizational structure and achieve project savings, the extent to which the Utility incurs unrecoverable costs that are higher than the forecasts of such costs; and changes in cost forecasts or the scope and timing of planned work resulting from changes in customer demand for electricity and natural gas or other reasons; |
• | whether the Utility and its third-party vendors and contractors are able to protect the Utility’s operational networks and information technology systems from cyber- and physical attacks, or other internal or external hazards; |
• | the timing and outcome of the October 1, 2018 request for rehearing of FERC’s denial of the complaint filed by the CPUC and certain other parties that the Utility provide an open and transparent planning process for its capital transmission projects that do not go through the CAISO’s Transmission Planning Process to allow for greater participation and input from interested parties; and the timing and ultimate outcome of the Ninth Circuit Court of Appeals decision on January 8, 2018, to reverse FERC’s decision granting the Utility a 50 basis point ROE incentive adder for continued participation in the CAISO and remanding the case to FERC for further proceedings; |
• | the outcome of current and future self-reports, investigations, or other enforcement proceedings that could be commenced or notices of violation that could be issued relating to the Utility’s compliance with laws, rules, regulations, or orders applicable to its operations, including the construction, expansion, or replacement of its electric and gas facilities, electric grid reliability, inspection and maintenance practices, customer billing and privacy, physical and cybersecurity, environmental laws and regulations; and the outcome of existing and future SED notices of violations; |
• | the timing and outcome of any CPUC action in connection with the Utility’s SmartMeter™ Upgrade cost-benefit analysis; |
• | the impact of environmental remediation laws, regulations, and orders; the ultimate amount of costs incurred to discharge the Utility’s known and unknown remediation obligations; and the extent to which the Utility is able to recover environmental costs in rates or from other sources; |
• | the impact of SB 100, which was signed into law on September 10, 2018, that increases the percentage from 50% to 60% of California’s electricity portfolio that must come from renewables by 2030; and establishes state policy that 100% of all retail electricity sales must come from renewable portfolio standard-eligible or carbon-free resources by 2045; |
• | how the CPUC and the California Air Resources Board implement state environmental laws relating to GHG, renewable energy targets, energy efficiency standards, DERs, EVs, and similar matters, including whether the Utility is able to continue recovering associated compliance costs, such as the cost of emission allowances and offsets under cap-and-trade regulations; and whether the Utility is able to timely recover its associated investment costs; |
• | the impact of the California governor’s executive order issued on January 26, 2018, to implement a new target of five million zero-emission vehicles on the road in California by 2030; |
• | the ultimate amount of unrecoverable environmental costs the Utility incurs associated with the Utility’s natural gas compressor station site located near Hinkley, California and the Utility’s fossil fuel-fired generation sites; |
• | the impact of new legislation or NRC regulations, recommendations, policies, decisions, or orders relating to the nuclear industry, including operations, seismic design, security, safety, relicensing, the storage of spent nuclear fuel, decommissioning, cooling water intake, or other issues; the impact of potential actions, such as legislation, taken by state agencies that may affect the Utility’s ability to continue operating Diablo Canyon until its planned retirement; |
• | the impact of wildfires, droughts, floods, or other weather-related conditions or events, climate change, natural disasters, acts of terrorism, war, vandalism (including cyber-attacks), downed power lines, and other events, that can cause unplanned outages, reduce generating output, disrupt the Utility’s service to customers, or damage or disrupt the facilities, operations, or information technology and systems owned by the Utility, its customers, or third parties on which the Utility relies, and the reparation and other costs that the Utility may incur in connection with such conditions or events; the impact of the adequacy of the Utility’s emergency preparedness; whether the Utility incurs liability to third parties for property damage or personal injury caused by such events; whether the Utility is subject to civil, criminal, or regulatory penalties in connection with such events; and whether the Utility’s insurance coverage is available for these types of claims and sufficient to cover the Utility’s liability; |
• | whether the Utility’s climate change adaptation strategies are successful; |
• | the breakdown or failure of equipment that can cause damages, including fires, and unplanned outages; and whether the Utility will be subject to investigations, penalties, and other costs in connection with such events; |
• | the impact that reductions in Utility customer demand for electricity and natural gas, driven by customer departures to CCAs and DA providers, have on the Utility’s ability to make and recover its investments through rates and earn its authorized return on equity, and whether the Utility is successful in addressing the impact of growing distributed and renewable generation resources, changing customer demand for its natural gas and electric services; |
• | the supply and price of electricity, natural gas, and nuclear fuel; the extent to which the Utility can manage and respond to the volatility of energy commodity prices; the ability of the Utility and its counterparties to post or return collateral in connection with price risk management activities; and whether the Utility is able to recover timely its electric generation and energy commodity costs through rates, including its renewable energy procurement costs; |
• | the amount and timing of charges reflecting probable liabilities for third-party claims; the extent to which costs incurred in connection with third-party claims or litigation can be recovered through insurance, rates, or from other third parties; and whether the Utility can continue to obtain adequate insurance coverage for future losses or claims, especially following a major event that causes widespread third-party losses; |
• | the ability of PG&E Corporation and the Utility to access capital markets and other sources of debt and equity financing in a timely manner and on acceptable terms; |
• | the impact of the regulation of utilities and their holding companies, including how the CPUC interprets and enforces the financial and other conditions imposed on PG&E Corporation when it became the Utility’s holding company, and whether the uncertainty in connection with the 2018 Camp fire and the 2017 Northern California wildfires, the ultimate outcomes of the CPUC’s pending investigations, and other enforcement matters will impact the Utility’s ability to make distributions to PG&E Corporation; |
• | the outcome of federal or state tax audits and the impact of any changes in federal or state tax laws, policies, regulations, or their interpretation; |
• | changes in the regulatory and economic environment, including potential changes affecting renewable energy sources and associated tax credits, as a result of the current federal administration; and |
• | the impact of changes in GAAP, standards, rules, or policies, including those related to regulatory accounting, and the impact of changes in their interpretation or application. |
• | prior to June 21, 2019, “re-inspect all of its electrical grid and remove or trim all trees that could fall onto its power lines, poles or equipment in high-wind conditions, . . . identify and fix all conductors that might swing together and arc due to slack and/or other circumstances under high-wind conditions[,] identify and fix damaged or weakened poles, transformers, fuses and other connectors [and] identify and fix any other condition anywhere in its grid similar to any condition that contributed to any previous wildfires;” |
• | “document the foregoing inspections and the work done and . . . rate each segment’s safety under various wind conditions;” and |
• | at all times from and after June 21, 2019, “supply electricity only through those parts of its electrical grid it has determined to be safe under the wind conditions then prevailing.” |
• | “fully comply with all applicable laws concerning vegetation management and clearance requirements;” |
• | “fully comply with the specific targets and metrics set forth in its wildfire mitigation plan, including with respect to enhanced vegetation management;” |
• | submit to “regular, unannounced inspections” by the Monitor “of PG&E’s vegetation management efforts and equipment inspection, enhancement, and repair efforts” in connection with a requirement that the Monitor “assess PG&E’s wildfire mitigation and wildfire safety work;” |
• | “maintain traceable, verifiable, accurate, and complete records of its vegetation management efforts” and report to the Monitor monthly on its vegetation management status and progress; and |
• | “ensure that sufficient resources, financial and personnel, including contractors and employees, are allocated to achieve the foregoing” and to forgo issuing “any dividends until [the Utility] is in compliance with all applicable vegetation management requirements as set forth above.” |
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101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
PG&E CORPORATION |
/s/ JASON P. WELLS |
Jason P. Wells Executive Vice President and Chief Financial Officer (duly authorized officer and principal financial officer) |
PACIFIC GAS AND ELECTRIC COMPANY |
/s/ DAVID S. THOMASON |
David S. Thomason Vice President, Chief Financial Officer and Controller (duly authorized officer and principal financial officer) |
PG&E CORPORATION | ||
By: | ||
Name: | ||
Title: |
PACIFIC GAS AND ELECTRIC COMPANY | ||
By: | ||
Name: | ||
Title: |
INDEMNITEE: | |
Name: | |
Email: | |
Phone: |
(1) | For purposes of valuing Plan assets and Eligible Employees’ Accounts for periodic reports and statements, the date as of which such reports or statements are made; and |
(1) | For purposes of determining the amount of assets actually distributed to the Eligible Employee, his or her beneficiary, or an Alternate Payee (or available for withdrawal), a date that shall not be more than thirty business days prior to the date the check is issued to the Eligible Employee. |
(1) | Participants in SERP. Distribution of the balance credited to the Account of any Eligible Employee who was a participant in the SERP will be made according to the time and form provisions applicable to that Eligible Employee’s benefits under the SERP. Sections 6.01(2), 6.02, 6.03, 6.04 and 6.05 shall not apply to the Eligible Employees described above in this Section 6.01(1). |
(2) | Other Eligible Employees. Except to the extent the Eligible Employee has elected otherwise under this Section 6 at the time of deferral, distribution of the balance credited to an Eligible Employee’s Account shall be made in a single lump sum as soon as reasonably practicable (but in any event within 90 days) following the date that is seven (7) months following Separation from Service. |
(3) | DROs. In the case of an Alternate Payee (as defined in Section 7.01(1)), to the extent allowable under Code Section 409A, distribution shall be made as directed in a domestic relations order approved by the Plan Administrator, but only as to the portion of the Eligible Employee’s Account which the domestic relations order states is payable to the Alternate Payee. |
(1) | General Rule. The election described in Section 6.02 shall be made no later than December 31 of the calendar year immediately preceding the calendar year in which the Salary or STIP Payment commences to be earned that is the basis of the Company Contribution for which an election is being made, in accordance with such procedures established by the Company in its sole discretion. |
(2) | Initial Eligibility. Notwithstanding Section 6.03(1), an Eligible Employee that is newly eligible to participate in the Plan (or in any Aggregated Plan) must make an election regarding whether distributions shall be made in a lump-sum or installments, as provided in Section 6.02. Such election must be made within thirty (30) days after he or she first becomes an Eligible Employee (or within such other earlier deadline as may be established by the Company, in its sole discretion) but only with respect to Company Contributions attributable to Salary and STIP Payments that are paid with respect to services performed after such election is made; provided, however, that for this purpose only such thirty (30) day period shall begin to run on the date that the Eligible Employee first becomes eligible to participate in this Plan (or, if earlier, any Aggregated Plan). In the event an Eligible Employee fails to timely make such election, Section 6.01(2) shall apply. Notwithstanding anything to the contrary herein, no Company Contributions shall be earned or made to a newly Eligible Employee’s Account with respect to service performed prior to the earlier of (1) the day after the Eligible Employee returns an initial election pursuant to Section 6.03(2) or (2) 31 days after the individual first qualifies as an Eligible Employee. |
(3) | Performance-Based Compensation. Notwithstanding Section 6.03(1), with respect to STIP Payments that qualify as “Performance-Based Compensation,” the Company may, in its sole discretion, permit an election pertaining to Company Contributions attributable to such Performance-Based Compensation to be made no later than six (6) months before the end of the performance service period and in accordance with Code Section 409A. For this purpose, “Performance-Based Compensation” shall be compensation, the payment or amount of which is contingent on pre-established organizational or individual performance criteria, which satisfies the requirements of Code Section 409A |
(1) | No Payment Unless a DRO. No payment shall be made to any person designated in a domestic relations order (an “Alternate Payee”) until the Plan Administrator (or a court of competent jurisdiction reversing an initial adverse determination by the Plan Administrator) determines that the order is a DRO. Payment shall be made to each Alternate Payee as specified in the DRO. |
(2) | Time of Payment. Payment may be made to an Alternate Payee in the form of a lump sum, at the time specified in the DRO, but no earlier than the date the DRO determination is made by the Plan. |
(3) | Hold Procedures. Notwithstanding any contrary Plan provision, prior to the receipt of a domestic relations order, the Plan Administrator may, in its sole discretion, place a hold upon all or a portion of an Eligible Employee’s Account for a reasonable period of time (as determined by the Plan Administrator in accordance with Code Section 409A) if the Plan Administrator receives notice that (a) a domestic relations order is being sought by the Eligible Employee, his or her spouse, former spouse, child or other dependent, and (b) the Eligible Employee’s Account is a source of the payment under such domestic relations order. For purposes of this Section 7.01, a “hold” means that no withdrawals, distributions, or investment transfers may be made with respect to an Eligible Employee’s Account. If the Plan Administrator places a hold upon an Eligible Employee’s Account pursuant to this Section 7.01, it shall inform the Eligible Employee of such fact. |
(1) | Limitations. Any alteration, amendment, or termination shall take effect upon the date indicated in the document embodying such alteration, amendment, or termination, provided that no such alteration or amendment shall divest any portion of an Account that is then vested under the Plan. |
(2) | Appendices. Notwithstanding the above, the Plan Administrator may amend the Appendices in its discretion. |
(1) | any existing customer of the Company or its affiliates or subsidiaries; |
(2) | any prospective customer of the Company or its affiliates or subsidiaries about whom Mr. Soto acquired information as a result of any solicitation efforts by the Company or its affiliates or subsidiaries, or by the prospective customer, during Mr. Soto’s employment with the Company; |
(3) | any existing vendor of the Company or its affiliates or subsidiaries; |
(4) | any prospective vendor of the Company or its affiliates or subsidiaries, about whom Mr. Soto acquired information as a result of any solicitation efforts by the Company or its affiliates or subsidiaries, or by the prospective vendor, during Mr. Soto’s employment with the Company; |
(5) | any existing employee, agent or consultant of the Company or its affiliates or subsidiaries, to terminate or otherwise alter the person’s or entity’s employment, agency or consultant relationship with the Company or its affiliates or subsidiaries; or |
(6) | any existing employee, agent or consultant of the Company or its affiliates or subsidiaries, to work in any capacity for or on behalf of any person, Company or other business enterprise that is in competition with the Company or its affiliates or subsidiaries. |
Dated: | 8/5/2019 | PACIFIC GAS AND ELECTRIC COMPANY | ||
By: | /s/ DINYAR B. MISTRY | |||
Dated: | 7/8/2019 | JESUS SOTO | ||
/s/ JESUS SOTO |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 of PG&E Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 9, 2019 | /s/ WILLIAM D. JOHNSON |
William D. Johnson | |
Chief Executive Officer and President |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 of PG&E Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 9, 2019 | /s/ JASON P. WELLS |
Jason P. Wells | |
Executive Vice President and Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 of Pacific Gas and Electric Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 9, 2019 | /s/ MICHAEL A. LEWIS |
Michael A. Lewis | |
Senior Vice President, Electric Operations |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 of Pacific Gas and Electric Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 9, 2019 | /s/ MELVIN J. CHRISTOPHER |
Melvin J. Christopher | |
Vice President, Gas Operations |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 of Pacific Gas and Electric Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 9, 2019 | /s/ JAMES M. WELSCH |
James M. Welsch | |
Senior Vice President and Chief Nuclear Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 of Pacific Gas and Electric Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 9, 2019 | /s/ DAVID S. THOMASON |
David S. Thomason | |
Vice President, Chief Financial Officer and Controller |
(1) | the Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of PG&E Corporation. |
/s/ WILLIAM D. JOHNSON | |
William D. Johnson | |
Chief Executive Officer and President |
(1) | the Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of PG&E Corporation. |
/s/ JASON P. WELLS | |
Jason P. Wells | |
Executive Vice President and | |
Chief Financial Officer |
(1) | the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Pacific Gas and Electric Company. |
/s/ MICHAEL A. LEWIS | |
Michael A. Lewis | |
Senior Vice President, Electric Operations |
(1) | the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Pacific Gas and Electric Company. |
/s/ MELVIN J. CHRISTOPHER | |
Melvin J. Christopher | |
Vice President, Gas Operations |
(1) | the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Pacific Gas and Electric Company. |
/s/ JAMES M. WELSCH | |
James M. Welsch | |
Senior Vice President and Chief Nuclear Officer |
(1) | the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Pacific Gas and Electric Company. |
/s/ DAVID S. THOMASON | |
David S. Thomason | |
Vice President, Chief Financial Officer and Controller |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Net Loss | $ (2,549) | $ (980) | $ (2,413) | $ (535) |
Other Comprehensive Income | ||||
Pension and other post-retirement benefit plans obligations (net of taxes) | 0 | 0 | 0 | 0 |
Total other comprehensive income | 0 | 0 | 0 | 0 |
Comprehensive Loss | (2,549) | (980) | (2,413) | (535) |
Preferred stock dividend requirement of subsidiary | 4 | 4 | 7 | 7 |
Comprehensive Loss Attributable to Common Shareholders | (2,553) | (984) | (2,420) | (542) |
Pacific Gas & Electric Co | ||||
Net Loss | (2,550) | (976) | (2,417) | (524) |
Other Comprehensive Income | ||||
Pension and other post-retirement benefit plans obligations (net of taxes) | 0 | 1 | 0 | 1 |
Total other comprehensive income | 0 | 1 | 0 | 1 |
Comprehensive Loss | $ (2,550) | $ (975) | $ (2,417) | $ (523) |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Pension and other postretirement benefit plans obligations tax | $ 0 | $ 0 | $ 0 | $ 0 |
Pacific Gas & Electric Co | ||||
Pension and other postretirement benefit plans obligations tax | $ 0 | $ 0 | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Allowance for doubtful accounts | $ 39 | $ 56 |
Common stock, shares authorized (in shares) | 800,000,000 | 800,000,000 |
Common stock, shares outstanding (in shares) | 529,223,793 | 520,338,710 |
Pacific Gas & Electric Co | ||
Allowance for doubtful accounts | $ 39 | $ 56 |
Common stock, par value (in dollars per share) | $ 5 | $ 5 |
Common stock, shares authorized (in shares) | 800,000,000 | 800,000,000 |
Common stock, shares outstanding (in shares) | 264,374,809 | 264,374,809 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Statement of Cash Flows [Abstract] | |
Discount on net issuances of commercial paper | $ 1 |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Millions |
Total |
Common Stock |
Reinvested Earnings |
Accumulated Other Comprehensive Income (Loss) |
Total Shareholders’ Equity |
Non controlling Interest - Preferred Stock of Subsidiary |
Pacific Gas & Electric Co |
Pacific Gas & Electric Co
Preferred Stock
|
Pacific Gas & Electric Co
Common Stock
|
Pacific Gas & Electric Co
Additional Paid-in Capital
|
Pacific Gas & Electric Co
Reinvested Earnings
|
Pacific Gas & Electric Co
Accumulated Other Comprehensive Income (Loss)
|
Pacific Gas & Electric Co
Total Shareholders’ Equity
|
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Beginning balance (in shares) at Dec. 31, 2017 | 514,755,845 | ||||||||||||
Beginning balance at Dec. 31, 2017 | $ 19,472 | $ 12,632 | $ 6,596 | $ (8) | $ 19,220 | $ 252 | $ 258 | $ 1,322 | $ 8,505 | $ 9,656 | $ 6 | $ 19,747 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net loss | 452 | 452 | |||||||||||
Other comprehensive income (loss) | 2 | (2) | |||||||||||
Preferred stock dividend | (3) | (3) | |||||||||||
Ending balance at Mar. 31, 2018 | 258 | 1,322 | 8,505 | 10,107 | 4 | 20,196 | |||||||
Beginning balance (in shares) at Dec. 31, 2017 | 514,755,845 | ||||||||||||
Beginning balance at Dec. 31, 2017 | 19,472 | $ 12,632 | 6,596 | (8) | 19,220 | 252 | 258 | 1,322 | 8,505 | 9,656 | 6 | 19,747 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net loss | (535) | $ (524) | |||||||||||
Ending balance (in shares) at Jun. 30, 2018 | 517,102,983 | ||||||||||||
Ending balance at Jun. 30, 2018 | 19,061 | $ 12,763 | 6,059 | (13) | 18,809 | 252 | 258 | 1,322 | 8,505 | 9,127 | 5 | 19,217 | |
Beginning balance at Mar. 31, 2018 | 258 | 1,322 | 8,505 | 10,107 | 4 | 20,196 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net loss | (980) | (980) | (980) | $ (976) | (976) | (976) | |||||||
Other comprehensive income (loss) | 0 | 0 | 0 | 1 | 1 | ||||||||
Common stock issued, net (in shares) | 1,099,026 | ||||||||||||
Common stock issued, net | 47 | $ 47 | 47 | ||||||||||
Stock-based compensation amortization | 15 | $ 15 | 15 | ||||||||||
Preferred stock dividend requirement of subsidiary | (4) | (4) | (4) | ||||||||||
Preferred stock dividend | (4) | (4) | |||||||||||
Ending balance (in shares) at Jun. 30, 2018 | 517,102,983 | ||||||||||||
Ending balance at Jun. 30, 2018 | $ 19,061 | $ 12,763 | 6,059 | (13) | 18,809 | 252 | 258 | 1,322 | 8,505 | 9,127 | 5 | 19,217 | |
Beginning balance (in shares) at Dec. 31, 2018 | 520,338,710 | 520,338,710 | 264,374,809 | ||||||||||
Beginning balance at Dec. 31, 2018 | $ 12,903 | $ 12,910 | (250) | (9) | 12,651 | 252 | 258 | 1,322 | 8,550 | 2,826 | (1) | 12,955 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net loss | 136 | 136 | 136 | 133 | 133 | ||||||||
Common stock issued, net (in shares) | 8,871,568 | ||||||||||||
Common stock issued, net | 85 | $ 85 | 85 | ||||||||||
Stock-based compensation amortization | 5 | $ 5 | 5 | ||||||||||
Ending balance (in shares) at Mar. 31, 2019 | 529,210,278 | ||||||||||||
Ending balance at Mar. 31, 2019 | $ 13,129 | $ 13,000 | (114) | (9) | 12,877 | 252 | 258 | 1,322 | 8,550 | 2,959 | (1) | 13,088 | |
Beginning balance (in shares) at Dec. 31, 2018 | 520,338,710 | 520,338,710 | 264,374,809 | ||||||||||
Beginning balance at Dec. 31, 2018 | $ 12,903 | $ 12,910 | (250) | (9) | 12,651 | 252 | 258 | 1,322 | 8,550 | 2,826 | (1) | 12,955 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net loss | $ (2,413) | $ (2,417) | |||||||||||
Ending balance (in shares) at Jun. 30, 2019 | 529,223,793 | 529,223,793 | 264,374,809 | ||||||||||
Ending balance at Jun. 30, 2019 | $ 10,594 | $ 13,014 | (2,663) | (9) | 10,342 | 252 | 258 | 1,322 | 8,550 | 409 | (1) | 10,538 | |
Beginning balance (in shares) at Mar. 31, 2019 | 529,210,278 | ||||||||||||
Beginning balance at Mar. 31, 2019 | 13,129 | $ 13,000 | (114) | (9) | 12,877 | 252 | 258 | 1,322 | 8,550 | 2,959 | (1) | 13,088 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net loss | (2,549) | (2,549) | (2,549) | $ (2,550) | (2,550) | (2,550) | |||||||
Common stock issued, net (in shares) | 13,515 | ||||||||||||
Stock-based compensation amortization | $ 14 | $ 14 | 14 | ||||||||||
Ending balance (in shares) at Jun. 30, 2019 | 529,223,793 | 529,223,793 | 264,374,809 | ||||||||||
Ending balance at Jun. 30, 2019 | $ 10,594 | $ 13,014 | $ (2,663) | $ (9) | $ 10,342 | $ 252 | $ 258 | $ 1,322 | $ 8,550 | $ 409 | $ (1) | $ 10,538 |
ORGANIZATION AND BASIS OF PRESENTATION |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | ORGANIZATION AND BASIS OF PRESENTATION PG&E Corporation is a holding company whose primary operating subsidiary is Pacific Gas and Electric Company, a public utility serving northern and central California. The Utility generates revenues mainly through the sale and delivery of electricity and natural gas to customers. The Utility is primarily regulated by the CPUC and the FERC. In addition, the NRC oversees the licensing, construction, operation, and decommissioning of the Utility’s nuclear generation facilities. This quarterly report on Form 10-Q is a combined report of PG&E Corporation and the Utility. PG&E Corporation’s Condensed Consolidated Financial Statements include the accounts of PG&E Corporation, the Utility, and other wholly owned and controlled subsidiaries. The Utility’s Condensed Consolidated Financial Statements include the accounts of the Utility and its wholly owned and controlled subsidiaries. All intercompany transactions have been eliminated in consolidation. The Notes to the Condensed Consolidated Financial Statements apply to both PG&E Corporation and the Utility. PG&E Corporation and the Utility assess financial performance and allocate resources on a consolidated basis (i.e., the companies operate as one segment). The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with GAAP and in accordance with the interim period reporting requirements of Form 10-Q and reflect all adjustments (consisting only of normal recurring adjustments) that management believes are necessary for the fair presentation of PG&E Corporation’s and the Utility’s financial condition, results of operations, and cash flows for the periods presented. The information at December 31, 2018 in the Condensed Consolidated Balance Sheets included in this quarterly report was derived from the audited Consolidated Balance Sheets in Item 8 of the 2018 Form 10-K. This quarterly report should be read in conjunction with the 2018 Form 10-K. The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Some of the more significant estimates and assumptions relate to the Utility’s regulatory assets and liabilities, legal and regulatory contingencies, insurance recoveries, environmental remediation liabilities, AROs, pension and other post-retirement benefit plan obligations, and the valuation of pre-petition liabilities. Management believes that its estimates and assumptions reflected in the Condensed Consolidated Financial Statements are appropriate and reasonable. A change in management’s estimates or assumptions could result in an adjustment that would have a material impact on PG&E Corporation’s and the Utility’s financial condition and results of operations during the period in which such change occurred. Chapter 11 Filing and Going Concern The accompanying Condensed Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business. However, as a result of the challenges that are further described below, such realization of assets and satisfaction of liabilities are subject to uncertainty. PG&E Corporation and the Utility are facing extraordinary challenges relating to a series of catastrophic wildfires that occurred in Northern California in 2017 and 2018. See Note 10 below. Uncertainty regarding these matters raises substantial doubt about PG&E Corporation’s and the Utility’s abilities to continue as going concerns. PG&E Corporation and the Utility determined that commencing reorganization cases under Chapter 11 was necessary to restore PG&E Corporation’s and the Utility’s financial stability to fund ongoing operations and provide safe service to customers. However, there can be no assurance that such proceedings will restore PG&E Corporation’s and the Utility’s financial stability. On the Petition Date, PG&E Corporation and the Utility filed voluntary petitions for relief under Chapter 11 in the Bankruptcy Court. The Condensed Consolidated Financial Statements do not include any adjustments that might be necessary should PG&E Corporation and the Utility be unable to continue as going concerns. Pursuant to Chapter 11, PG&E Corporation and the Utility retain control of their assets and are authorized to operate their business as debtors-in-possession while being subject to the jurisdiction of the Bankruptcy Court. While operating as debtors-in-possession under Chapter 11, PG&E Corporation and the Utility may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business and subject to restrictions in PG&E Corporation’s and the Utility’s DIP Credit Agreement (see Note 5 below) and applicable orders of the Bankruptcy Court, for amounts other than those reflected in the accompanying Condensed Consolidated Financial Statements. Any such actions occurring during the Chapter 11 Cases authorized by the Bankruptcy Court could materially impact the amounts and classifications of assets and liabilities reported in PG&E Corporation’s and the Utility’s Condensed Consolidated Financial Statements. (For more information regarding the Chapter 11 Cases, see Note 2 below.)
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BANKRUPTCY FILING |
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BANKRUPTCY FILING | BANKRUPTCY FILING Chapter 11 Proceedings On January 29, 2019, PG&E Corporation and the Utility filed the Chapter 11 Cases with the Bankruptcy Court. PG&E Corporation and the Utility continue to operate their business as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Under the Bankruptcy Code, third-party actions to collect pre-petition indebtedness owed by PG&E Corporation or the Utility, as well as most litigation pending against PG&E Corporation and the Utility (including the third-party matters described in Note 10 below) as of the Petition Date, are subject to an automatic stay. Absent an order of the Bankruptcy Court providing otherwise, substantially all pre-petition liabilities will be administered under a Chapter 11 plan of reorganization to be voted upon by creditors and other stakeholders, and approved by the Bankruptcy Court. However, under the Bankruptcy Code, regulatory or criminal proceedings are generally not subject to an automatic stay, and PG&E Corporation and the Utility expect these proceedings to continue during the pendency of the Chapter 11 Cases. Under the priority scheme established by the Bankruptcy Code, certain post-petition and secured or “priority” pre-petition liabilities need to be satisfied before general unsecured creditors and holders of PG&E Corporation's and the Utility’s equity are entitled to receive any distribution. No assurance can be given as to what values, if any, will be ascribed in the Chapter 11 Cases to the claims and interests of each of these constituencies. Additionally, no assurance can be given as to whether, when or in what form unsecured creditors and holders of PG&E Corporation’s or the Utility’s equity may receive a distribution on such claims or interests. Under the Bankruptcy Code, PG&E Corporation and the Utility may assume, assume and assign, or reject certain executory contracts and unexpired leases, including, without limitation, leases of real property and equipment, subject to the approval of the Bankruptcy Court and to certain other conditions. Any description of an executory contract or unexpired lease in this quarterly report on Form 10-Q, or in the 2018 Form 10-K, including, where applicable, the express termination rights thereunder or a quantification of their obligations, must be read in conjunction with, and is qualified by, any overriding rejection rights PG&E Corporation and the Utility have under the Bankruptcy Code. Significant Bankruptcy Court Actions On January 31, 2019, the Bankruptcy Court approved, on an interim basis, certain motions (the “First Day Motions”) authorizing, but not directing, PG&E Corporation and the Utility to, among other things, (a) secure $5.5 billion of debtor-in-possession financing; (b) continue to use PG&E Corporation’s and the Utility’s cash management system; and (c) pay certain pre-petition claims relating to (i) certain safety, reliability, outage, and nuclear facility suppliers; (ii) shippers, warehousemen, and other lien claimants; (iii) taxes; (iv) employee wages, salaries, and other compensation and benefits; and (v) customer programs, including public purpose programs. The First Day Motions were subsequently approved by the Bankruptcy Court on a final basis at hearings on February 27, 2019, March 12, 2019, March 13, 2019, and March 27, 2019. On May 23, 2019, the Bankruptcy Court entered an order (the “Exclusivity Order”) pursuant to section 1121(d) of the Bankruptcy Code, extending PG&E Corporation’s and the Utility’s exclusive periods in which to file a Chapter 11 plan of reorganization (the “Exclusive Filing Period”) and solicit acceptances thereof (the “Exclusive Solicitation Period”). Pursuant to the Exclusivity Order, PG&E Corporation’s and the Utility’s Exclusive Filing Period is extended to, and including, September 26, 2019, and PG&E Corporation’s and the Utility’s Exclusive Solicitation Period is extended to, and including, November 26, 2019. On June 25, 2019, the Ad Hoc Committee of Senior Unsecured Noteholders of the Utility (the “Ad Hoc Noteholder Committee”) submitted a motion, pursuant to section 1121(d)(1) of the Bankruptcy Code, for the entry of an order terminating the Exclusive Filing Period and the Exclusive Solicitation Period. The Ad Hoc Noteholder Committee annexed to its motion a “Term Sheet for Plan of Reorganization.” On July 17, 2019, the Ad Hoc Noteholder Committee filed with the Bankruptcy Court an amended version of the term sheet, along with a commitment letter with respect to certain financings described therein. Certain third parties have filed joinders and statements in support with the Bankruptcy Court with respect to the Ad Hoc Noteholder Committee’s motion, but such parties have not taken any position on the plan construct described by the term sheet. These third parties include TURN, two collective bargaining units representing the Utility’s employees, and the UCC. On July 18, 2019, PG&E Corporation and the Utility filed an objection to the Ad Hoc Noteholder Committee’s motion with the Bankruptcy Court, requesting that the motion be denied. Also on July 18, 2019, the Ad Hoc Group of Subrogation Claim Holders (the “Ad Hoc Subrogation Group”), the TCC, and certain owners of common stock of PG&E Corporation (the “Shareholder Group”) filed objections to the Ad Hoc Noteholder Committee’s motion with the Bankruptcy Court. At a hearing on July 24, 2019, the Bankruptcy Court granted an oral motion of the CPUC and the Governor’s office to adjourn the hearing on the Ad Hoc Noteholder Committee’s motion from July 24, 2019 to August 13, 2019, to allow PG&E Corporation and the Utility, the CPUC, the Governor’s office, and other parties in interest time to engage in discussions regarding the formulation of a potential protocol for the efficient submission and consideration of Chapter 11 plan proposals. The parties are due to provide a status update on these discussions to the Bankruptcy Court on August 9, 2019. On August 7, 2019, the Ad Hoc Noteholder Committee submitted a statement with the Bankruptcy Court, criticizing the protocol proposed by the CPUC and including as an exhibit its own proposed “Alternative Protocol” to govern a competitive plan process. In addition, the Ad Hoc Noteholder Committee annexed to its statement a second amended version of the term sheet and a revised version of the commitment letter. On July 23, 2019, the Ad Hoc Subrogation Group submitted its own motion, pursuant to section 1121(d)(1) of the Bankruptcy Code, to terminate the Exclusive Filing Period and the Exclusive Solicitation Period, which included as an exhibit a “Restructuring Term Sheet.” The hearing before the Bankruptcy Court on the Ad Hoc Subrogation Group’s motion is scheduled for August 13, 2019. On August 6, 2019, PG&E Corporation and the Utility filed an objection to the Ad Hoc Subrogation Group’s motion with the Bankruptcy Court, requesting that the motion be denied. Also on August 6, 2019, the UCC filed a statement in opposition with respect to the Ad Hoc Subrogation Group’s motion, and the Shareholder Group filed an objection to the Ad Hoc Subrogation Group’s motion, both requesting that the motion be denied. On July 1, 2019, the Bankruptcy Court entered an order approving a deadline of October 21, 2019, at 5:00 p.m. (Pacific Time) (the “Bar Date”) for filing claims against PG&E Corporation and the Utility relating to the period prior to the Petition Date. The Bar Date is subject to certain exceptions, including for claims arising under section 503(b)(9) of the Bankruptcy Code, the bar date for which occurred on April 22, 2019. The Bankruptcy Court also approved PG&E Corporation’s and the Utility’s plan to provide notice of the Bar Date to parties-in-interest, including potential wildfire-related claimants and other potential creditors. Debtor-In-Possession Financing See Note 5 for further discussion of the DIP Facilities, which provide up to $5.5 billion in financing. Financial Reporting in Reorganization Effective on the Petition Date, PG&E Corporation and the Utility began to apply accounting standards applicable to reorganizations, which are applicable to companies under Chapter 11 bankruptcy protection. These accounting standards require the financial statements for periods subsequent to the Petition Date to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Expenses, realized gains and losses, and provisions for losses that are directly associated with reorganization proceedings must be reported separately as reorganization items, net in the Condensed Consolidated Statements of Income. In addition, the balance sheet must distinguish pre-petition LSTC of PG&E Corporation and the Utility from pre-petition liabilities that are not subject to compromise, post-petition liabilities, and liabilities of the subsidiaries of PG&E Corporation that are not debtors in the Chapter 11 Cases in the Condensed Consolidated Balance Sheets. LSTC are pre-petition obligations that are not fully secured and have at least a possibility of not being repaid at the full claim amount. Where there is uncertainty about whether a secured claim will be paid or impaired pursuant to the Chapter 11 Cases, PG&E Corporation and the Utility have classified the entire amount of the claim as LSTC. Furthermore, the realization of assets and the satisfaction of liabilities are subject to uncertainty. While operating as debtors-in-possession, actions to enforce or otherwise effect the payment of certain claims against PG&E Corporation and the Utility in existence before the Petition Date are stayed while PG&E Corporation and the Utility continue business operations as debtors-in-possession. These claims are reflected as LSTC in the Condensed Consolidated Balance Sheets at June 30, 2019. Additional claims (which could be LSTC) may arise after the Petition Date resulting from the rejection of executory contracts, including leases, and from the determination by the Bankruptcy Court (or agreement by parties-in-interest) of allowed claims for contingencies and other disputed amounts. PG&E Corporation’s Condensed Consolidated Financial Statements are presented on a consolidated basis and include the accounts of PG&E Corporation and the Utility and other subsidiaries of PG&E Corporation and the Utility that individually and in aggregate are immaterial. Such other subsidiaries did not file for bankruptcy. The Utility’s Condensed Consolidated Financial Statements are presented on a consolidated basis and include the accounts of the Utility and other subsidiaries of the Utility that individually and in aggregate are immaterial. Such other subsidiaries did not file for bankruptcy. Liabilities Subject to Compromise As a result of the commencement of the Chapter 11 Cases, the payment of pre-petition liabilities is subject to compromise or other treatment pursuant to a plan of reorganization. Generally, actions to enforce or otherwise effect payment of pre-petition liabilities are stayed. Although payment of pre-petition claims generally is not permitted, the Bankruptcy Court granted PG&E Corporation and the Utility authority to pay certain pre-petition claims in designated categories and subject to certain terms and conditions. This relief generally was designed to preserve the value of PG&E Corporation’s and the Utility’s business and assets. As described above, among other things, the Bankruptcy Court authorized, but did not require, PG&E Corporation and the Utility to pay certain pre-petition claims relating to employee wages and benefits, taxes, and certain vendors. The determination of how liabilities will ultimately be settled or treated cannot be made until the Bankruptcy Court confirms a Chapter 11 plan of reorganization and such plan becomes effective. Accordingly, the ultimate amount of such liabilities is not determinable at this time. GAAP requires pre-petition liabilities that are subject to compromise to be reported at the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for different amounts. The amounts currently classified as LSTC are preliminary and may be subject to future adjustments depending on Bankruptcy Court actions, further developments with respect to disputed claims, determinations of the secured status of certain claims, the values of any collateral securing such claims, rejection of executory contracts, continued reconciliation or other events. The following table presents LSTC as reported in the Condensed Consolidated Balance Sheets at June 30, 2019:
(1) PG&E Corporation amounts reflected under the column “PG&E Corporation” exclude the accounts of the Utility. (2) At June 30, 2019, PG&E Corporation and the Utility had $650 million and $21,526 million in aggregate principal amount of pre-petition indebtedness, respectively. Utility pre-petition financing debt also includes $285 million of accrued contractual interest to the Petition Date. See Note 5 for details of pre-petition debt reported as LSTC. (3) See Note 10 for information regarding pre-petition wildfire-related claims reported as LSTC. As described in Note 10 under the heading “Plan Support Agreements with Public Entities,” on June 18, 2019, PG&E Corporation and the Utility entered into agreements with certain local public entities to potentially resolve their wildfire-related claims through the Chapter 11 process. Potential Claims PG&E Corporation and the Utility have filed with the Bankruptcy Court schedules and statements of financial affairs setting forth, among other things, the assets and liabilities of PG&E Corporation and the Utility, subject to the assumptions filed in connection therewith. On July 1, 2019, the Bankruptcy Court entered an order approving the Bar Date of October 21, 2019, at 5:00 p.m. (Pacific Time) for filing claims against PG&E Corporation and the Utility relating to the period prior to the Petition Date. The Bar Date is subject to certain exceptions, including for claims arising under section 503(b)(9) of the Bankruptcy Code, the bar date for which occurred on April 22, 2019. Numerous claims have been filed with the Bankruptcy Court against PG&E Corporation and the Utility relating to the period prior to the Petition Date and it is expected that new and amended claims will continue to be filed until the Bar Date, including claims amended to assign value to claims originally filed with no designated value. Through the claims resolution process, differences in amounts scheduled by PG&E Corporation and the Utility and claims filed by creditors will be investigated and resolved, including through the filing of objections with the Bankruptcy Court where appropriate. In light of the substantial number and amount of claims filed, the claims resolution process may take considerable time to complete and will likely continue after PG&E Corporation and the Utility emerge from bankruptcy. The ultimate number and amount of allowed claims is not determinable at this time. Reorganization Items, Net Reorganization items, net represent amounts incurred after the Petition Date as a direct result of the Chapter 11 Cases and are comprised of professional fees and financing costs, net of interest income. Reorganization items also include adjustments to reflect the carrying value of LSTC at their estimated allowed claim amounts, as such adjustments are approved by the Bankruptcy Court. Cash paid for reorganization items, net was $15 million and $78 million for PG&E Corporation and the Utility, respectively, during the six months ended June 30, 2019. Reorganization items, net for the three months ended June 30, 2019 and from the Petition Date through June 30, 2019 include the following:
(1) PG&E Corporation amounts reflected under the column “PG&E Corporation” exclude the accounts of the Utility. (2) PG&E Corporation and the Utility incurred $416,667 and $250,000, respectively, in fees to the U.S. Trustee in the three months ended June 30, 2019.
(1) PG&E Corporation amounts reflected under the column “PG&E Corporation” exclude the accounts of the Utility. (2) PG&E Corporation and the Utility incurred $416,667 and $250,000, respectively, in fees to the U.S. Trustee through June 30, 2019. Contractual Interest on Debt Subject to Compromise Effective as of the Petition Date, PG&E Corporation and the Utility ceased recording interest expense on outstanding pre-petition debt. Contractual interest expense represents amounts due under the contractual terms of outstanding pre-petition debt. From the Petition Date through June 30, 2019, contractual interest expense of $405 million related to LSTC has not been recorded in the financial statements. The portion of authorized revenues from the Petition Date through June 30, 2019 related to interest expense on pre-petition debt has been deferred as a non-current regulatory liability. The Bankruptcy Court’s Decision on its Authority over PG&E Corporation’s and the Utility’s Rejection of Power Purchase Agreements On June 7, 2019, the Bankruptcy Court granted PG&E Corporation’s and the Utility’s motion for declaratory judgment in an adversary proceeding entitled Pacific Gas & Electric Company v. FERC. In its amended declaratory judgment, the Bankruptcy Court found that FERC had no “concurrent jurisdiction, or any jurisdiction, over the determination of whether any rejections of power purchase contracts by either Debtor should be authorized” pursuant to section 365 of the Bankruptcy Code. The Bankruptcy Court also found that the “Debtors do not need approval from the Federal Energy Regulatory Commission to reject any of their power purchase contracts” and that “[a]ny determinations of the Federal Energy Regulatory Commission” that were contrary to these findings “are void, of no force and effect and not binding on this court or either Debtor.” The Bankruptcy Court further stated that such determinations include, but are not limited to, those previously made in certain FERC proceedings initiated before the Chapter 11 Cases were filed in connection with power purchase contracts with the Utility. On June 12, 2019, the Bankruptcy Court certified its amended declaratory judgment for direct appeal to the United States Court of Appeals for the Ninth Circuit. On July 15, 2019, FERC and certain counterparties to the Utility’s power purchase agreements filed requests for the Ninth Circuit to permit such direct appeal. In addition, on June 26, 2019, the Utility filed a petition for review of those earlier FERC orders also in the Ninth Circuit. Resolution of Remaining 2001 Chapter 11 Disputed Claims Various electricity suppliers filed claims in the Utility’s 2001 prior proceeding filed under Chapter 11 of the U.S. Bankruptcy Code seeking payment for energy supplied to the Utility’s customers between May 2000 and June 2001. While the FERC and judicial proceedings are pending, the Utility pursued settlements with electricity suppliers and entered into a number of settlement agreements with various electricity suppliers to resolve some of these disputed claims and to resolve the Utility’s refund claims against these electricity suppliers. Under these settlement agreements, amounts payable by the parties, in some instances, would be subject to adjustment based on the outcome of the various refund offset and interest issues being considered by the FERC. Generally, any net refunds, claim offsets, or other credits that the Utility receives from electricity suppliers either through settlement or through the conclusion of the various FERC and judicial proceedings are refunded to customers through rates in future periods. The Utility’s obligations with respect to such claims (all of which arose prior to the initiation of the Utility’s pending Chapter 11 Case on January 29, 2019), including pursuant to any prior settlements relating thereto, are expected to be determined through the proceedings of the Chapter 11 Cases.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES For a summary of the significant accounting policies used by PG&E Corporation and the Utility, see Note 2 of the Condensed Consolidated Financial Statements above for bankruptcy-related policies and Note 2 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K. Variable Interest Entities A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, or whose equity investors lack any characteristics of a controlling financial interest. An enterprise that has a controlling financial interest in a VIE is a primary beneficiary and is required to consolidate the VIE. Some of the counterparties to the Utility’s power purchase agreements are considered VIEs. Each of these VIEs was designed to own a power plant that would generate electricity for sale to the Utility. To determine whether the Utility has a controlling interest or was the primary beneficiary of any of these VIEs at June 30, 2019, the Utility assessed whether it absorbs any of the VIE’s expected losses or receives any portion of the VIE’s expected residual returns under the terms of the power purchase agreement, analyzed the variability in the VIE’s gross margin, and considered whether it had any decision-making rights associated with the activities that are most significant to the VIE’s performance, such as dispatch rights and operating and maintenance activities. The Utility’s financial obligation is limited to the amount the Utility pays for delivered electricity and capacity. The Utility did not have any decision-making rights associated with any of the activities that are most significant to the economic performance of any of these VIEs. Since the Utility was not the primary beneficiary of any of these VIEs at June 30, 2019, it did not consolidate any of them. Pension and Other Post-Retirement Benefits PG&E Corporation and the Utility sponsor a non-contributory defined benefit pension plan and cash balance plan. Both plans are included in “Pension Benefits” below. Post-retirement medical and life insurance plans are included in “Other Benefits” below. The net periodic benefit costs reflected in PG&E Corporation’s Condensed Consolidated Financial Statements for the three and six months ended June 30, 2019 and 2018 were as follows:
(1) A portion of service costs are capitalized pursuant to ASU 2017-07. (2) The Utility recorded these amounts to a regulatory account since they are probable of recovery from, or refund to, customers in future rates.
(1) A portion of service costs are capitalized pursuant to ASU 2017-07. (2) The Utility recorded these amounts to a regulatory account since they are probable of recovery from, or refund to, customers in future rates. Non-service costs are reflected in Other income, net on the Condensed Consolidated Statements of Income. Service costs are reflected in Operating and maintenance on the Condensed Consolidated Statements of Income. There was no material difference between PG&E Corporation and the Utility for the information disclosed above. On February 27, 2019, PG&E Corporation and the Utility received final approval from the Bankruptcy Court to maintain existing pension and other benefit plans, other than the non-qualified pension plan, during the pendency of the Chapter 11 Cases. Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss) The changes, net of income tax, in PG&E Corporation’s accumulated other comprehensive income (loss) are summarized below:
(1) These components are included in the computation of net periodic pension and other post-retirement benefit costs. (See the “Pension and Other Post-Retirement Benefits” table above for additional details.)
(1) These components are included in the computation of net periodic pension and other post-retirement benefit costs. (See the “Pension and Other Post-Retirement Benefits” table above for additional details.)
(1) These components are included in the computation of net periodic pension and other post-retirement benefit costs. (See the “Pension and Other Post-Retirement Benefits” table above for additional details.)
(1) These components are included in the computation of net periodic pension and other post-retirement benefit costs. (See the “Pension and Other Post-Retirement Benefits” table above for additional details.) There was no material difference between PG&E Corporation and the Utility for the information disclosed above. Revenue Recognition Revenue from Contracts with Customers The Utility recognizes revenues when electricity and natural gas services are delivered. The Utility records unbilled revenues for the estimated amount of energy delivered to customers but not yet billed at the end of the period. Unbilled revenues are included in accounts receivable on the Condensed Consolidated Balance Sheets. Rates charged to customers are based on CPUC and FERC authorized revenue requirements. Revenues can vary significantly from period to period because of seasonality, weather, and customer usage patterns. Regulatory Balancing Account Revenue The CPUC authorizes most of the Utility’s revenues in the Utility’s GRC and its GT&S rate case, which generally occur every three or four years. The Utility’s ability to recover revenue requirements authorized by the CPUC in these rate cases is independent, or “decoupled,” from the volume of the Utility’s sales of electricity and natural gas services. The Utility recognizes revenues that have been authorized for rate recovery, are objectively determinable and probable of recovery, and are expected to be collected within 24 months. Generally, electric and natural gas operating revenue is recognized ratably over the year. The Utility records a balancing account asset or liability for differences between customer billings and authorized revenue requirements that are probable of recovery or refund. The CPUC also has authorized the Utility to collect additional revenue requirements to recover costs that the Utility has been authorized to pass on to customers, including costs to purchase electricity and natural gas, and to fund public purpose, demand response, and customer energy efficiency programs. In general, the revenue recognition criteria for pass-through costs billed to customers are met at the time the costs are incurred. The Utility records a regulatory balancing account asset or liability for differences between incurred costs and customer billings or authorized revenue meant to recover those costs, to the extent that these differences are probable of recovery or refund. As a result, these differences have no impact on net income. The following table presents the Utility’s revenues disaggregated by type of customer:
(1) This activity is primarily related to the change in unbilled revenue, partially offset by other miscellaneous revenue items. (2) These amounts represent revenues authorized to be billed or refunded to customers. Recently Adopted Accounting Standards Recognition of Lease Assets and Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which amends the guidance relating to the definition of a lease, the recognition of lease assets and lease liabilities on the balance sheet, and the disclosure of key information about leasing arrangements. Under the new standard, all lessees must recognize a ROU asset, reflecting the right to use the underlying asset for the lease term, and a lease liability, reflecting the obligation to make lease payments, on the balance sheet. Operating leases were previously not recognized on the balance sheet. PG&E Corporation and the Utility adopted the ASU on January 1, 2019. PG&E Corporation and the Utility elected certain practical expedients and will carry forward historical conclusions related to (1) contracts that contain leases, (2) existing lease and easement classification, and (3) initial direct costs. After adoption of the new standard, the Corporation and Utility elected to not separate lease and non-lease components. Additionally, PG&E Corporation and the Utility have elected not to restate comparative periods upon adoption. PG&E Corporation and the Utility determine if an arrangement is a lease at inception. As most of the leases do not provide implicit discount rates, the Utility uses an estimate of its incremental secured borrowing rates based on observed market data and other information available at the lease commencement date. The ROU assets and lease liabilities include only fixed lease payments. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease terms will only include options to extend or terminate the lease when it is reasonably certain that the Utility will exercise such options. The Utility recognizes lease expense in conformity with ratemaking. Operating leases are included in operating lease ROU assets and current and noncurrent operating lease liabilities on the Condensed Consolidated Balance Sheets. Finance leases are included in property, plant, and equipment, other current liabilities, and other noncurrent liabilities on the Condensed Consolidated Balance Sheets. Financing leases were immaterial for the six months ended June 30, 2019. Cash payments arising from operating leases were $848 million for the six months ended June 30, 2019 and are presented within operating activities on the Condensed Consolidated Statement of Cash Flows. Cash payments for the principal portion of the financing lease liability will continue to be presented within financing activities. Variable lease payments not included in the financing lease liability, if any, are presented within operating activities. On January 1, 2019, PG&E Corporation and the Utility recorded ROU assets and lease liabilities of $2.8 billion, representing the net present value of fixed lease payments and excluding any variable lease payments. This amount is presented within the supplemental disclosures of noncash activities for the six months ended, June 30, 2019. The majority of the Utility’s ROU assets and lease liabilities relate to various power purchase agreements. These power purchase agreements primarily consist of generation plants leased to meet customer demand plus applicable reserve margins, for terms between 5 years and 20 years. PG&E Corporation and the Utility have also recorded ROU assets and lease liabilities related to property and land leases. At June 30, 2019, the Utility’s operating leases had a weighted average remaining lease term of 6.1 years and a weighted average discount rate of 6.1%. The following table shows the lease expense recognized for the fixed and variable component of the Utility’s lease obligations:
The following table shows the Utility’s future expected operating lease payments:
(1) Represents the remaining expected operating lease payments from July 1, 2019 through December 31, 2019. The following table shows the Utility’s future expected obligations for power purchase and other lease commitments:
Accounting Standards Issued But Not Yet Adopted Fair Value Measurement In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurements, which amends the existing guidance relating to the disclosure requirements for fair value measurements. The ASU will be effective for PG&E Corporation and the Utility on January 1, 2020 with early adoption permitted. PG&E Corporation and the Utility are currently evaluating the impact the guidance will have on their Condensed Consolidated Financial Statements and related disclosures. Intangibles-Goodwill and Other In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This ASU will be effective for PG&E Corporation and the Utility on January 1, 2020 with early adoption permitted. PG&E Corporation and the Utility are currently evaluating the impact of the guidance on their Condensed Consolidated Financial Statements and related disclosures. Financial Instruments—Credit Losses In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which provides a model, known as the current expected credit loss model, to estimate the expected lifetime credit loss on financial assets, including trade and other receivables, rather than incurred losses over the remaining life of most financial assets measured at amortized cost. The guidance also requires use of an allowance to record estimated credit losses on available-for-sale debt securities. This ASU will be effective for PG&E Corporation and the Utility on January 1, 2020. PG&E Corporation and the Utility are currently evaluating the impact of the guidance on their Condensed Consolidated Financial Statements and related disclosures.
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REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS |
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Regulated Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS | REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS Regulatory Assets and Liabilities Long-Term Regulatory Assets Long-term regulatory assets are comprised of the following:
(1) Payments into the pension and other benefits plans are based on annual contribution requirements. As these annual requirements continue indefinitely into the future, the Utility expects to continuously recover pension benefits. (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 2001 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) Includes the accelerated amortization of premiums and debt issuance costs on pre-petition debt. (4) Includes costs of responding to catastrophic events that have been declared a disaster or state of emergency by competent federal or state authorities. Recovery of CEMA costs are subject to CPUC review and approval. (5) Includes specific incremental wildfire liability costs the CPUC approved for tracking in June 2018. Recovery of WEMA costs are subject to CPUC review and approval. (6) Includes costs associated with the implementation of regulations and requirements adopted to protect the public from potential fire hazards associated with overhead power line facilities and nearby aerial communication facilities that have not been previously authorized in another proceeding. Recovery of FHPMA costs are subject to CPUC review and approval. (7) Includes costs associated with the 2019 Wildfire Safety Plan. Recovery of FHPMA costs are subject to CPUC review and approval. Current Regulatory Liabilities Current regulatory liabilities are primarily comprised of the current portion of the tax reform adjustment recorded as a result of the Tax Act. Long-Term Regulatory Liabilities Long-term regulatory liabilities are comprised of the following:
(1) Represents the cumulative differences between the recorded costs to remove assets and amounts collected in rates for expected costs to remove assets. (2) Represents the net of amounts owed to customers for deferred taxes collected at higher rates before the Tax Act and amounts owed to the Utility for reversal of deferred taxes subject to flow-through treatment. (3) Represents the cumulative differences between ARO expenses and amounts collected in rates. Decommissioning costs related to the Utility’s nuclear facilities are recovered through rates and are placed in nuclear decommissioning trusts. This regulatory liability also represents the deferral of realized and unrealized gains and losses on these nuclear decommissioning trust investments. (See Note 9 below.) (4) 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. (5) Represents cumulative differences between incurred costs and amounts collected in rates for Post-Retirement Medical, Post-Retirement Life and Long Term Disability Plans. For more information, see Note 3 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K. Regulatory Balancing Accounts Current regulatory balancing accounts receivable and payable are comprised of the following:
For more information, see Note 3 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K.
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DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT Debtor-In-Possession Facilities In connection with the Chapter 11 Cases, PG&E Corporation and the Utility entered into the DIP Credit Agreement, among the Utility, as borrower, PG&E Corporation, as guarantor, JPMorgan Chase Bank, N.A., as administrative agent, Citibank, N.A., as collateral agent, and the lenders and issuing banks party thereto (together with such other financial institutions from time to time party thereto, the “DIP Lenders”). The DIP Credit Agreement provides for $5.5 billion in senior secured superpriority debtor in possession credit facilities in the form of (i) a revolving credit facility in an aggregate amount of $3.5 billion (the “DIP Revolving Facility”), including a $1.5 billion letter of credit subfacility, (ii) a term loan facility in an aggregate principal amount of $1.5 billion (the “DIP Initial Term Loan Facility”) and (iii) a delayed draw term loan facility in an aggregate principal amount of $500 million (the “DIP Delayed Draw Term Loan Facility,” together with the DIP Revolving Facility and the DIP Initial Term Loan Facility, the “DIP Facilities”), subject to the terms and conditions set forth therein. The DIP Credit Agreement also provides for up to $4.0 billion of incremental facilities in the form of (i) one or more additional tranches of term loans or (ii) one or more increases in the aggregate amount of revolving commitments under the DIP Revolving Facility (together, the “Incremental Facilities”), subject to the terms and conditions set forth therein. The Incremental Facilities are uncommitted and would require approval from the Bankruptcy Court. On the Petition Date, PG&E Corporation and the Utility filed a motion seeking, among other things, interim and final approval of the DIP Facilities, which motion was granted on an interim basis by the Bankruptcy Court following a hearing on January 31, 2019. As a result of the Bankruptcy Court’s interim approval of the DIP Facilities and the satisfaction of the other conditions thereof, the DIP Credit Agreement became effective on February 1, 2019 and a portion of the DIP Revolving Facility in the amount of $1.5 billion (including $750 million of the letter of credit subfacility) was made available to the Utility. On March 27, 2019, the Bankruptcy Court approved the DIP Facilities on a final basis, authorizing the Utility to borrow up to the remainder of the DIP Revolving Facility (including the remainder of the $1.5 billion letter of credit subfacility), the DIP Initial Term Loan Facility and the DIP Delayed Draw Term Loan Facility, in each case subject to the terms and conditions of the DIP Credit Agreement. Borrowings under the DIP Facilities are senior secured obligations of the Utility, secured by substantially all of the Utility’s assets and entitled to superpriority administrative expense claim status in the Utility’s Chapter 11 Case. The Utility’s obligations under the DIP Facilities are guaranteed by PG&E Corporation, and such guarantee is a senior secured obligation of PG&E Corporation, secured by substantially all of PG&E Corporation’s assets and entitled to superpriority administrative expense claim status in PG&E Corporation’s Chapter 11 Case. On February 1, 2019, the Utility borrowed $350 million under the DIP Revolving Facility. On April 3, 2019, following the Bankruptcy Court’s final approval of the DIP Facilities, the Utility borrowed $1.5 billion under the DIP Initial Term Loan Facility and repaid the $350 million outstanding under the DIP Revolving Facility. The commencement of the Chapter 11 Cases constituted an event of default or termination event with respect to, and caused an automatic and immediate acceleration of the debt outstanding under or in respect of, certain instruments and agreements relating to direct financial obligations of PG&E Corporation and the Utility (the “Accelerated Direct Financial Obligations”). However, any efforts to enforce such payment obligations are automatically stayed as of the Petition Date, and are subject to the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The material Accelerated Direct Financial Obligations include the Utility’s outstanding senior notes, agreements in respect of certain series of pollution control bonds, and PG&E Corporation’s term loan facility, as well as short-term borrowings under PG&E Corporation’s and the Utility’s revolving credit facilities and the Utility’s term loan facility. For more information, see Note 15 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K. Debtor-in-Possession Financing The following table summarizes the Utility’s outstanding borrowings and availability under the DIP Facilities at June 30, 2019:
(1) May be extended to December 2021, subject to satisfaction of certain terms and conditions, including payment of a 25 basis point extension fee. As of June 30, 2019, PG&E Corporation and the Utility each had no commercial paper borrowings outstanding. PG&E Corporation and the Utility do not expect to be able to access the commercial paper market for the duration of the Chapter 11 Cases. Debt The following table summarizes PG&E Corporation’s and the Utility’s outstanding debt subject to compromise:
(1) Debt subject to compromise must be reported at the amounts expected to be allowed by the Bankruptcy Court and the carrying values will be adjusted as claims are approved. Total Utility Debt Subject to Compromise does not include $285 million of accrued contractual interest to the Petition Date. At March 31, 2019, PG&E Corporation and the Utility wrote off $178 million of unamortized debt issuance costs and debt discount to present the debt subject to compromise at the outstanding face value. The write-offs are included within long-term regulatory assets in the Condensed Consolidated Balance Sheets. See Notes 2 and 4 for further details. (2) At June 30, 2019, the contractual LIBOR-based interest rate on loans was 3.87%. (3) At June 30, 2019, the contractual LIBOR-based interest rate on the term loan was 3.60%. (4) Pollution Control Bonds series 2008F and 2010E were reissued in June 2017. Although the stated maturity date for both series is 2026, these bonds have a mandatory redemption date of May 31, 2022. (5) Each series of these bonds is supported by a separate direct-pay letter of credit. Following the Utility’s Chapter 11 filing, investors in these bonds drew on the letter of credit facilities. The letter of credit facility supporting the Series 2009 A-B bonds matured on June 5, 2019. In December 2015, the maturity dates of the letter of credit facilities supporting the Series 1996 C, E, F, 1997 B bonds were extended to December 1, 2020. Although the stated maturity date of these bonds is 2026, each series will remain outstanding only if the Utility extends or replaces the letter of credit related to the series or otherwise obtains consent from the issuer to the continuation of the series without a credit facility. (6) At June 30, 2019, the contractual interest rate on the letter of credit facility supporting these bonds was 7.70%. (7) At June 30, 2019, the contractual interest rate on the letter of credit facility supporting these bonds ranged from 7.70% to 7.83%. (8) Also includes $79 million in letters of credit. (9) At June 30, 2019, the contractual LIBOR-based interest rate on the loans was 3.67%. (10) At June 30, 2019, the contractual LIBOR-based interest rate on the term loan was 3.00%.
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EQUITY |
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Stockholders' Equity Note [Abstract] | |
EQUITY | EQUITY There were no issuances under the PG&E Corporation February 2017 equity distribution agreement for the six months ended June 30, 2019. PG&E Corporation issued common stock under the PG&E Corporation 401(k) plan and share-based compensation plans. During the six months ended June 30, 2019, 8.9 million shares were issued for cash proceeds of $85 million under these plans. Beginning January 1, 2019 PG&E Corporation changed its default matching contributions under its 401(k) plan from PG&E Corporation common stock to cash. Beginning in March 2019, at PG&E Corporation’s directive, the 401(k) plan trustee began purchasing new shares in the PG&E Corporation common stock fund on the open market rather than directly from PG&E Corporation. Dividends On December 20, 2017, the Boards of Directors of PG&E Corporation and the Utility suspended quarterly cash dividends on both PG&E Corporation’s and the Utility’s common stock, beginning the fourth quarter of 2017, as well as the Utility’s preferred stock, beginning the three-month period ending January 31, 2018, due to the uncertainty related to the causes of and potential liabilities associated with the Northern California wildfires. See Wildfire-related contingencies in Note 10 below. The DIP Credit Agreement includes usual and customary covenants for debtor-in-possession loan agreements of this type, including covenants limiting PG&E Corporation’s and the Utility’s ability to, among other things, declare and pay any dividend or make any other distributions with respect to any of their capital stock. Also, on April 3, 2019, the court overseeing the Utility’s probation issued an order imposing new conditions of probation, including foregoing issuing “any dividends until [the Utility] is in compliance with all applicable vegetation management requirements under applicable law and the Utility’s wildfire mitigation plan.” PG&E Corporation does not expect to pay any cash dividends during the Chapter 11 Cases.
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EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | EARNINGS PER SHARE PG&E Corporation’s basic EPS are calculated by dividing the income available for common shareholders by the weighted average number of common shares outstanding. PG&E Corporation applies the treasury stock method of reflecting the dilutive effect of outstanding share-based compensation in the calculation of diluted EPS. The following is a reconciliation of PG&E Corporation’s income available for common shareholders and weighted average common shares outstanding for calculating diluted EPS:
For each of the periods presented above, the calculation of outstanding common shares on a diluted basis excluded an insignificant amount of options and securities that were antidilutive.
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DERIVATIVES |
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DERIVATIVES | DERIVATIVES Use of Derivative Instruments The Utility is exposed to commodity price risk as a result of its electricity and natural gas procurement activities. Procurement costs are recovered through customer rates. The Utility uses both derivative and non-derivative contracts to manage volatility in customer rates due to fluctuating commodity prices. Derivatives include contracts, such as power purchase agreements, forwards, futures, swaps, options, and CRRs that are traded either on an exchange or over-the-counter. By order dated April 8, 2019, the Bankruptcy Court authorized the Utility to continue these programs in the ordinary course of business in a manner consistent with its pre-petition practices. Derivatives are presented in the Utility’s Condensed Consolidated Balance Sheets recorded at fair value and on a net basis in accordance with master netting arrangements for each counter-party. The fair value of derivative instruments is further offset by cash collateral paid or received where the right of offset and the intention to offset exist. Price risk management activities that meet the definition of derivatives are recorded at fair value on the Condensed Consolidated Balance Sheets. These instruments are not held for speculative purposes and are subject to certain regulatory requirements. The Utility expects to fully recover in rates all costs related to derivatives under the applicable ratemaking mechanism in place as long as the Utility’s price risk management activities are carried out in accordance with CPUC directives. Therefore, all unrealized gains and losses associated with the change in fair value of these derivatives are deferred and recorded within the Utility’s regulatory assets and liabilities on the Condensed Consolidated Balance Sheets. Net realized gains or losses on commodity derivatives are recorded in the cost of electricity or the cost of natural gas with corresponding increases or decreases to regulatory balancing accounts for recovery from or refund to customers. The Utility elects the normal purchase and sale exception for eligible derivatives. Eligible derivatives are those that require physical delivery in quantities that are expected to be used by the Utility over a reasonable period in the normal course of business, and do not contain pricing provisions unrelated to the commodity delivered. These items are not reflected in the Condensed Consolidated Balance Sheets. Volume of Derivative Activity The volumes of the Utility’s outstanding derivatives were as follows:
(1) Amounts shown are for the combined positions of the electric fuels and core gas supply portfolios. (2) Million British Thermal Units. (3) CRRs are financial instruments that enable the holders to manage variability in electric energy congestion charges due to transmission grid limitations. Presentation of Derivative Instruments in the Financial Statements At June 30, 2019, the Utility’s outstanding derivative balances were as follows:
At December 31, 2018, the Utility’s outstanding derivative balances were as follows:
Cash inflows and outflows associated with derivatives are included in operating cash flows on the Utility’s Condensed Consolidated Statements of Cash Flows. |
FAIR VALUE MEASUREMENTS |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS PG&E Corporation and the Utility measure their cash equivalents, trust assets, and price risk management instruments at fair value. A three-tier fair value hierarchy is established that prioritizes the inputs to valuation methodologies used to measure fair value:
The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value on a recurring basis for PG&E Corporation and the Utility are summarized below. Assets held in rabbi trusts are held by PG&E Corporation and not the Utility.
(1) Includes the effect of the contractual ability to settle contracts under master netting agreements and margin cash collateral. (2) Represents amount before deducting $491 million, primarily related to deferred taxes on appreciation of investment value.
(1) Includes the effect of the contractual ability to settle contracts under master netting agreements and margin cash collateral. (2) Represents amount before deducting $408 million, primarily related to deferred taxes on appreciation of investment value. Valuation Techniques The following describes the valuation techniques used to measure the fair value of the assets and liabilities shown in the tables above. There are no restrictions on the terms and conditions upon which the investments may be redeemed. Transfers between levels in the fair value hierarchy are recognized as of the end of the reporting period. There were no material transfers between any levels for the three and six months ended June 30, 2019 and 2018. Trust Assets Assets Measured at Fair Value In general, investments held in the trusts are exposed to various risks, such as interest rate, credit, and market volatility risks. Nuclear decommissioning trust assets and other trust assets are composed primarily of equity and fixed-income securities and also include short-term investments that are money market funds valued at Level 1. Global equity securities primarily include investments in common stock that are valued based on quoted prices in active markets and are classified as Level 1. Fixed-income securities are primarily composed of U.S. government and agency securities, municipal securities, and other fixed-income securities, including corporate debt securities. U.S. government and agency securities primarily consist of U.S. Treasury securities that are classified as Level 1 because the fair value is determined by observable market prices in active markets. A market approach is generally used to estimate the fair value of fixed-income securities classified as Level 2 using evaluated pricing data such as broker quotes, for similar securities adjusted for observable differences. Significant inputs used in the valuation model generally include benchmark yield curves and issuer spreads. The external credit ratings, coupon rate, and maturity of each security are considered in the valuation model, as applicable. Assets Measured at NAV Using Practical Expedient Investments in the nuclear decommissioning trusts and the long-term disability trust that are measured at fair value using the NAV per share practical expedient have not been classified in the fair value hierarchy tables above. The fair value amounts are included in the tables above in order to reconcile to the amounts presented in the Condensed Consolidated Balance Sheets. These investments include commingled funds that are composed of equity securities traded publicly on exchanges as well as fixed-income securities that are composed primarily of U.S. government securities and asset-backed securities. Price Risk Management Instruments Price risk management instruments include physical and financial derivative contracts, such as power purchase agreements, forwards, futures, swaps, options, and CRRs that are traded either on an exchange or over-the-counter. Power purchase agreements, forwards, and swaps are valued using a discounted cash flow model. Exchange-traded futures that are valued using observable market forward prices for the underlying commodity are classified as Level 1. Over-the-counter forwards and swaps that are identical to exchange-traded futures, or are valued using forward prices from broker quotes that are corroborated with market data are classified as Level 2. Exchange-traded options are valued using observable market data and market-corroborated data and are classified as Level 2. Long-dated power purchase agreements that are valued using significant unobservable data are classified as Level 3. These Level 3 contracts are valued using either estimated basis adjustments from liquid trading points or techniques, including extrapolation from observable prices, when a contract term extends beyond a period for which market data is available. Market and credit risk management utilizes models to derive pricing inputs for the valuation of the Utility’s Level 3 instruments using pricing inputs from brokers and historical data. The Utility holds CRRs to hedge the financial risk of CAISO-imposed congestion charges in the day-ahead market. Limited market data is available in the CAISO auction and between auction dates; therefore, the Utility utilizes historical prices to forecast forward prices. CRRs are classified as Level 3. Level 3 Measurements and Sensitivity Analysis The Utility’s market and credit risk management function, which reports to PG&E Corporation’s Chief Financial Officer, is responsible for determining the fair value of the Utility’s price risk management derivatives. The Utility’s finance and risk management functions collaborate to determine the appropriate fair value methodologies and classification for each derivative. Inputs used and the fair value of Level 3 instruments are reviewed period-over-period and compared with market conditions to determine reasonableness. Significant increases or decreases in any of those inputs would result in a significantly higher or lower fair value, respectively. All reasonable costs related to Level 3 instruments are expected to be recoverable through customer rates; therefore, there is no impact to net income resulting from changes in the fair value of these instruments. (See Note 8 above.)
(1) Represents price per megawatt-hour.
(1) Represents price per megawatt-hour. Level 3 Reconciliation The following tables present the reconciliation for Level 3 price risk management instruments for the three and six months ended June 30, 2019 and 2018:
(1) The costs related to price risk management activities are fully passed through to customers in rates. Accordingly, unrealized gains and losses are deferred in regulatory liabilities and assets and net income is not impacted.
(1) The costs related to price risk management activities are fully passed through to customers in rates. Accordingly, unrealized gains and losses are deferred in regulatory liabilities and assets and net income is not impacted. Financial Instruments PG&E Corporation and the Utility use the following methods and assumptions in estimating fair value for financial instruments: the fair values of cash, net accounts receivable; short-term borrowings; accounts payable; and customer deposits to approximate their carrying values at June 30, 2019 and December 31, 2018, as they are short-term in nature. The carrying amount and fair value of PG&E Corporation’s and the Utility’s debt instruments were as follows (the table below excludes financial instruments with carrying values that approximate their fair values):
(1) On January 29, 2019 PG&E Corporation and the Utility filed for Chapter 11 protection. Debt held by PG&E Corporation and the Utility became debt subject to compromise and is valued at the allowed claim amount. For more information, see Note 2 and Note 4. (2) The Utility drew $350 million from the DIP Revolving Facility on February 1, 2019 which was subsequently repaid on April 3, 2019 using certain of the proceeds of the DIP Initial Term Loan Facility. Nuclear Decommissioning Trust Investments The following table provides a summary of equity securities and available-for-sale debt securities:
(1) Represents amounts before deducting $491 million and $408 million for the periods ended June 30, 2019 and December 31, 2018, respectively, primarily related to deferred taxes on appreciation of investment value. The fair value of fixed-income securities by contractual maturity is as follows:
The following table provides a summary of activity for fixed income and equity securities:
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WILDFIRE-RELATED CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WILDFIRE-RELATED CONTINGENCIES | WILDFIRE-RELATED CONTINGENCIES PG&E Corporation and the Utility have significant contingencies arising from their operations, including contingencies related to wildfires. A provision for a loss contingency is recorded when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated. PG&E Corporation and the Utility evaluate which potential liabilities are probable and the related range of reasonably estimated losses and record a charge that reflects their best estimate or the lower end of the range, if there is no better estimate. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of losses is estimable, often involves a series of complex judgments about future events. Loss contingencies are reviewed quarterly and estimates are adjusted to reflect the impact of all known information, such as negotiations, discovery, settlements and payments, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. PG&E Corporation’s and the Utility’s provision for loss and expense excludes anticipated legal costs, which are expensed as incurred. PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows may be materially affected by the outcome of the following matters. Wildfire-Related Claims Wildfire-related claims on the Condensed Consolidated Financial Statements include amounts associated with the 2018 Camp fire, the 2017 Northern California wildfires, and the 2015 Butte fire. At June 30, 2019 and December 31, 2018, the Utility’s Condensed Consolidated Balance Sheets include estimated liabilities in respect of total wildfire-related claims as follows:
(1) On the Petition Date, all wildfire-related claims were classified as LSTC and all pending litigation was stayed. As of June 30, 2019, $100 million was reclassified from LSTC to current liabilities - wildfire-related claims to reflect Bankruptcy Court approval of contributions to the Wildfire Assistance Fund. In addition, during the three and six months ended June 30, 2019, the Utility incurred legal and other costs of $19 million and $32 million, respectively, related to the 2018 Camp fire, with no corresponding costs in the same periods in 2018. During the three and six months ended June 30, 2019, the Utility incurred legal and other costs of $7 million and $41 million, respectively, related to the 2017 Northern California wildfires, as compared to $46 million and $68 million, respectively, in the same periods in 2018. 2018 Camp Fire Background On November 8, 2018, a wildfire began near the city of Paradise, Butte County, California (the “2018 Camp fire”), which is located in the Utility’s service territory. Cal Fire’s Camp Fire Incident Information Website as of July 9, 2019 (the “Cal Fire website”) indicated that the 2018 Camp fire consumed 153,336 acres. On the Cal Fire website, Cal Fire reported 85 fatalities and the destruction of 13,972 residences, 528 commercial structures and 4,293 other buildings resulting from the 2018 Camp fire. There have been no subsequent updates of this information on the Cal Fire website. On May 15, 2019, Cal Fire issued a news release announcing the results of its investigation into the cause of the 2018 Camp fire. According to the news release:
Cal Fire indicated in its news release that its investigation report for the 2018 Camp fire has been forwarded to the Butte County District Attorney. (See “District Attorneys’ Offices’ Investigations” below for further information regarding the investigations of the 2018 Camp fire.) As of the date of this filing, this investigation report has not been released publicly. PG&E Corporation and the Utility accept Cal Fire’s determination that the 2018 Camp fire ignited at the first ignition site. PG&E Corporation and the Utility have not been able to form a conclusion as to whether a second fire ignited as a result of vegetation contact with the Utility’s facilities. PG&E Corporation and the Utility are continuing to review the evidence concerning the 2018 Camp fire. PG&E Corporation and the Utility have not yet had access to all of the evidence collected by Cal Fire as part of its investigation or to the investigation report prepared by Cal Fire. Further, the CPUC’s SED is conducting investigations to assess the compliance of electric and communication companies’ facilities with applicable rules and regulations in areas impacted by the 2018 Camp fire. According to information made available by the CPUC, investigation topics include, but are not limited to, maintenance of facilities, vegetation management, and emergency preparedness and response. Various other entities may also be investigating the fire. It is uncertain when the investigations will be complete and whether the SED will release any preliminary findings before its investigations are complete. 2017 Northern California Wildfires Background Beginning on October 8, 2017, multiple wildfires spread through Northern California, including Napa, Sonoma, Butte, Humboldt, Mendocino, Lake, Nevada, and Yuba Counties, as well as in the area surrounding Yuba City (the “2017 Northern California wildfires”). According to the Cal Fire California Statewide Fire Summary dated October 30, 2017, at the peak of the 2017 Northern California wildfires, there were 21 major fires that, in total, burned over 245,000 acres and destroyed an estimated 8,900 structures. The 2017 Northern California wildfires resulted in 44 fatalities. Cal Fire has issued 19 investigation reports and two supplementary investigation reports that include its determination of the causes of 21 of the 2017 Northern California wildfires, and alleged that all of these fires, with the exception of the Tubbs fire, involved the Utility’s equipment. During the second quarter of 2018, Cal Fire issued news releases announcing its determination on the causes of 16 of the 2017 Northern California wildfires (the La Porte, McCourtney, Lobo, Honey, Redwood, Sulphur, Cherokee, 37, Blue, Norrbom, Adobe, Partrick, Pythian, Nuns, Pocket and Atlas fires, located in Mendocino, Lake, Butte, Sonoma, Humboldt, Nevada and Napa counties). According to the Cal Fire news releases:
Cal Fire stated in its news releases that the McCourtney, Lobo, Sulphur, Blue, Norrbom, Adobe, Partrick, Pythian, Pocket and Atlas fire investigations, and the investigation related to the Honey fire, have been referred to the appropriate county District Attorney’s offices for review “due to evidence of alleged violations of state law.” (See “District Attorneys’ Offices’ Investigations” below for further information regarding the investigations by the District Attorneys’ offices related to these fires.) Also during the second quarter of 2018, Cal Fire released its investigation reports related to the Redwood, Cherokee, 37, Nuns and La Porte fires. Cal Fire did not refer these fires to District Attorney offices for investigation. On October 9, 2018, Cal Fire issued a news release announcing the results of its investigation into the Cascade fire, located in Yuba County, concluding that the Cascade fire “was started by sagging power lines coming into contact during heavy winds” and that “the power line in question was owned by Pacific Gas and Electric Company.” On October 10, 2018, Cal Fire released its investigation report related to the Cascade fire. (See “District Attorneys’ Offices’ Investigations” below for further information regarding the investigations of the Cascade fire by the Office of the District Attorney of Yuba County.) On January 24, 2019, Cal Fire issued a news release and its investigation report into the cause of the Tubbs fire. Cal Fire has determined that the Tubbs fire was caused by a private electrical system adjacent to a residential structure. During the second quarter of 2019, Cal Fire released its investigation reports related to the Sulphur, Blue, Norrbom, Adobe, Partrick, Pythian, Pocket and Atlas fires. The Cal Fire investigation report for the Adobe fire included as Attachment 42.1 a “Supplementary Investigation Report” concerning the Pressley fire. The Cal Fire investigator concludes in the Supplementary Investigation Report that the Pressley fire was started by an ember cast from the Adobe fire. On July 24, 2019, the CPUC released copies of Cal Fire’s investigation report related to the Point fire and supplementary investigation reports related to the Youngs fire, which Cal Fire had not previously released publicly, as attachments to the SED’s own investigative reports for those fires. (The Youngs fire is the fire that the Utility has previously referred to as the Maacama fire.) The Cal Fire investigation report for the Point fire alleges that the fire was caused by a tree limb that broke off in high winds and fell into a power line, causing the power line to contact the ground. The Cal Fire investigators in the Youngs supplementary reports conclude that the fire was caused by a tree that fell into a power line, severing the line. Cal Fire has not yet released its investigation reports related to the McCourtney and Lobo fires because Cal Fire referred its investigations into these fires to local law enforcement and the information contained in its investigation reports related to these fires remains confidential. As described in Note 11, on June 27, 2019, the CPUC issued an OII disclosing the findings of a June 13, 2019 report by the SED, which, among other things, alleges that the Utility committed 27 violations in connection with 12 of the 2017 Northern California wildfires (specifically, the Adobe, Atlas, Cascade, Norrbom, Nuns, Oakmont/Pythian, Partrick, Pocket, Point, Potter/Redwood, Sulphur and Youngs fires). As described in the OII, the 27 alleged violations include failure to maintain vegetation clearances, failure to identify and abate hazardous trees, improper record keeping, incomplete patrol prior to re-energizing a circuit, failure to retain evidence, failure to report an incident, and failure to maintain clearances between lines. No violations were identified by the SED in connection with the Cherokee, La Porte and Tubbs fires. The 37 fire was determined by the SED to not be a reportable incident. The SED report does not address the Lobo and McCourtney fires because Cal Fire referred its investigations into these fires to local law enforcement and the information contained in its investigation reports related to these fires remains confidential. On a status conference call before the assigned ALJ on July 29, 2019, the SED informed the parties that because the Nevada County District Attorney had decided not to pursue criminal charges in connection with the Lobo and McCourtney fires, the SED may add alleged violations related to those fires and the 2018 Camp fire to the OII. As required by the OII, on July 29, 2019, the Utility filed its initial response to the OII. In the initial response, the Utility indicated that it intends to fully cooperate with the CPUC but also stated that it disagreed with certain of the alleged violations set forth in the OII. The Utility also filed a Corrective Actions Report and an Application to Develop a Mobile Application and Supporting Systems, both as required by the OII. Also as required by the OII, on August 5, 2019, the Utility submitted a report to respond to the information requests contained in the OII, relating to matters such as the Utility’s vegetation management procedures and practices, its use of recloser devices in high fire risk areas, its pro-active de-energization of powerlines during times of high fire danger and its recordkeeping and other practices. Further, the SED is conducting investigations into certain of the other 2017 Northern California wildfires, including the McCourtney and Lobo fires. Various other entities may also be investigating certain of the fires. It is uncertain when the investigations will be complete and whether the SED will release any preliminary findings before its investigations are complete. Third-Party Claims, Investigations and Other Proceedings Related to the 2018 Camp Fire and 2017 Northern California Wildfires If the Utility’s facilities, such as its electric distribution and transmission lines, are determined to be the substantial cause of one or more fires, and the doctrine of inverse condemnation applies, the Utility could be liable for property damage, business interruption, interest and attorneys’ fees without having been found negligent. California courts have imposed liability under the doctrine of inverse condemnation in legal actions brought by property holders against utilities on the grounds that losses borne by the person whose property was damaged through a public use undertaking should be spread across the community that benefited from such undertaking, and based on the assumption that utilities have the ability to recover these costs from their customers. Further, California courts have determined that the doctrine of inverse condemnation is applicable regardless of whether the CPUC ultimately allows recovery by the utility for any such costs. The CPUC may decide not to authorize cost recovery even if a court decision were to determine that the Utility is liable as a result of the application of the doctrine of inverse condemnation. (See “Loss Recoveries – Regulatory Recovery” below for further information regarding potential cost recovery related to the wildfires, including in connection with SB 901.) In addition to claims for property damage, business interruption, interest and attorneys’ fees, the Utility could be liable for fire suppression costs, evacuation costs, medical expenses, personal injury damages, punitive damages and other damages under other theories of liability, including if the Utility were found to have been negligent. Further, the Utility could be subject to material fines, penalties, or restitution orders if the CPUC or any law enforcement agency were to bring an enforcement action, including a criminal proceeding, and it were determined that the Utility had failed to comply with applicable laws and regulations. As of January 28, 2019, before the automatic stay arising as a result of the filing of the Chapter 11 Cases, PG&E Corporation and the Utility were aware of approximately 100 complaints on behalf of at least 4,200 plaintiffs related to the 2018 Camp fire, nine of which sought to be certified as class actions. The pending civil litigation against PG&E Corporation and the Utility related to the 2018 Camp fire, which is currently stayed as a result of the commencement of the Chapter 11 Cases, included claims under multiple theories of liability, including inverse condemnation, trespass, private nuisance, public nuisance, negligence, negligence per se, negligent interference with prospective economic advantage, negligent infliction of emotional distress, premises liability, violations of the Public Utilities Code, violations of the Health & Safety Code, malice and false advertising in violation of the California Business and Professions Code. The plaintiffs principally asserted that PG&E Corporation’s and the Utility’s alleged failure to maintain and repair their distribution and transmission lines and failure to properly maintain the vegetation surrounding such lines were the causes of the 2018 Camp fire. The plaintiffs sought damages and remedies that include wrongful death, personal injury, property damage, evacuation costs, medical expenses, establishment of a class action medical monitoring fund, punitive damages, attorneys’ fees and other damages. PG&E Corporation’s and the Utility’s obligations with respect to such claims are expected to be determined through the Chapter 11 process. As of January 28, 2019, before the automatic stay arising as a result of the filing of the Chapter 11 Cases, PG&E Corporation and the Utility were aware of approximately 750 complaints on behalf of at least 3,800 plaintiffs related to the 2017 Northern California wildfires, five of which sought to be certified as class actions. These cases were coordinated in the San Francisco County Superior Court. As of the Petition Date, the coordinated litigation was in the early stages of discovery. A trial with respect to the Atlas fire was scheduled to begin on September 23, 2019. The pending civil litigation against PG&E Corporation and the Utility related to the 2017 Northern California wildfires, included claims under multiple theories of liability, including inverse condemnation, trespass, private nuisance and negligence. This litigation, including the trial date with respect to the Atlas fire, currently is stayed as a result of the commencement of the Chapter 11 Cases. The plaintiffs principally asserted that PG&E Corporation’s and the Utility’s alleged failure to maintain and repair their distribution and transmission lines and failure to properly maintain the vegetation surrounding such lines were the causes of the 2017 Northern California wildfires. The plaintiffs sought damages that include wrongful death, personal injury, property damage, evacuation costs, medical expenses, punitive damages, attorneys’ fees and other damages. PG&E Corporation’s and the Utility’s obligations with respect to such claims are expected to be determined through the Chapter 11 process. However, the TCC has submitted a motion to the Bankruptcy Court seeking relief from the automatic stay to enable certain plaintiffs to pursue their claims outside of the Chapter 11 process, as further described under the heading “Motions to Lift the Automatic Stay for Certain Tubbs Fire-Related Claims” below. PG&E Corporation and the Utility have opposed such motions. Insurance carriers who have made payments to their insureds for property damage arising out of the 2017 Northern California wildfires filed 52 subrogation complaints in the San Francisco County Superior Court and the Sonoma County Superior Court as of January 28, 2019. These complaints allege, among other things, negligence, inverse condemnation, trespass and nuisance. The allegations were similar to the ones made by individual plaintiffs. As of January 28, 2019, insurance carriers have filed 39 similar subrogation complaints with respect to the 2018 Camp fire in the Sacramento County Superior Court and the Butte County Superior Court. PG&E Corporation’s and the Utility’s obligations with respect to such claims are expected to be determined through the Chapter 11 process. However, certain holders of subrogation claims have submitted motions to the Bankruptcy Court seeking relief from the automatic stay in order to pursue their claims outside of the Chapter 11 process, as further described under the heading “Motions to Lift the Automatic Stay for Certain Tubbs Fire-Related Claims” below. PG&E Corporation and the Utility have opposed such motions. Various government entities, including Yuba, Nevada, Lake, Mendocino, Napa and Sonoma Counties and the Cities of Santa Rosa and Clearlake, also asserted claims against PG&E Corporation and the Utility based on the damages that these government entities allegedly suffered as a result of the 2017 Northern California wildfires. Such alleged damages included, among other things, loss of natural resources, loss of public parks, property damages and fire suppression costs. The causes of action and allegations were similar to the ones made by individual plaintiffs and the insurance carriers. With respect to the 2018 Camp fire, Butte County has filed similar claims against PG&E Corporation and the Utility. As described below under the heading “Plan Support Agreements with Public Entities,” on June 18, 2019, PG&E Corporation and the Utility entered into agreements with certain government entities to potentially resolve their wildfire-related claims through the Chapter 11 process. As described in Note 2, on July 1, 2019, the Bankruptcy Court entered an order approving the Bar Date of October 21, 2019, at 5:00 p.m. (Pacific Time) for filing claims against PG&E Corporation and the Utility relating to the period prior to the Petition Date, including claims in connection with the 2018 Camp fire and the 2017 Northern California wildfires. The Bar Date is subject to certain exceptions, including for claims arising under section 503(b)(9) of the Bankruptcy Code, the bar date for which occurred on April 22, 2019. It is expected that numerous wildfire-related claims will be filed against PG&E Corporation and the Utility in connection with the 2018 Camp fire and the 2017 Northern California wildfires through the Bar Date. On July 18, 2019, PG&E Corporation and the Utility filed a motion for entry of an order establishing procedures and schedules for the estimation of PG&E Corporation’s and the Utility’s aggregate liability for certain claims arising out of the 2018 Camp fire and the 2017 Northern California wildfires, as further described under the heading “Motion for the Establishment of Wildfire Claims Estimation Procedures” below. PG&E Corporation and the Utility are continuing to review the evidence concerning the 2018 Camp fire and 2017 Northern California wildfires. PG&E Corporation and the Utility have not yet had access to all of the evidence collected by Cal Fire as part of its investigations or to the McCourtney and Lobo investigation reports prepared by Cal Fire. PG&E Corporation and the Utility and plaintiffs have reached an agreement to transfer available evidence collected by Cal Fire for the fires for which its investigation reports have been released to a shared storage facility. The transfer of the evidence is not yet complete. (See “District Attorneys’ Offices’ Investigations” below for information regarding certain investigations related to the 2018 Camp fire and 2017 Northern California wildfires.) Regardless of any determinations of cause by Cal Fire with respect to any pre-petition fire, ultimately PG&E Corporation’s and the Utility’s liability will be resolved through the Chapter 11 process, regulatory proceedings and any potential enforcement proceedings, all of which could take a number of years to resolve. The timing and outcome of these and other potential proceedings are uncertain. PG&E Corporation and the Utility, as part of their efforts to emerge from bankruptcy, are engaged in discussions with holders of claims related to the 2017 Northern California wildfires and the 2018 Camp fire in an attempt to reach a global settlement of such claims. As discussed under the heading “Plan Support Agreements with Public Entities,” PG&E Corporation and the Utility have entered into agreements with certain government entity claimholders to potentially resolve their wildfire-related claims. The most recent settlement offers made by PG&E Corporation and the Utility to subrogated insurance claimholders and individual claimholders as of the date of this filing are discussed in further detail below under the heading “2018 Camp Fire and 2017 Northern California Wildfires Accounting Charge.” PG&E Corporation and the Utility cannot predict the outcome or timing of discussions with other claimholders. Even if discussions with claimholders were successful, the consummation of such a global settlement would likely be contingent on numerous uncertain conditions, including Bankruptcy Court approval and governmental action. On March 16, 2018, PG&E Corporation and the Utility filed a demurrer to the inverse condemnation cause of action in the 2017 Northern California wildfires litigation. On May 21, 2018, the court overruled the motion. On July 20, 2018, PG&E Corporation and the Utility filed a writ in the Court of Appeal requesting appellate review of the trial court’s decision, which was denied on September 17, 2018. On September 27, 2018, PG&E Corporation and the Utility filed a petition for review to the California Supreme Court. On November 14, 2018, the California Supreme Court denied PG&E Corporation’s and the Utility’s petition for review. Motions to Lift the Automatic Stay for Certain Tubbs Fire-Related Claims On July 2, 2019, the TCC submitted a motion, pursuant to section 362(d)(1) of the Bankruptcy Code, for entry of an order terminating the automatic stay to permit certain individual plaintiffs (the “Tubbs Preference Plaintiffs”) to proceed to a jury trial on their claims against PG&E Corporation and the Utility arising from the Tubbs fire, and to request the San Francisco Superior Court in the coordinated litigation for the 2017 Northern California wildfires to order one or more of the cases of the Tubbs Preference Plaintiffs to trial with preference pursuant to California Code of Civil Procedure section 36. On July 9, 2019, the TCC submitted an amended motion to request relief from the stay with respect to additional individual plaintiffs to proceed to a jury trial on their claims against PG&E Corporation and the Utility arising from the Tubbs fire. On July 3, 2019, the Ad Hoc Subrogation Group submitted a motion for relief from the automatic stay to permit certain of the Ad Hoc Subrogation Group’s members to pursue their claims against PG&E Corporation and the Utility regarding the issue of PG&E Corporation’s and the Utility’s liability for the Tubbs fire in the San Francisco Superior Court in the coordinated litigation for the 2017 Northern California wildfires. On July 19, 2019, PG&E Corporation and the Utility filed an objection to the motions of the TCC and the Ad Hoc Subrogation Group, requesting that the motions be denied. Also on July 19, 2019, the UCC and the Shareholder Group filed objections to the motions of the TCC and the Ad Hoc Subrogation Group with the Bankruptcy Court, requesting that the motions be denied. The Shareholder Group also joined in PG&E Corporation’s and the Utility’s objection to the motions of the TCC and the Ad Hoc Subrogation Group. On July 22, 2019, the Bankruptcy Court issued an order continuing the hearings on the TCC’s and the Ad Hoc Subrogation Group’s motions for relief from the automatic stay to August 14, 2019. Motion for the Establishment of Wildfire Claims Estimation Procedures On July 18, 2019, PG&E Corporation and the Utility submitted a motion, pursuant to sections 105(a) and 502(c) of the Bankruptcy Code, for entry of an order establishing procedures and schedules for the estimation of PG&E Corporation’s and the Utility’s aggregate liability for contingent and/or unliquidated claims arising out of the 2015 Butte fire, the 2017 Northern California wildfires and the 2018 Camp fire (which are collectively referred to in this paragraph as “wildfire claims”). In the motion, PG&E Corporation and the Utility proposed, among other things, the following general parameters of the estimation process:
The motion is expected to be heard by the Bankruptcy Court on August 14, 2019. On August 7, 2019, certain third parties filed joinders and statements in support with the Bankruptcy Court with respect to PG&E Corporation’s and the Utility’s motion, including the Ad Hoc Noteholder Committee, the UCC and the Shareholder Group. Also on August 7, 2019, certain third parties filed objections to PG&E Corporation’s and the Utility’s motion with the Bankruptcy Court, including the City and County of San Francisco, the Ad Hoc Subrogation Group and the TCC. The objection of the City and County of San Francisco is limited to PG&E Corporation’s and the Utility’s proposal for the Bankruptcy Court to address the legal issue of whether, under the doctrine of inverse condemnation, PG&E Corporation and the Utility may be held strictly liable for wildfire claims asserting property damages even where it was not negligent. Plan Support Agreements with Public Entities On June 18, 2019, PG&E Corporation and the Utility entered into PSAs with certain local public entities providing for an aggregate of $1.0 billion to be paid by PG&E Corporation and the Utility to such public entities pursuant to PG&E Corporation and the Utility’s Chapter 11 plan of reorganization in order to settle such public entities’ claims against PG&E Corporation and the Utility relating to the 2018 Camp fire, 2017 Northern California wildfires and 2015 Butte fire (collectively, “Public Entity Wildfire Claims”). PG&E Corporation and the Utility’s Chapter 11 plan of reorganization currently is under development and has not yet been filed with the Bankruptcy Court. PG&E Corporation and the Utility have entered into a PSA with each of the following public entities or group of public entities, as applicable:
For purposes of each PSA, the local public entities that are party to such PSA are referred to herein as “Supporting Public Entities.” Each PSA provides that PG&E Corporation and the Utility’s Chapter 11 plan of reorganization will include, among other things, the following elements:
The “Settlement Amount” set forth in each PSA is as follows:
Each PSA provides that, subject to certain terms and conditions, the Supporting Public Entities will support PG&E Corporation and the Utility’s Chapter 11 plan of reorganization with respect to its treatment of their respective Public Entity Wildfire Claims, including by voting to accept PG&E Corporation and the Utility’s Chapter 11 plan of reorganization in the Chapter 11 Cases. Each PSA may be terminated by the applicable Supporting Public Entities under certain circumstances, including:
Each PSA may be terminated by PG&E Corporation and the Utility under certain circumstances, including if:
Potential Losses in Connection with the 2018 Camp Fire and 2017 Northern California Wildfires On May 8, 2019, the California Department of Insurance issued a news release announcing an update on property losses in connection with the 2018 wildfires in Southern California (which are not in the Utility’s service territory) and the 2018 Camp fire, indicating that “total claims over $12 billion as of April [2019]” in insured losses have been reported from the November 2018 fires, of which approximately $8.6 billion relates to statewide claims from the 2018 Camp fire. On September 6, 2018, the California Department of Insurance issued a news release announcing that insurers have received nearly 55,000 insurance claims totaling more than $12.28 billion in losses, of which approximately $10 billion relates to statewide claims from the 2017 Northern California wildfires. The dollar amounts announced by the California Department of Insurance represent an aggregate amount of approximately $18.6 billion of insurance claims made as of the above dates related to the 2018 Camp fire and 2017 Northern California wildfires. PG&E Corporation and the Utility expect that additional claims have been submitted and will continue to be submitted to insurers, particularly with respect to the 2018 Camp fire. These claims reflect insured property losses only. The $18.6 billion of insurance claims made as of the above dates does not account for uninsured or underinsured property losses, interest, attorneys’ fees, fire suppression and clean-up costs, evacuation costs, personal injury or wrongful death damages, medical expenses or other costs, such as potential punitive damages, fines or penalties, or losses related to claims that have not manifested yet (“future claims”), each of which could be significant. Potential liabilities related to the 2018 Camp fire and 2017 Northern California wildfires depend on various factors, including but not limited to the cause of each fire, contributing causes of the fires (including alternative potential origins, weather and climate related issues), the number, size and type of structures damaged or destroyed, the contents of such structures and other personal property damage, the number and types of trees damaged or destroyed, attorneys’ fees for claimants, the nature and extent of any personal injuries, including the loss of lives, the extent to which future claims arise, the amount of fire suppression and clean-up costs, other damages the Utility may be responsible for if found negligent, the amount of any penalties or fines that may be imposed by governmental entities, and the amount of any penalties, fines, or restitution orders that might result from any criminal charges brought. There are a number of unknown facts and legal considerations that may impact the amount of any potential liability. Among other things, there is uncertainty at this time as to the number of wildfire-related claims that will be filed in the Chapter 11 Cases, the number of current and future claims that will be allowed by the Bankruptcy Court, how claims for punitive damages and claims by variously situated persons will be treated and whether such claims will be allowed, and the impact that historical settlement values for wildfire claims and other factors may have on the estimation of wildfire liability in the Chapter 11 Cases. If PG&E Corporation and the Utility were to be found liable for certain or all of the costs, expenses and other losses described above with respect to the 2018 Camp fire and 2017 Northern California wildfires, the amount of such liability could exceed $30 billion, which amount does not include potential punitive damages, fines and penalties or damages related to claims that have not manifested yet. This estimate is based on a wide variety of data and other information available to PG&E Corporation and the Utility and their advisors, including various precedents involving similar claims, and accounts for property losses (including insured, uninsured and underinsured property losses), interest, attorneys’ fees, fire suppression and clean-up costs, evacuation costs, personal injury or wrongful death damages, medical expenses and certain other costs. This estimate is not intended to provide an upper end of the range of potential liability arising from the 2018 Camp fire and 2017 Northern California wildfires. In certain circumstances, PG&E Corporation’s and the Utility’s liability could be substantially greater than such amount. If PG&E Corporation and the Utility were to be found liable for any punitive damages, and such damages were allowed by the Bankruptcy Court, or if PG&E Corporation and the Utility were subject to fines or penalties, the amount of such punitive damages, fines and penalties could be significant. PG&E Corporation and the Utility have received significant fines and penalties in connection with past incidents. For example, in 2015, the CPUC approved a decision that imposed penalties on the Utility totaling $1.6 billion in connection with the natural gas explosion that occurred in the City of San Bruno, California on September 9, 2010 (the “San Bruno explosion”). These penalties represented nearly three times the underlying liability for the San Bruno explosion of approximately $558 million incurred for third-party claims, exclusive of shareholder derivative lawsuits and legal costs incurred. The amount of punitive damages, fines and penalties imposed on PG&E Corporation and the Utility could likewise be a significant amount in relation to the underlying liabilities with respect to the 2018 Camp fire and 2017 Northern California wildfires. PG&E Corporation’s and the Utility’s obligations with respect to such claims are expected to be determined through the Chapter 11 process. Regulatory proceedings are not subject to the automatic stay imposed as a result of the commencement of the Chapter 11 Cases; however, collection efforts in connection with fines or penalties arising out of such proceedings are stayed. 2018 Camp Fire and 2017 Northern California Wildfires Accounting Charge Following accounting rules, PG&E Corporation and the Utility record a liability when a loss is probable and reasonably estimable. In accordance with U.S. generally accepted accounting principles, PG&E Corporation and the Utility evaluate which potential liabilities are probable and the related range of reasonably estimated losses, and record a charge that is the amount within the range that is a better estimate than any other amount or the lower end of the range, if there is no better estimate. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of losses is estimable, often involves a series of complex judgments about future events. Loss contingencies are reviewed quarterly and estimates are adjusted to reflect the impact of all known information, such as negotiations, discovery, settlements and payments, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. 2018 Camp Fire In light of the current state of the law and the information currently available to the Utility, PG&E Corporation and the Utility have determined that it is probable they will incur a loss for claims in connection with the 2018 Camp fire. PG&E Corporation and the Utility recorded a charge in the amount of $10.5 billion for the year ended December 31, 2018. Based on additional facts and circumstances available to the Utility as of the date of this filing, including the entry into the PSAs and the status of PG&E Corporation’s and the Utility’s efforts to reach a resolution with other holders of wildfire-related claims, PG&E Corporation and the Utility recorded an additional charge for claims in connection with the 2018 Camp fire in the amount of $1.9 billion for the three months ended June 30, 2019. The aggregate liability of $12.4 billion for claims in connection with the 2018 Camp fire corresponds to the lower end of the range of PG&E Corporation’s and the Utility’s reasonably estimated probable losses, and is subject to change based on additional information. PG&E Corporation and the Utility currently believe that it is reasonably possible that the amount of the loss related to the 2018 Camp fire will be greater than the amount accrued, but are unable to reasonably estimate the additional loss and the upper end of the range because there are a number of unknown facts and legal considerations that may impact the amount of any potential liability, including the total scope and nature of claims that may be asserted against PG&E Corporation and the Utility. PG&E Corporation and the Utility intend to continue to review the available information and other information as it becomes available, including evidence in Cal Fire’s possession, evidence from or held by other parties, claims that have not yet been submitted, and additional information about the nature and extent of personal and business property damage and losses, the nature, number and severity of personal injuries, and information made available through the discovery process. The process for estimating losses associated with claims requires management to exercise significant judgment based on a number of assumptions and subjective factors, including but not limited to factors identified above and estimates based on currently available information and prior experience with wildfires. As more information becomes available, management estimates and assumptions regarding the financial impact of the 2018 Camp fire may change, which could result in material increases to the loss accrued. The $12.4 billion liability does not include any amounts for potential penalties or fines that may be imposed by governmental entities on PG&E Corporation or the Utility, or punitive damages, if any, or any losses related to future claims for damages that have not manifested yet, each of which could be significant. In addition, the charge does not include any amount in respect of FEMA reimbursement claims, claims for property damages related to federal land and other property or claims by certain state and local public entities that are not party to the PSAs, which amounts could be substantial. The charge also does not include any amounts for potential losses in connection with the wildfire-related securities class action litigation described below. 2017 Northern California Wildfires In light of the current state of the law and the information currently available to the Utility, PG&E Corporation and the Utility have determined that it is probable they will incur a loss for claims in connection with all 21 of the 2017 Northern California wildfires identified above, the reasons for which are discussed in more detail in this section below. PG&E Corporation and the Utility recorded a charge in the amount of $2.5 billion during the quarter ended June 30, 2018 and a charge in the amount of $1.0 billion during the quarter ended December 31, 2018, for a total charge in the amount of $3.5 billion for the year ended December 31, 2018. Based on additional facts and circumstances available to the Utility as of the date of this filing, including additional information from Cal Fire, the entry into the PSAs and the status of PG&E Corporation’s and the Utility’s efforts to reach a resolution with other holders of wildfire-related claims, PG&E Corporation and the Utility recorded an additional charge for claims in connection with the 2017 Northern California wildfires in the amount of $2.0 billion for the three months ended June 30, 2019. The aggregate liability of $5.5 billion for claims in connection with the 2017 Northern California wildfires corresponds to the lower end of the range of PG&E Corporation’s and the Utility’s reasonably estimated probable losses and is subject to change based on additional information. In the case of the Tubbs and 37 fires, PG&E Corporation and the Utility continue to believe that if the claims related to these fires were litigated on the merits, it would not be probable that they would incur a loss for such claims. However, as a result of PG&E Corporation’s and the Utility’s most recent settlement offer to holders of claims related to the Tubbs and 37 fires as of the date of this filing, PG&E Corporation and the Utility have determined that it is probable they will incur a loss for claims in connection with such fires. With respect to 17 of the other 19 of the 2017 Northern California wildfires (the La Porte, McCourtney, Lobo, Honey, Redwood, Sulphur, Cherokee, Blue, Pocket, Atlas, Cascade, Point and Sonoma/Napa merged fires (which include the Nuns, Norrbom, Adobe, Partrick and Pythian fires)), PG&E Corporation and the Utility previously determined that it is probable they would incur a loss for claims in connection with such fires if such claims were litigated on the merits. With respect to 2 of the other 19 of the 2017 Northern California wildfires (the Youngs and Pressley fires), PG&E Corporation and the Utility have determined that it is probable they would incur a loss for claims in connection with such fires if such claims were litigated on the merits based on information that became available to PG&E Corporation and the Utility after the filing of their last Quarterly Report on Form 10-Q. PG&E Corporation and the Utility currently believe that it is reasonably possible that the amount of the loss related to the 2017 Northern California wildfires will be greater than the amount accrued, but are unable to reasonably estimate the additional loss and the upper end of the range because there are a number of unknown facts and legal considerations that may impact the amount of any potential liability, including the total scope and nature of claims that may be asserted against PG&E Corporation and the Utility. PG&E Corporation and the Utility intend to continue to review the available information and other information as it becomes available, including evidence in Cal Fire’s possession, evidence from or held by other parties, claims that have not yet been submitted, and additional information about the nature and extent of personal and business property damage and losses, the nature, number and severity of personal injuries, and information made available through the discovery process. The process for estimating losses associated with claims requires management to exercise significant judgment based on a number of assumptions and subjective factors, including but not limited to factors identified above and estimates based on currently available information and prior experience with wildfires. As more information becomes available, management estimates and assumptions regarding the financial impact of the 2017 Northern California wildfires may change, which could result in material increases to the loss accrued. The $5.5 billion liability does not include any amounts for potential penalties or fines that may be imposed by governmental entities on PG&E Corporation or the Utility, or punitive damages, if any, or any losses related to future claims for damages that have not manifested yet, each of which could be significant. In addition, the charge does not include any amount in respect of FEMA reimbursement claims, claims for property damages related to federal land and other property or claims by certain state and local public entities that are not party to the PSAs, which amounts could be substantial. The charge also does not include any amounts for potential losses in connection with the wildfire-related securities class action litigation described below. Additional Information Related to 2018 Camp Fire and 2017 Northern California Wildfires Accounting Charge The aggregate liability of $17.9 billion for claims in connection with the 2018 Camp fire and the 2017 Northern California wildfires is comprised of (i) $8.5 billion for subrogated insurance claimholders, (ii) $7.5 billion for individual claimholders (including those with uninsured and underinsured property losses, among other claims), (iii) $1.0 billion for the Supporting Public Entities with respect to their Public Entity Wildfire Claims pursuant to the PSAs and (iv) $900 million for clean-up and fire suppression costs. The aggregate liabilities of $8.5 billion for subrogated insurance claimholders and $7.5 billion for individual claimholders are based on PG&E Corporation’s and the Utility’s estimates of probable loss developed from data and other information available to PG&E Corporation and the Utility and PG&E Corporation’s and the Utility’s most recent settlement offers to representatives of such claimholders as of the date of this filing. PG&E Corporation and the Utility cannot predict the outcome or timing of discussions with such claimholders. With respect to the $1.0 billion liability for claims held by the Supporting Public Entities, while PG&E Corporation and the Utility previously disclosed the existence of claims asserted by such entities, PG&E Corporation and the Utility had not previously taken a charge related to these claims as the amount of the liability could not be reasonably estimated. As described above, the aggregate liability of $17.9 billion for claims in connection with the 2018 Camp fire and the 2017 Northern California wildfires corresponds to the lower end of the range of PG&E Corporation’s and the Utility’s reasonably estimated probable losses and is subject to change based on additional information. (See “Potential Losses in Connection with the 2018 Camp Fire and 2017 Northern California Wildfires” above.) As of the date of this filing, PG&E Corporation and the Utility believe that the settlement discussions with representatives of subrogated insurance claimholders are in a particularly critical period of the negotiation. PG&E Corporation and the Utility believe that the potential exists for material developments in the negotiation in the near term. Accordingly, if PG&E Corporation, the Utility and such claimholders reach agreement, PG&E Corporation’s and the Utility’s probable loss contingency for the subrogated insurance claims may increase by a material amount, which would result in an additional accrual above the $8.5 billion reflected in this filing. Any such increase could be substantial and could be taken in the third quarter of 2019. In their motion submitted to the Bankruptcy Court on July 23, 2019, the Ad Hoc Subrogation Group stated that holders of subrogated insurance claims hold in excess of $20 billion of wildfire-related claims against PG&E Corporation and the Utility. In the “Restructuring Term Sheet” attached to such motion, the Ad Hoc Subrogation Group proposed terms for a plan of reorganization that would settle all such subrogated insurance claims for consideration valued at $15.8 billion. PG&E Corporation and the Utility cannot predict the outcome or timing of discussions with such claimholders. Loss Recoveries PG&E Corporation and the Utility had insurance coverage for liabilities, including wildfire. Additionally, there are several mechanisms that allow for recovery of costs from customers. Potential for recovery is described below. Failure to obtain a substantial or full recovery of costs related to the 2018 Camp fire and 2017 Northern California wildfires or any conclusion that such recovery is no longer probable could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows. In addition, the inability to recover costs in in a timely manner could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows. Insurance PG&E Corporation and the Utility had $842 million of insurance coverage for liabilities, including wildfire events, for the period from August 1, 2017 through July 31, 2018, subject to an initial self-insured retention of $10 million per occurrence and further retentions of approximately $40 million per occurrence. During the third quarter of 2018, PG&E Corporation and the Utility renewed their liability insurance coverage for wildfire events in an aggregate amount of approximately $1.4 billion for the period from August 1, 2018 through July 31, 2019, comprised of $700 million for general liability (subject to an initial self-insured retention of $10 million per occurrence), and $700 million for property damages only, which property damage coverage includes an aggregate amount of approximately $200 million through the reinsurance market where a catastrophe bond was utilized. PG&E Corporation and the Utility record a receivable for insurance recoveries when it is deemed probable that recovery of a recorded loss will occur. Through June 30, 2019, PG&E Corporation and the Utility recorded $1.38 billion for probable insurance recoveries in connection with the 2018 Camp fire and $842 million for probable insurance recoveries in connection with the 2017 Northern California wildfires. These amounts reflect an assumption that the cause of each fire is deemed to be a separate occurrence under the insurance policies. The amount of the receivable is subject to change based on additional information. PG&E Corporation and the Utility intend to seek full recovery for all insured losses and believe it is reasonably possible that they will record a receivable for the full amount of the insurance limits in the future. If PG&E Corporation and the Utility are unable to recover the full amount of their insurance, PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows could be materially affected. Even if PG&E Corporation and the Utility were to recover the full amount of their insurance, PG&E Corporation and the Utility expect their losses in connection with the 2018 Camp fire and 2017 Northern California wildfires will substantially exceed their available insurance. The following table presents changes in the insurance receivable for the six months ended June 30, 2019. The balance for insurance receivable is included in Other accounts receivable in PG&E Corporation’s and the Utility’s Condensed Consolidated Balance Sheets:
Regulatory Recovery On June 21, 2018, the CPUC issued a decision granting the Utility’s request to establish a WEMA to track specific incremental wildfire liability costs effective as of July 26, 2017. The decision does not grant the Utility rate recovery of any wildfire-related costs. Any such rate recovery would require CPUC authorization in a separate proceeding. The Utility may be unable to fully recover costs in excess of insurance, if at all. Rate recovery is uncertain, therefore the Utility has not recorded a regulatory asset related to any wildfire claims costs. Even if such recovery is possible, it could take a number of years to resolve and a number of years to collect. In addition, SB 901, signed into law on September 21, 2018, requires the CPUC to establish a customer harm threshold, directing the CPUC to limit certain disallowances in the aggregate, so that they do not exceed the maximum amount that the Utility can pay without harming ratepayers or materially impacting its ability to provide adequate and safe service (the “Customer Harm Threshold”). SB 901 also authorizes the CPUC to issue a financing order that permits recovery, through the issuance of recovery bonds (also referred to as “securitization”), of wildfire-related costs found to be just and reasonable by the CPUC and, only for the 2017 Northern California wildfires, any amounts in excess of the Customer Harm Threshold. SB 901 does not authorize securitization with respect to possible 2018 Camp fire costs. On January 10, 2019, the CPUC adopted an OIR, which establishes a process to develop criteria and a methodology to inform determinations of the Customer Harm Threshold in future applications under Section 451.2(a) of the Public Utilities Code for recovery of costs related to the 2017 Northern California wildfires. On March 29, 2019, the Assigned Commissioner issued a scoping memo, which confirmed that the CPUC in this proceeding would establish a Customer Harm Threshold methodology applicable only to 2017 fires, to be invoked in connection with a future application for cost recovery, and would not determine a specific financial outcome in this proceeding. On July 8, 2019, the CPUC issued a decision in the Customer Harm Threshold proceeding. The CPUC decision provides that “[a]n electrical corporation that has filed for relief under chapter 11 of the Bankruptcy Code may not access the Stress Test to recover costs in an application under Section 451.2(b), because the Commission cannot determine the corporation’s ‘financial status,’ which includes, among other considerations, its capital structure, liquidity needs, and liabilities, as required by Section 451.2(b).” This determination effectively bars PG&E Corporation and the Utility from access to relief under the Customer Harm Threshold during the pendency of the Chapter 11 Cases. On August 7, 2019, the Utility submitted to the CPUC an application for rehearing of the decision. The Utility indicated in its application, among other things, that the CPUC’s decision “is contrary to law because it bars a utility that has filed for Chapter 11 from accessing the CHT [Customer Harm Threshold], requires a utility to file a cost recovery application before the CHT [Customer Harm Threshold] will be determined, and erects ratepayer protection mechanisms as an extra-statutory hurdle for accessing the CHT [Customer Harm Threshold].” The Utility also argued that the CPUC should apply the Customer Harm Threshold methodology to costs related to the 2018 Camp fire. The decision otherwise adopts a methodology to determine the Customer Harm Threshold based on (1) the maximum additional debt that a utility can take on and maintain a minimum investment grade credit rating; (2) excess cash available to the utility; (3) a potential maximum regulatory adjustment of either 20% of the Customer Harm Threshold or 5% of the total disallowed wildfire liabilities, whichever is greater; and (4) an adjustment to preserve for ratepayers any tax benefits associated with the Customer Harm Threshold. The decision also requires a utility to include proposed ratepayer protection measures to mitigate harm to ratepayers as part of an application under Section 451.2(b). Failure to obtain a substantial or full recovery of costs related to wildfires could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows. Wildfire-Related Derivative Litigation Two purported derivative lawsuits alleging claims for breach of fiduciary duties and unjust enrichment were filed in the San Francisco County Superior Court on November 16, 2017 and November 20, 2017, respectively, naming as defendants current and certain former members of the Board of Directors and certain current and former officers of PG&E Corporation and the Utility. PG&E Corporation and the Utility are named as nominal defendants. These lawsuits were consolidated by the court on February 14, 2018, and are denominated In Re California North Bay Fire Derivative Litigation. On April 13, 2018, the plaintiffs filed a consolidated complaint. After the parties reached an agreement regarding a stay of the derivative proceeding pending resolution of the tort actions described above and any regulatory proceeding relating to the 2017 Northern California wildfires, on April 24, 2018, the court entered a stipulation and order to stay. The stay is subject to certain conditions regarding the plaintiffs’ access to discovery in other actions. On January 28, 2019, the plaintiffs filed a request to lift the stay for the purposes of amending their complaint to add allegations regarding the 2018 Camp fire. On August 3, 2018, a third purported derivative lawsuit, entitled Oklahoma Firefighters Pension and Retirement System v. Chew, et al., was filed in the U.S. District Court for the Northern District of California, naming as defendants certain current and former members of the Board of Directors and certain current and former officers of PG&E Corporation and the Utility. PG&E Corporation is named as a nominal defendant. The lawsuit alleges claims for breach of fiduciary duties and unjust enrichment as well as a claim under Section 14(a) of the federal Securities Exchange Act of 1934 alleging that PG&E Corporation’s and the Utility’s 2017 proxy statement contained misrepresentations regarding the companies’ risk management and safety programs. On October 15, 2018, PG&E Corporation filed a motion to stay the litigation. Prior to the scheduled hearing on this motion, this matter was automatically stayed by PG&E Corporation’s and the Utility’s commencement of bankruptcy proceedings, as discussed below. On October 23, 2018, a fourth purported derivative lawsuit, entitled City of Warren Police and Fire Retirement System v. Chew, et al., was filed in San Francisco County Superior Court, alleging claims for breach of fiduciary duty, corporate waste and unjust enrichment. It names as defendants certain current and former members of the Board of Directors and certain current and former officers of PG&E Corporation, and names PG&E Corporation as a nominal defendant. Plaintiff filed a request with the court seeking the voluntary dismissal of this matter without prejudice on January 18, 2019. On November 21, 2018, a fifth purported derivative lawsuit, entitled Williams v. Earley, Jr., et al., was filed in federal court in San Francisco, alleging claims identical to those alleged in the Oklahoma Firefighters Pension and Retirement System v. Chew, et al. lawsuit listed above against certain current and former officers and directors, and naming PG&E Corporation and the Utility as nominal defendants. This lawsuit includes allegations related to the 2017 Northern California wildfires and the 2018 Camp fire. This action was stayed by stipulation of the parties and order of the court on December 21, 2018, subject to resolution of the pending securities class action. On December 24, 2018, a sixth purported derivative lawsuit, entitled Bowlinger v. Chew, et al., was filed in San Francisco Superior Court, alleging claims for breach of fiduciary duty, abuse of control, corporate waste, and unjust enrichment in connection with the 2018 Camp fire against certain current and former officers and directors, and naming PG&E Corporation and the Utility as nominal defendants. The court has scheduled a case management conference for December 13, 2019. On January 25, 2019, a seventh purported derivative lawsuit, entitled Hagberg v. Chew, et al., was filed in San Francisco Superior Court, alleging claims for breach of fiduciary duty, abuse of control, corporate waste, and unjust enrichment in connection with the 2018 Camp fire against certain current and former officers and directors, and naming PG&E Corporation and the Utility as nominal defendants. On January 28, 2019, an eighth purported derivative lawsuit, entitled Blackburn v. Meserve, et al., was filed in federal court alleging claims for breach of fiduciary duty, unjust enrichment, and waste of corporate assets in connection with the 2017 Northern California wildfires and the 2018 Camp fire against certain current and former officers and directors, and naming PG&E Corporation as a nominal defendant. Due to the commencement of the Chapter 11 Cases, PG&E Corporation and the Utility filed notices in each of these proceedings on February 1, 2019, reflecting that the proceedings are automatically stayed pursuant to Section 362(a) of the Bankruptcy Code. On February 5, 2019, the plaintiff in Bowlinger v. Chew, et al. filed a response to the notice asserting that the automatic stay did not apply to his claims. PG&E Corporation and the Utility accordingly filed a Motion to Enforce the Automatic Stay with the Bankruptcy Court as to the Bowlinger action, which was granted. Wildfire-Related Securities Class Action Litigation In June 2018, two purported securities class actions were filed in the United States District Court for the Northern District of California, naming PG&E Corporation and certain of its current and former officers as defendants, entitled David C. Weston v. PG&E Corporation, et al. and Jon Paul Moretti v. PG&E Corporation, et al., respectively. The complaints alleged material misrepresentations and omissions related to, among other things, vegetation management and transmission line safety in various PG&E Corporation public disclosures. The complaints asserted claims under Section 10(b) and Section 20(a) of the federal Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and sought unspecified monetary relief, interest, attorneys’ fees and other costs. Both complaints identified a proposed class period of April 29, 2015 to June 8, 2018. On September 10, 2018, the court consolidated both cases and the litigation is now denominated In re PG&E Corporation Securities Litigation. The court also appointed the Public Employees Retirement Association of New Mexico as lead plaintiff. The plaintiff filed a consolidated amended complaint on November 9, 2018. After the plaintiff requested leave to amend their complaint to add allegations regarding the 2018 Camp fire, the plaintiff filed a second amended consolidated complaint on December 14, 2018. Due to the commencement of the Chapter 11 Cases, PG&E Corporation and the Utility filed a notice on February 1, 2019, reflecting that the proceedings are automatically stayed pursuant to Section 362(a) of the Bankruptcy Code. On February 15, 2019, PG&E Corporation and the Utility filed a complaint in Bankruptcy Court against the plaintiff seeking preliminary and permanent injunctive relief to extend the stay to the claims alleged against the individual officer defendants. On February 22, 2019, a purported securities class action was filed in the United States District Court for the Northern District of California, entitled York County on behalf of the York County Retirement Fund, et al. v. Rambo, et al. (the “York County Action”). The complaint names as defendants certain current and former officers and directors, as well as the underwriters of four public offerings of notes from 2016 to 2018. Neither PG&E Corporation nor the Utility is named as a defendant. The complaint alleges material misrepresentations and omissions in connection with the note offerings related to, among other things, PG&E Corporation’s and the Utility’s vegetation management and wildfire safety measures. The complaint asserts claims under Section 11 and Section 15 of the federal Securities Act of 1933, and seeks unspecified monetary relief, attorneys’ fees and other costs, and injunctive relief. On May 7, 2019, the York County Action was consolidated with In re PG&E Corporation Securities Litigation. On May 28, 2019, the plaintiffs in the consolidated securities actions filed a third amended consolidated class action complaint, which includes the claims asserted in the previously-filed actions and names as defendants PG&E Corporation, the Utility, certain current and former officers and directors, and the underwriters. The action remains stayed as to PG&E Corporation and the Utility, and PG&E Corporation and the Utility are currently seeking an order from the Bankruptcy Court to extend the stay to the officer, director, and underwriter defendants. District Attorneys’ Offices’ Investigations During the second quarter of 2018, Cal Fire issued news releases stating that it referred the investigations related to the McCourtney, Lobo, Honey, Sulphur, Blue, Norrbom, Adobe, Partrick, Pythian, Pocket and Atlas fires to the appropriate county District Attorney’s offices for review “due to evidence of alleged violations of state law.” On March 12, 2019, the Sonoma, Napa, Humboldt and Lake County District Attorneys announced that they would not prosecute PG&E Corporation or the Utility for the fires in those counties, which include the Sulphur, Blue, Norrbom, Adobe, Partrick, Pythian, Pocket and Atlas fires. PG&E Corporation and the Utility were the subject of criminal investigations or other actions by the Nevada County District Attorney’s Office to whom Cal Fire had referred its investigations into the McCourtney and Lobo fires. On July 23, 2019, the Nevada County District Attorney informed PG&E Corporation and the Utility of his decision not to pursue criminal charges in connection with the McCourtney and Lobo fires. The Honey fire was referred to the Butte County District Attorney’s Office, and in October 2018, the Utility reached an agreement to settle any civil claims or criminal charges that could have been brought by the Butte County District Attorney in connection with the Honey fire, as well as the La Porte and Cherokee fires (which were not referred). The settlement provides for funding by the Utility for at least four years of an enhanced fire prevention and communication program, in the amount of up to $1.5 million, not recoverable in rates. On October 9, 2018, the Office of the District Attorney of Yuba County announced its decision not to pursue criminal charges at such time against PG&E Corporation or the Utility pertaining to the Cascade fire. The District Attorney’s Office also indicated that it reserved the right “to review any additional information or evidence that may be submitted to it prior to the expiration of the criminal statute of limitations.” In addition, the Butte County District Attorney’s Office and the California Attorney General’s Office have opened a criminal investigation of the 2018 Camp fire. PG&E Corporation and the Utility have been informed by the Butte County District Attorney’s Office and the California Attorney General’s Office that a grand jury has been empaneled in Butte County, and the Utility was served with subpoenas in the grand jury investigation. The Utility has produced documents and continues to produce documents and respond to other requests for information in connection with the criminal investigation of the 2018 Camp fire, including, but not limited to, documents related to the operation and maintenance of equipment owned or operated by the Utility. The Utility has also cooperated with the Butte County District Attorney’s Office and the California Attorney General’s Office in the collection of physical evidence from equipment owned or operated by the Utility. PG&E Corporation and the Utility are unable to predict the outcome of the criminal investigation into the 2018 Camp fire. The Utility could be subject to material fines, penalties, or restitution if it is determined that the Utility failed to comply with applicable laws and regulations, as well as non-monetary remedies such as oversight requirements. The criminal investigation is not subject to the automatic stay imposed as a result of the commencement of the Chapter 11 Cases. Additional investigations and other actions may arise out of the other 2017 Northern California wildfires and the 2018 Camp fire. The timing and outcome for resolution of the remaining referrals by Cal Fire to the appropriate county District Attorneys’ offices are uncertain. SEC Investigation On March 20, 2019, PG&E Corporation learned that the SEC’s San Francisco Regional Office is conducting an investigation related to PG&E Corporation’s and the Utility’s public disclosures and accounting for losses associated with the 2018 Camp fire, the 2017 Northern California wildfires and the 2015 Butte fire. PG&E Corporation and the Utility are unable to predict the timing and outcome of the investigation. Clean-up and Repair Costs The Utility incurred costs of $655 million for clean-up and repair of the Utility’s facilities (including $236 million in capital expenditures) through June 30, 2019, in connection with the 2018 Camp fire. The Utility also incurred costs of $334 million for clean-up and repair of the Utility’s facilities (including $161 million in capital expenditures) through June 30, 2019, in connection with the 2017 Northern California wildfires. The Utility is authorized to track and seek recovery of clean-up and repair costs through CEMA. (CEMA requests are subject to CPUC approval.) The Utility capitalizes and records as regulatory assets costs that are probable of recovery. At June 30, 2019, the CEMA regulatory asset balances related to the 2018 Camp fire and 2017 Northern California wildfires were zero and $88 million, respectively, and are included in long-term regulatory assets on the Condensed Consolidated Balance Sheets. Additionally, the capital expenditures for clean-up and repair are included in property, plant and equipment at June 30, 2019. Should PG&E Corporation and the Utility conclude that recovery of any clean-up and repair costs included in the CEMA is no longer probable, PG&E Corporation and the Utility will record a charge in the period such conclusion is reached. Failure to obtain a substantial or full recovery of these costs could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows. Wildfire Assistance Fund On May 24, 2019, the Bankruptcy Court entered an order authorizing PG&E Corporation and the Utility to establish and fund a program (the “Wildfire Assistance Fund”) to assist those displaced by the 2018 Camp fire and 2017 Northern California wildfires with the costs of substitute or temporary housing (“Alternative Living Expenses”) and other urgent needs. The Wildfire Assistance Fund is intended to aid certain wildfire claimants who are either uninsured or still in need of assistance for Alternative Living Expenses or have other urgent needs. The Wildfire Assistance Fund will consist of $105 million deposited into a segregated account to be controlled by an independent third-party administrator appointed by the Bankruptcy Court, who will disburse and administer the funds. The administrator will be responsible for developing the specific eligibility requirements and application procedures for the distribution of the Wildfire Assistance Fund to eligible claimants. Up to $5 million of the Wildfire Assistance Fund may be used to pay the costs of administering the fund. The establishment of the Wildfire Assistance Fund is not an acknowledgment or admission by PG&E Corporation or the Utility of liability with respect to the 2018 Camp fire or 2017 Northern California wildfires. The Utility fully funded $105 million into the Wildfire Assistance Fund on August 2, 2019. 2015 Butte Fire In September 2015, a wildfire (the “2015 Butte fire”) ignited and spread in Amador and Calaveras Counties in Northern California. On April 28, 2016, Cal Fire released its report of the investigation of the origin and cause of the 2015 Butte fire. According to Cal Fire’s report, the 2015 Butte fire burned 70,868 acres, resulted in two fatalities, destroyed 549 homes, 368 outbuildings and four commercial properties, and damaged 44 structures. Cal Fire’s report concluded that the 2015 Butte fire was caused when a gray pine tree contacted the Utility’s electric line, which ignited portions of the tree, and determined that the failure by the Utility and/or its vegetation management contractors, ACRT Inc. and Trees, Inc., to identify certain potential hazards during its vegetation management program ultimately led to the failure of the tree. Third-Party Claims On May 23, 2016, individual plaintiffs filed a master complaint against the Utility and its two vegetation management contractors in the Superior Court of California, County of Sacramento. Subrogation insurers also filed a separate master complaint on the same date. The California Judicial Council previously had authorized the coordination of all cases in Sacramento County. As of January 28, 2019, 95 known complaints were filed against the Utility and its two vegetation management contractors in the Superior Court of California in the Counties of Calaveras, San Francisco, Sacramento, and Amador. The complaints involve approximately 3,900 individual plaintiffs representing approximately 2,000 households and their insurance companies. These complaints were part of, or were in the process of being added to, the coordinated proceeding. Plaintiffs sought to recover damages and other costs, principally based on the doctrine of inverse condemnation and negligence theory of liability. Plaintiffs also sought punitive damages. Several plaintiffs dismissed the Utility’s two vegetation management contractors from their complaints. The Utility does not expect the number of claimants to increase significantly in the future, because the statute of limitations for property damage and personal injury in connection with the 2015 Butte fire has expired. Further, due to the commencement of the Chapter 11 Cases, these plaintiffs have been stayed from continuing to prosecute pending litigation and from commencing new lawsuits against PG&E Corporation or the Utility on account of pre-petition obligations. On January 30, 2019, the Court in the coordinated proceeding issued an order staying the action. On April 28, 2017, the Utility moved for summary adjudication on plaintiffs’ claims for punitive damages. The court denied the Utility’s motion and the Utility filed a writ with the Court of Appeal of the State of California, Third Appellate District. The writ was granted on July 2, 2018, directing the trial court to enter summary adjudication in favor of the Utility and to deny plaintiffs’ claim for punitive damages under California Civil Code Section 3294. Plaintiffs sought rehearing and asked the California Supreme Court to review the Court of Appeal’s decision. Both requests were denied. Neither the trial nor appellate courts originally addressed whether plaintiffs can seek punitive damages at trial under Public Utilities Code Section 2106. However, the trial court, in November 2018, denied a motion filed by the Utility that would have confirmed that punitive damages under Public Utilities Code Section 2106 are unavailable. The Utility believes a loss related to punitive damages is unlikely, but possible. On June 22, 2017, the Superior Court of California, County of Sacramento ruled on a motion of several plaintiffs and found that the doctrine of inverse condemnation applied to the Utility with respect to the 2015 Butte fire. The court held, among other things, that the Utility had failed to put forth any evidence to support its contention that the CPUC would not allow the Utility to pass on its inverse condemnation liability through rate increases. While the ruling was binding only between the Utility and the plaintiffs in the coordination proceeding at the time of the ruling, others could make similar claims. On January 4, 2018, the Utility filed with the court a renewed motion for a legal determination of inverse condemnation liability, citing the November 30, 2017 CPUC decision denying the San Diego Gas & Electric Company application to recover wildfire costs in excess of insurance, and the CPUC declaration that it will not automatically allow utilities to spread inverse condemnation losses through rate increases. On May 1, 2018, the Superior Court of California, County of Sacramento issued its ruling on the Utility’s renewed motion in which the court affirmed, with minor changes, its tentative ruling dated April 25, 2018. The court determined that it was bound by earlier holdings of two appellate courts decisions, Barham and Pacific Bell. Further, the court stated that the Utility’s constitutional arguments should be made to the appellate courts and suggested that, to the extent the Utility raised the public policy implications of the November 30, 2017 CPUC decision in the San Diego Gas & Electric Company cost recovery proceeding, these arguments should be addressed to the Legislature or CPUC. The Utility filed a writ with the Court of Appeal seeking immediate review of the court’s decision. On June 18, 2018, after the writ was summarily denied, the Utility filed a Petition for Review with the California Supreme Court, which also was denied. On September 6, 2018, the court set a trial for some individual plaintiffs to begin on April 1, 2019. The Utility reached agreement with two plaintiffs in the litigation to stipulate to judgment against the Utility on inverse condemnation grounds. The court granted the Utility’s stipulated judgment motion on November 29, 2018 and the Utility filed its appeal on December 11, 2018. As a result of the filing of the Chapter 11 Cases, these lawsuits, including the trial and the appeal from the stipulated judgment, are stayed. In addition to the coordinated plaintiffs, Cal Fire, the OES, the County of Calaveras, the Calaveras County Water District, and four smaller public entities (three fire districts and the California Department of Veterans Affairs) brought suit or indicated that they intended to do so. The Calaveras County Water District and the four smaller public entities filed their complaints in August 2018 and September 2018. They were added to the coordinated proceedings. The Utility settled the claims of the three fire protection districts and the Calaveras County Water District. On April 13, 2017, Cal Fire filed a complaint with the Superior Court of California, County of Calaveras, seeking to recover over $87 million for its costs incurred on the theory that the Utility and its vegetation management contractors were negligent, or violated the law, among other claims. On July 31, 2017, Cal Fire dismissed its complaint against Trees, Inc., one of the Utility’s vegetation contractors. Cal Fire had requested that a trial of its claims be set in 2019, following any trial of the claims of the individual plaintiffs. On October 19, 2018, the Utility filed a motion for summary judgment arguing that Cal Fire cannot recover any fire suppression costs under the Third District Court of Appeal’s decision in Dep’t of Forestry & Fire Prot. v. Howell (2017) 18 Cal. App. 5th 154. The hearing on that motion was set for January 31, 2019, but the hearing and Cal Fire’s case against the Utility are now stayed. Prior to the stay, the Utility and Cal Fire were also engaged in a mediation process. Also, on February 20, 2018, the County of Calaveras filed suit against the Utility and the Utility’s vegetation management contractors to recover damages and other costs, based on the doctrine of inverse condemnation and negligence theory of liability. The County also sought punitive damages. On March 2, 2018, the County served a mediation demand seeking in excess of $167 million, having previously indicated that it intended to bring an approximately $85 million claim against the Utility. This claim included costs that the County of Calaveras allegedly incurred or expected to incur for infrastructure damage, erosion control, and other costs. The Utility and the County of Calaveras settled the County’s claims in November 2018 for $25.4 million. Further, in May 2017, the OES indicated that it intended to bring a claim against the Utility that it estimated to be approximately $190 million. This claim would include costs incurred by the OES for tree and debris removal, infrastructure damage, erosion control, and other claims related to the 2015 Butte fire. The Utility has not received any information or documentation from the OES since its May 2017 statement. In June 2017, the Utility entered into an agreement with the OES that extended its deadline to file a claim to December 2020. PG&E Corporation’s and the Utility’s obligations with respect to such outstanding claims are expected to be determined through the Chapter 11 process. As described in Note 2, on July 1, 2019, the Bankruptcy Court entered an order approving the Bar Date of October 21, 2019, at 5:00 p.m. (Pacific Time) for filing claims against PG&E Corporation and the Utility relating to the period prior to the Petition Date, including claims in connection with the 2015 Butte fire. The Bar Date is subject to certain exceptions, including for claims arising under section 503(b)(9) of the Bankruptcy Code, the bar date for which occurred on April 22, 2019. It is expected that numerous wildfire-related claims will be filed against PG&E Corporation and the Utility in connection with the 2015 Butte fire through the Bar Date. On July 18, 2019, PG&E Corporation and the Utility filed a motion for entry of an order establishing procedures and schedules for the estimation of PG&E Corporation’s and the Utility’s aggregate liability for certain claims arising out of the 2015 Butte fire, as further described under the heading “Motion for the Establishment of Wildfire Claims Estimation Procedures” above. Estimated Losses from Third-Party Claims In connection with the 2015 Butte fire, the Utility may be liable for property damages, business interruption, interest, and attorneys’ fees without having been found negligent, through the doctrine of inverse condemnation. In addition, the Utility may be liable for fire suppression costs, personal injury damages, and other damages if the Utility is found to have been negligent. While the Utility believes it was not negligent, there can be no assurance that a court would agree with the Utility. The Utility’s assessment of the estimated loss related to the 2015 Butte fire is based on assumptions about the number, size, and type of structures damaged or destroyed, the contents of such structures, the number and types of trees damaged or destroyed, as well as assumptions about personal injury damages, attorneys’ fees, fire suppression costs, and certain other damages. The Utility has determined that it is probable that it will incur a loss of $1.1 billion in connection with the 2015 Butte fire. While this amount includes the Utility’s assumptions about fire suppression costs (including its assessment of the Cal Fire loss), it does not include any portion of the estimated claim from the OES. The Utility still does not have sufficient information to reasonably estimate any liability it may have for that additional claim. The process for estimating costs associated with claims relating to the 2015 Butte fire requires management to exercise significant judgment based on a number of assumptions and subjective factors. As more information becomes known, management estimates and assumptions regarding the financial impact of the 2015 Butte fire may result in material increases to the loss accrued. PG&E Corporation’s and the Utility’s Condensed Consolidated Balance Sheets included liabilities for 2015 Butte fire third-party claims of $226 million and $212 million as of December 31, 2018 and June 30, 2019, respectively, reflecting payments of $14 million in January 2019, prior to the Petition Date. As of June 30, 2019, the Utility has paid $888 million of the $904 million in settlements to date in connection with the 2015 Butte fire. If the Utility records losses in connection with claims relating to the 2015 Butte fire that materially exceed the amount the Utility accrued for these liabilities, PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows could be materially affected in the reporting periods during which additional charges are recorded. Loss Recoveries The Utility has liability insurance from various insurers, that provides coverage for third-party liability attributable to the 2015 Butte fire in an aggregate amount of $922 million. The Utility records insurance recoveries when it is deemed probable that a recovery will occur and the Utility can reasonably estimate the amount or its range. Through June 30, 2019, the Utility recorded $922 million for probable insurance recoveries in connection with losses related to the 2015 Butte fire. While the Utility plans to seek recovery of all insured losses, it is unable to predict the ultimate amount and timing of such insurance recoveries. In addition, the Utility has received $60 million in cumulative reimbursements from the insurance policies of its vegetation management contractors. Recoveries of additional amounts under the insurance policies of the Utility’s vegetation management contractors, including policies where the Utility is listed as an additional insured, are uncertain. The balance for the insurance receivable is included in Other accounts receivable in PG&E Corporation’s and the Utility’s Condensed Consolidated Balance Sheets and was $85 million and $50 million as of December 31, 2018 and June 30, 2019, respectively, reflecting reimbursements of $35 million during the six months ended June 30, 2019. OTHER CONTINGENCIES AND COMMITMENTSPG&E Corporation and the Utility have significant contingencies arising from their operations, including contingencies related to enforcement and litigation matters and environmental remediation. A provision for a loss contingency is recorded when it is both probable that a liability has been incurred and the amount of the liability can reasonably be estimated. PG&E Corporation and the Utility evaluate which potential liabilities are probable and the related range of reasonably estimated losses and record a charge that reflects their best estimate or the lower end of the range, if there is no better estimate. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of losses is estimable, often involves a series of complex judgments about future events. PG&E Corporation’s and the Utility’s provision for loss and expense excludes anticipated legal costs, which are expensed as incurred. The Utility also has substantial financial commitments in connection with agreements entered into to support its operating activities. PG&E Corporation’s and the Utility’s financial condition, results of operations, and cash flows may be materially affected by the outcome of the following matters. Enforcement and Litigation Matters U.S. District Court Matters and Probation On August 9, 2016, the jury in the federal criminal trial against the Utility in the United States District Court for the Northern District of California, in San Francisco, found the Utility guilty on one count of obstructing a federal agency proceeding and five counts of violations of pipeline integrity management regulations of the Natural Gas Pipeline Safety Act. On January 26, 2017, the court imposed a sentence on the Utility in connection with the conviction. The court sentenced the Utility to a five-year corporate probation period, oversight by the Monitor for a period of five years, with the ability to apply for early termination after three years, a fine of $3 million to be paid to the federal government, certain advertising requirements, and community service. The probation includes a requirement that the Utility not commit any local, state, or federal crimes during the probation period. As part of the probation, the Utility has retained the Monitor at the Utility’s expense. The goal of the Monitor is to help ensure that the Utility takes reasonable and appropriate steps to maintain the safety of its gas and electric operations, and to maintain effective ethics, compliance and safety related incentive programs on a Utility-wide basis. On November 27, 2018, the court overseeing the Utility’s probation issued an order requiring that the Utility, the United States Attorney’s Office for the Northern District of California (the “USAO”) and the Monitor provide written answers to a series of questions regarding the Utility’s compliance with the terms of its probation, including what requirements of the Utility’s probation “might be implicated were any wildfire started by reckless operation or maintenance of PG&E power lines” or “might be implicated by any inaccurate, slow, or failed reporting of information about any wildfire by PG&E.” The court also ordered the Utility to provide “an accurate and complete statement of the role, if any, of PG&E in causing and reporting the recent 2018 Camp fire in Butte County and all other wildfires in California” since January 2017 (“Question 4 of the November 27 Order”). On December 5, 2018, the court issued an order requesting that the Office of the California Attorney General advise the court of its view on “the extent to which, if at all, the reckless operation or maintenance of PG&E power lines would constitute a crime under California law.” The responses of the Attorney General were submitted on December 28, 2018, and the responses of the Utility, the USAO and the Monitor were submitted on December 31, 2018. On January 3, 2019, the court issued a new order requiring that the Utility provide further information regarding the 2017 Atlas fire. The court noted that “[t]his order postpones the question of the adequacy of PG&E’s response” to Question 4 of the November 27 Order. On January 4, 2019, the court issued another order requiring that the Utility provide, “with respect to each of the eighteen October 2017 Northern California wildfires that [Cal Fire] has attributed to [the Utility’s] facilities,” information regarding the wind conditions in the vicinity of each fire’s origin and information about the equipment allegedly involved in each fire’s ignition. The responses of the Utility were submitted on January 10, 2019. On January 9, 2019, the court ordered the Utility to appear in court on January 30, 2019, as a result of the court’s finding that “there is probable cause to believe there has been a violation of the conditions of supervision” with respect to reporting requirements related to the 2017 Honey fire. In addition, on January 9, 2019, the court issued an order (the “January 9 Order”) proposing to add new conditions of probation that would require the Utility, among other things, to:
The Utility was ordered to show cause by January 23, 2019 as to why the Utility’s conditions of probation should not be modified as proposed. The Utility’s response was submitted on January 23, 2019. The court requested that Cal Fire file a public statement, and invited the CPUC to comment, by January 25, 2019. On January 30, 2019, the court found that the Utility had violated a condition of its probation with respect to reporting requirements related to the 2017 Honey fire. Also, on January 30, 2019, the court ordered the Utility to submit to the court on February 6, 2019 the 2019 Wildfire Safety Plan that the Utility was required to submit to the CPUC by February 6, 2019 in accordance with SB 901, and invited interested parties to comment on such plan by February 20, 2019. In addition, on February 14, 2019, the court ordered the Utility to provide additional information, including on its vegetation clearance requirements. The Utility submitted its response to the court on February 22, 2019. As of April 30, 2019, to the Utility’s knowledge, no parties have submitted comments to the court on the 2019 Wildfire Safety Plan. On March 5, 2019, the court issued an order proposing to add new conditions of probation that would require the Utility, among other things, to:
The court ordered all parties to show cause by March 22, 2019, as to why the Utility’s conditions of probation should not be modified as proposed. The responses of the Utility, the USAO, Cal Fire, the CPUC, and non-party victims were filed on March 22, 2019. At a hearing on April 2, 2019, the court indicated it would impose the new conditions of probation proposed on March 5, 2019, on the Utility, and on April 3, 2019, the court issued an order imposing the new terms though amended the second condition to clarify that “[f]or purposes of this condition, the operative wildfire mitigation plan will be the plan ultimately approved by the CPUC.” Also, on April 2, 2019, the court directed the parties to submit briefing by April 16, 2019, regarding whether the court can extend the term of probation beyond five years in light of the violation that has been adjudicated and whether the Monitor reports should be made public. The responses of the Utility, the USAO, and the Monitor were filed on April 16, 2019. The Utility’s response contended that the term of probation may not be extended beyond five years and the USAO’s response contended that whether the term of probation could be extended beyond five years was an open legal issue. The court held a sentencing hearing on the probation violation related to reporting requirements in connection with the 2017 Honey fire on May 7, 2019. After that hearing, the court imposed two additional conditions of probation by order dated May 14, 2019: (1) requiring that PG&E’s Board of Directors, Chief Executive Officer, senior executives, the Monitor and U.S. Probation Officer visit the towns of Paradise and San Bruno “to gain a firsthand understanding of the harm inflicted on those communities;” and (2) requiring that a committee of PG&E’s Board of Directors assume responsibility for tracking progress of the 2019 Wildfire Safety Plan and the additional terms of probation regarding wildfire safety, reporting in writing to the full Board at least quarterly. The court also stated that it was not going to rule at this time on whether the court has authority to extend probation and would leave that question “in abeyance.” The court did not discuss whether the Monitor reports should be made public. Members of PG&E Corporation’s Board of Directors and senior management attended site visits to the Town of Paradise on June 7, 2019 and the City of San Bruno on July 16, 2019, which were coordinated by the U.S. Probation Officer overseeing the Utility’s probation. In addition, the Compliance and Public Policy Committee, a committee of PG&E Corporation’s Board of Directors, will be responsible for tracking the Utility’s progress against the Utility’s wildfire mitigation plan, as approved by the CPUC, and compliance with the terms of the Utility’s probation regarding wildfire safety. On July 10, 2019, the court ordered the Utility to respond to a Wall Street Journal article titled “PG&E Knew for Years Its Lines Could Spark Wildfires, and Didn’t Fix Them” on a paragraph-by-paragraph basis, stating the extent to which each paragraph in the article is accurate. The court also ordered the Utility to disclose all political contributions made by the Utility since January 1, 2017, and provide additional explanations regarding those contributions and dividends distributed prior to filing the Chapter 11 Cases. The Utility filed its response with the court on July 31, 2019. In the response, the Utility disagreed with the Wall Street Journal article’s suggestion that the Utility knew of the specific maintenance conditions that caused the 2018 Camp fire and nonetheless deferred work that would have addressed those conditions. CPUC and FERC Matters Order Instituting an Investigation into the 2017 Northern California Wildfires On June 27, 2019, the CPUC issued an OII (the “2017 Northern California Wildfires OII”) to determine whether the Utility “violated any provision(s) of the California Public Utilities Code (PU Code), Commission General Orders (GO) or decisions, or other applicable rules or requirements pertaining to the maintenance and operation of its electric facilities that were involved in igniting fires in its service territory in 2017.” The 2017 Northern California Wildfires OII discloses the findings of a June 13, 2019 report by the SED, which, among other things, alleges that the Utility committed 27 violations in connection with 12 of the 2017 Northern California wildfires (specifically, the Adobe, Atlas, Cascade, Norrbom, Nuns, Oakmont/Pythian, Partrick, Pocket, Point, Potter/Redwood, Sulphur and Youngs fires). As described in the OII, the 27 alleged violations include failure to maintain vegetation clearances, failure to identify and abate hazardous trees, improper record keeping, incomplete patrol prior to re-energizing a circuit, failure to retain evidence, failure to report an incident, and failure to maintain clearances between lines. No violations were identified by the SED in connection with the Cherokee, La Porte and Tubbs fires. The 37 fire was determined by the SED to not be a reportable incident. The SED report does not address the Lobo and McCourtney fires because Cal Fire referred its investigations into these fires to local law enforcement and the information contained in its investigation reports related to these fires remains confidential. On a status conference call before the assigned ALJ on July 29, 2019, the SED informed the parties that because the Nevada County District Attorney had decided not to pursue criminal charges in connection with the Lobo and McCourtney fires, the SED may add alleged violations related to those fires and the 2018 Camp fire to the OII. The 2017 Northern California Wildfires OII requires the Utility to (i) show cause by July 29, 2019 why it should not be sanctioned for the 27 violations alleged in the SED report and (ii) submit a report by August 5, 2019, responding to information requests relating to “matters of concern that […] warrant further investigation and possible charges for violations of law.” These latter matters include the following: (i) the Utility’s vegetation management procedures and practices, (ii) the Utility’s procedures and practices regarding use of “recloser” devices in fire risk areas and during fire season, (iii) the Utility’s lack of procedures or policies for proactive de-energization of power lines during times of extreme fire danger, and (iv) the Utility’s record-keeping and other practices. The Utility is also required to take certain corrective actions and provide information regarding the qualifications of vegetation management personnel within 30 days of the issuance of the 2017 Northern California Wildfires OII. The Utility must also file an application to develop an open source, publicly available asset management system/database and mobile app, the costs of development and continued operation of which would be at shareholder expense. The OII also indicates that the assigned commissioner shall set a prehearing conference for 45 to 60 days after the initiation of the proceeding or as soon as practicable after the CPUC makes the assignment. The assigned commissioner will also issue a scoping memo setting forth the scope of the proceeding and establishing a procedural schedule. As required by the OII, on July 29, 2019, the Utility filed its initial response to the OII. In the initial response, the Utility indicated that it intends to fully cooperate with the CPUC but also stated that it disagreed with certain of the alleged violations set forth in the OII. The Utility also filed a Corrective Actions Report and an Application to Develop a Mobile Application and Supporting Systems, both as required by the OII. Also as required by the OII, on August 5, 2019, the Utility submitted a report to respond to the information requests contained in the OII, as explained above. Based on the information currently available, PG&E Corporation and the Utility believe it is probable that the CPUC will impose penalties, including fines or other remedies, on the Utility. The Utility is unable to reasonably estimate the amount or range of future charges that could be incurred given the CPUC’s wide discretion and the number of factors that can be considered in determining penalties. The Utility is unable to predict the timing and outcome of this proceeding. PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows could be materially affected if the Utility were required to pay a material amount of penalties or if the Utility were required to incur a material amount of costs that it cannot recover through rates. This proceeding is not subject to the automatic stay imposed as a result of the commencement of the Chapter 11 Cases; however, collection efforts in connection with fines or penalties arising out of this proceeding are stayed. Order Instituting an Investigation and Order to Show Cause into the Utility’s Locate and Mark practices On December 14, 2018, the CPUC issued an order instituting investigation and order to show cause (the “OII”) to assess the Utility’s practices and procedures related to the locating and marking of natural gas facilities. The OII directs the Utility to show cause as to why the CPUC should not find violations in this matter, and why the CPUC should not impose penalties, and/or any other forms of relief, if any violations are found. The Utility also is directed in the OII to provide a report on specific matters, including that it is conducting locate and mark programs in a safe manner. The OII cites a report by the SED dated December 6, 2018, which alleges that the Utility violated the law pertaining to the locating and marking of its gas facilities and falsified records related to its locate and mark activities between 2012 and 2017. As described in the OII, the SED cites reports issued in this matter by two consultants retained by the Utility, that (i) included certain facts and conclusions about the extent of inaccuracies in the Utility’s late tickets and the reasons for the inaccuracies, and (ii) provided an analysis, based on the available data, of tickets that should be properly categorized as late, and identification of associated dig-ins. As a result, the OII will determine whether the Utility violated any provision of the Public Utilities Code, general orders, federal law adopted by California, other rules, or requirements, and/or other state or federal law, by its locate and mark policies, practices, and related issues, and the extent to which the Utility’s practices with regard to locate and mark may have diminished system safety. The CPUC indicates that it has not concluded that the Utility has violated the law in any instance pertaining to late tickets, locating and marking, or any matter related to either, or to any other matter raised in this OII. However, if violations are found, the CPUC will consider what monetary fines and other remedies are appropriate, will review the duration of violations and, if supported by the evidence, it will consider ordering daily fines. On March 14, 2019, as directed by the CPUC, the Utility submitted a report that addressed the SED report and responded to the order to show cause. A prehearing conference was held on April 4, 2019, to establish scope and a procedural schedule. The assigned Commissioner and ALJ encouraged the SED and the Utility to reach a partial stipulation in order to streamline the proceeding. On April 24, 2019, the Utility provided notice of a settlement conference and the parties have continued settlement discussions. On May 7, 2019, the assigned Commissioner issued a scoping memo and ruling that included within the proceedings, in addition to the issues identified in the OII relating to the Utility’s locate and mark procedures, issues relating to the Utility’s use of “qualified electrical workers” for locating and marking underground infrastructure. On July 24, 2019, the SED submitted its opening testimony to the CPUC. A status conference with the ALJ was held on July 30, 2019. The parties continue settlement discussions. In accordance with the current procedural schedule issued by the ALJ on June 27, 2019, intervenor testimony is due August 16, 2019, and the Utility’s reply testimony is due September 18, 2019. The SED’s rebuttal testimony is due October 4, 2019. Evidentiary hearings are scheduled for October 21 to 25, 2019. Based on the information available to PG&E Corporation and the Utility as of the date of this filing, PG&E Corporation and the Utility believe it is probable that the Utility will incur penalties, including fines or other remedies. Accordingly, PG&E Corporation and the Utility recorded a charge during the quarter ended June 30, 2019 for an amount that is not material, which corresponds to the lower end of the range of PG&E Corporation's and the Utility's reasonably estimated losses and is subject to change based on additional information. PG&E Corporation and the Utility are unable to determine a better estimate within such range given the CPUC’s wide discretion and the number of factors that can be considered in determining penalties. The Utility is unable to predict the timing and outcome of this proceeding. PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows could be materially affected if the Utility were required to pay a material amount of penalties or if the Utility were required to incur a material amount of costs that it cannot recover through rates. This proceeding is not subject to the automatic stay imposed as a result of the commencement of the Chapter 11 Cases; however, collection efforts in connection with fines or penalties arising out of this proceeding are stayed. For more information about this proceeding, see Note 14 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K. Order Instituting an Investigation into Compliance with Ex Parte Communication Rules On April 26, 2018, the CPUC approved the revised PD issued on April 3, 2018, adopting the settlement agreement jointly submitted to the CPUC on March 28, 2017, as modified (the “settlement agreement”) by the Utility, the Cities of San Bruno and San Carlos, PAO (formerly known as the Office of Ratepayer Advocates or ORA), the SED, and TURN. The decision resulted in a total penalty of $97.5 million comprised of: (1) a $12 million payment to the California General Fund, (2) forgoing collection of $63.5 million of GT&S revenue requirements for the years 2018 ($31.75 million) and 2019 ($31.75 million), (3) a $10 million one-time revenue requirement adjustment to be amortized in equivalent annual amounts over the Utility’s next GRC cycle (i.e., the 2020 GRC), and (4) compensation payments to the Cities of San Bruno and San Carlos in a total amount of $12 million ($6 million to each city). In addition, the settlement agreement provides for certain non-financial remedies, including enhanced noticing obligations between the Utility and CPUC decision-makers, as well as certification of employee training on the CPUC ex parte communication rules. Under the terms of the settlement agreement, customers will bear no costs associated with the financial remedies set forth above. As a result of the CPUC’s April 26, 2018 decision, on May 17, 2018, the Utility made a $12 million payment to the California General Fund and $6 million payments to each of the Cities of San Bruno and San Carlos. At June 30, 2019, PG&E Corporation’s and the Utility’s Condensed Consolidated Balance Sheets include an $16 million accrual for a portion of the 2019 GT&S revenue requirement reduction. In accordance with accounting rules, adjustments related to revenue requirements are recorded in the periods in which they are incurred. The CPUC also ordered a second phase in this proceeding to determine if any of the additional communications that the Utility reported to the CPUC on September 21, 2017, violate the CPUC ex parte rules. On June 28, 2019, the Cities of San Bruno and San Carlos, PAO, the SED, TURN, and the Utility filed a joint motion with the CPUC seeking approval of a comprehensive settlement agreement that addresses all issues in the second phase of this proceeding. The settlement agreement proposed that the Utility pay a total penalty of $10 million comprised of: (1) a $2 million payment to the California General Fund, (2) forgoing collection of $5 million in revenue requirements during the term of its 2019 GT&S rate case, (3) forgoing collection of $1 million in revenue requirement during the term of its 2020 GRC cycle, and (4) compensation payments to the Cities of San Bruno and San Carlos in a total amount of $2 million ($1 million to each city). According to the terms of the settlement, these payments and forgone collection would not take place until a plan of reorganization is approved in the Chapter 11 Cases. In accordance with accounting rules, adjustments related to forgone collections would be recorded in the periods in which they are incurred. At June 30, 2019, PG&E Corporation’s and the Utility’s Consolidated Balance Sheets include a $4 million accrual for the amounts payable to the California General Fund and the Cities of San Bruno and San Carlos. The Utility is unable to predict whether the CPUC will approve the settlement. For more information about this proceeding, see Note 14 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K. Transmission Owner Rate Case Revenue Subject to Refund The FERC determines the amount of authorized revenue requirements, including the rate of return on electric transmission assets, that the Utility may collect in rates in the TO rate case. The FERC typically authorizes the Utility to charge new rates based on the requested revenue requirement, subject to refund, before the FERC has issued a final decision. The Utility bills and records revenue based on the amounts requested in its rate case filing and records a reserve for its estimate of the amounts that are probable of refund. Rates subject to refund went into effect on March 1, 2017, and March 1, 2018, for TO18 and TO19, respectively. Rates subject to refund for TO20 went into effect on May 1, 2019. On October 1, 2018, the ALJ issued an initial decision in the TO18 rate case and the Utility filed initial briefs on October 31, 2018, in response to the ALJ’s recommendations. The Utility expects the FERC to issue a decision in the TO18 rate case by late-2019, however, that decision will likely be the subject of requests for rehearing and appeal. On September 21, 2018, the Utility filed an all-party settlement with FERC, which was approved by FERC on December 20, 2018, in connection with TO19. As part of the settlement, the TO19 revenue requirement will be set at 98.85% of the revenue requirement for TO18 that will be determined upon issuance of a final unappealable decision in TO18. On November 30, 2018, the FERC issued an order accepting the Utility’s October 2018 filing of its TO20 formula rate case, subject to hearings and refund, and established May 1, 2019, as the effective date for rate changes. FERC also ordered that the hearings will be held in abeyance pending settlement discussions among the parties. The Utility is unable to predict the timing or outcome of FERC’s decisions in the TO18 and TO19 proceedings or the timing or outcome of the TO20 proceeding. Natural Gas Transmission Pipeline Rights-of-Way In 2012, the Utility notified the CPUC and the SED that the Utility planned to complete a system-wide survey of its transmission pipelines in an effort to address a self-reported violation whereby the Utility did not properly identify encroachments (such as building structures and vegetation overgrowth) on the Utility’s pipeline rights-of-way. The Utility also submitted a proposed compliance plan that set forth the scope and timing of remedial work to remove identified encroachments over a multi-year period and to pay penalties if the proposed milestones were not met. In March 2014, the Utility informed the SED that the survey had been completed and that remediation work, including removal of the encroachments, was expected to continue for several years. The SED has not addressed the Utility’s proposed compliance plan, and it is reasonably possible that the SED will impose fines on the Utility in the future based on the Utility’s failure to continuously survey its system and remove encroachments. The Utility is unable to reasonably estimate the amount or range of future charges that could be incurred given the SED’s wide discretion and the number of factors that can be considered in determining penalties. Other Matters PG&E Corporation and the Utility are subject to various claims, lawsuits, and regulatory proceedings that separately are not considered material. Accruals for contingencies related to such matters (excluding amounts related to the contingencies discussed above under “Enforcement and Litigation Matters”) totaled $98 million at December 31, 2018. These amounts were included in Other current liabilities in the Condensed Consolidated Balance Sheets. On the Petition Date, these amounts were moved to LSTC. PG&E Corporation and the Utility do not believe it is reasonably possible that the resolution of these matters will have a material impact on their financial condition, results of operations, or cash flows. 2015 GT&S Rate Case Capital Disallowance On June 23, 2016, the CPUC approved a final phase one decision in the Utility’s 2015 GT&S rate case. The phase one decision excluded from rate base $696 million of capital spending in 2011 through 2014 in excess of the amount adopted in the prior GT&S rate case. The decision permanently disallowed $120 million of that amount and ordered that the remaining $576 million be subject to an audit overseen by the CPUC staff, with the possibility that the Utility may seek recovery in a future proceeding. Additional charges may be required in the future based on the outcome of the CPUC’s audit of 2011 through 2014 capital spending. Capital disallowances are reflected in operating and maintenance expenses in the Condensed Consolidated Statements of Income. For more information, see Note 14 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K. Environmental Remediation Contingencies The Utility’s environmental remediation liability is primarily included in non-current liabilities on the Condensed Consolidated Balance Sheets and is comprised of the following:
(1) Primarily driven by the following sites: Vallejo, San Francisco East Harbor, Napa, Beach Street, San Francisco North Beach, and San Rafael MGP-Bio Marin MGP. (2) Primarily driven by the Geothermal landfill and Shell Pond site. (3) Primarily driven by the San Francisco Potrero Power Plant. The Utility’s gas compressor stations, former manufactured gas plant sites, power plant sites, gas gathering sites, and sites used by the Utility for the storage, recycling, and disposal of potentially hazardous substances are subject to requirements issued by the Environmental Protection Agency under the Federal Resource Conservation and Recovery Act in addition to other state hazardous waste laws. The Utility has a comprehensive program in place designed to comply with federal, state, and local laws and regulations related to hazardous materials, waste, remediation activities, and other environmental requirements. The Utility assesses and monitors the environmental requirements on an ongoing basis, and implements changes to its program as deemed appropriate. The Utility’s remediation activities are overseen by the DTSC, several California regional water quality control boards, and various other federal, state, and local agencies. The Utility’s environmental remediation liability at June 30, 2019, reflects its best estimate of probable future costs for remediation based on the current assessment data and regulatory obligations. Future costs will depend on many factors, including the extent of work necessary to implement final remediation plans and the Utility’s time frame for remediation. The Utility may incur actual costs in the future that are materially different than this estimate and such costs could have a material impact on results of operations, financial condition, and cash flows during the period in which they are recorded. At June 30, 2019, the Utility expected to recover $960 million of its environmental remediation liability for certain sites through various ratemaking mechanisms authorized by the CPUC. For more information, see remediation site descriptions below and see Note 14 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K. Natural Gas Compressor Station Sites The Utility is legally responsible for remediating groundwater contamination caused by hexavalent chromium used in the past at the Utility’s natural gas compressor stations. The Utility is also required to take measures to abate the effects of the contamination on the environment. Topock Site The Utility’s remediation and abatement efforts at the Topock site are subject to the regulatory authority of the California DTSC and the U.S. Department of the Interior. On April 24, 2018, the DTSC authorized the Utility to build an in-situ groundwater treatment system to convert hexavalent chromium into a non-toxic and non-soluble form of chromium. Construction activities began in October 2018 and will continue for several years. The Utility’s undiscounted future costs associated with the Topock site may increase by as much as $302 million if the extent of contamination or necessary remediation is greater than anticipated. The costs associated with environmental remediation at the Topock site are expected to be recovered primarily through the HSM, where 90% of the costs are recovered in rates. Hinkley Site The Utility has been implementing remediation measures at the Hinkley site to reduce the mass of the chromium plume in groundwater and to monitor and control movement of the plume. The Utility’s remediation and abatement efforts at the Hinkley site are subject to the regulatory authority of the California Regional Water Quality Control Board, Lahontan Region. In November 2015, the California Regional Water Quality Control Board, Lahontan Region adopted a clean-up and abatement order directing the Utility to contain and remediate the underground plume of hexavalent chromium and the potential environmental impacts. The final order states that the Utility must continue and improve its remediation efforts, define the boundaries of the chromium plume, and take other action. Additionally, the final order sets plume capture requirements, requires a monitoring and reporting program, and includes deadlines for the Utility to meet interim cleanup targets. The United States Geological Survey team is currently conducting a background study on the site to better define the chromium plume boundaries. A draft background study report is expected to be issued in 2019 and finalized in 2020. The Utility’s undiscounted future costs associated with the Hinkley site may increase by as much as $139 million if the extent of contamination or necessary remediation is greater than anticipated. The costs associated with environmental remediation at the Hinkley site will not be recovered through rates. Former Manufactured Gas Plants Former MGPs used coal and oil to produce gas for use by the Utility’s customers before natural gas became available. The by-products and residues of this process were often disposed of at the MGPs themselves. The Utility has undertaken a program to manage the residues left behind as a result of the manufacturing process; many of the sites in the program have been addressed. The Utility’s undiscounted future costs associated with MGP sites may increase by as much as $528 million if the extent of contamination or necessary remediation is greater than anticipated. The costs associated with environmental remediation at the MGP sites are recovered through the HSM, where 90% of the costs are recovered in rates. Utility-Owned Generation Facilities and Third-Party Disposal Sites Utility-owned generation facilities and third-party disposal sites often involve long-term remediation. The Utility’s undiscounted future costs associated with Utility-owned generation facilities and third-party disposal sites may increase by as much as $98 million if the extent of contamination or necessary remediation is greater than anticipated. The environmental remediation costs associated with the Utility-owned generation facilities and third-party disposal sites are recovered through the HSM, where 90% of the costs are recovered in rates. Fossil Fuel-Fired Generation Sites In 1998, the Utility divested its generation power plant business as part of generation deregulation. Although the Utility sold its fossil-fueled power plants, the Utility retained the environmental remediation liability associated with each site. The Utility’s undiscounted future costs associated with fossil fuel-fired generation sites may increase by as much as $86 million if the extent of contamination or necessary remediation is greater than anticipated. The environmental remediation costs associated with the fossil fuel-fired sites will not be recovered through rates. Insurance Wildfire Insurance In 2018, PG&E Corporation and the Utility renewed their liability insurance coverage for wildfire events in an aggregate amount of approximately $1.4 billion for the period from August 1, 2018 through July 31, 2019, comprised of $700 million for general wildfire liability in policies covering wildfire and non-wildfire events (subject to an initial self-insured retention of $10 million per occurrence), and $700 million for wildfire property damages only, which included approximately $200 million of coverage through the use of a catastrophe bond. For the period from August 1, 2019 through July 31, 2020, PG&E Corporation and the Utility have secured approximately $430 million for general wildfire liability (subject to an initial self-insured retention of $10 million per occurrence). PG&E Corporation and the Utility continue to pursue additional insurance coverage for the period from August 1, 2019 through July 30, 2020. Various coverage limitations applicable to different insurance layers could result in uninsured costs in the future depending on the amount and type of damages resulting from covered events. PG&E Corporation’s and the Utility’s cost of obtaining the wildfire and non-wildfire insurance coverage in place for the period of August 1, 2019 through July 31, 2020 (consisting of the $430 million general wildfire liability coverage described above and $520 million for non-wildfire general liability) is approximately $190 million, compared to the approximately $50 million that the Utility is currently recovering through rates through December 31, 2019. The Utility intends to seek recovery for the full amount of premium costs paid in excess of the amount the Utility currently is recovering from customers through the end of the current GRC period, which ends on December 31, 2019. PG&E Corporation and the Utility record a receivable for insurance recoveries when it is deemed probable that recovery of a recorded loss will occur. Through June 30, 2019, PG&E Corporation and the Utility recorded $1.38 billion for probable insurance recoveries in connection with the 2018 Camp fire and $842 million for probable insurance recoveries in connection with the 2017 Northern California wildfires. These amounts reflect an assumption that the cause of each fire is deemed to be a separate occurrence under the insurance policies. The amount of the receivable is subject to change based on additional information. PG&E Corporation and the Utility intend to seek full recovery for all insured losses and believe it is reasonably possible that they will record a receivable for the full amount of the insurance limits in the future. Nuclear Insurance The Utility maintains multiple insurance policies through NEIL and European Mutual Association for Nuclear Insurance, covering nuclear or non-nuclear events at the Utility’s two nuclear generating units at Diablo Canyon and the retired Humboldt Bay Unit 3. If NEIL losses in any policy year exceed accumulated funds, the Utility could be subject to a retrospective assessment. If NEIL were to exercise this assessment, as of the policy renewal on April 1, 2020, the maximum aggregate annual retrospective premium obligation for the Utility would be approximately $41 million. If European Mutual Association for Nuclear Insurance losses in any policy year exceed accumulated funds, the Utility could be subject to a retrospective assessment of approximately $5 million, as of the policy renewal on April 1, 2020. For more information about the Utility’s nuclear insurance coverage, see Note 14 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K. Tax Matters PG&E Corporation’s and the Utility’s unrecognized tax benefits may change significantly within the next 12 months due to the resolution of audits. As of June 30, 2019, it is reasonably possible that unrecognized tax benefits will decrease by approximately $10 million within the next 12 months. PG&E Corporation and the Utility believe that the majority of the decrease will not impact net income. PG&E Corporation does not believe that the Chapter 11 Cases resulted in loss of or limitation on the utilization of any of the tax carryforwards. PG&E Corporation will continue to monitor the status of tax carryforwards during the pendency of the Chapter 11 Cases. Purchase Commitments In the ordinary course of business, the Utility enters into various agreements to purchase power and electric capacity; natural gas supply, transportation, and storage; nuclear fuel supply and services; and various other commitments. At December 31, 2018, the Utility had undiscounted future expected obligations of approximately $40 billion. (See Note 14 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K.) The Utility has not entered into any new material commitments during the six months ended June 30, 2019.
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OTHER CONTINGENCIES AND COMMITMENTS |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER CONTINGENCIES AND COMMITMENTS | WILDFIRE-RELATED CONTINGENCIES PG&E Corporation and the Utility have significant contingencies arising from their operations, including contingencies related to wildfires. A provision for a loss contingency is recorded when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated. PG&E Corporation and the Utility evaluate which potential liabilities are probable and the related range of reasonably estimated losses and record a charge that reflects their best estimate or the lower end of the range, if there is no better estimate. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of losses is estimable, often involves a series of complex judgments about future events. Loss contingencies are reviewed quarterly and estimates are adjusted to reflect the impact of all known information, such as negotiations, discovery, settlements and payments, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. PG&E Corporation’s and the Utility’s provision for loss and expense excludes anticipated legal costs, which are expensed as incurred. PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows may be materially affected by the outcome of the following matters. Wildfire-Related Claims Wildfire-related claims on the Condensed Consolidated Financial Statements include amounts associated with the 2018 Camp fire, the 2017 Northern California wildfires, and the 2015 Butte fire. At June 30, 2019 and December 31, 2018, the Utility’s Condensed Consolidated Balance Sheets include estimated liabilities in respect of total wildfire-related claims as follows:
(1) On the Petition Date, all wildfire-related claims were classified as LSTC and all pending litigation was stayed. As of June 30, 2019, $100 million was reclassified from LSTC to current liabilities - wildfire-related claims to reflect Bankruptcy Court approval of contributions to the Wildfire Assistance Fund. In addition, during the three and six months ended June 30, 2019, the Utility incurred legal and other costs of $19 million and $32 million, respectively, related to the 2018 Camp fire, with no corresponding costs in the same periods in 2018. During the three and six months ended June 30, 2019, the Utility incurred legal and other costs of $7 million and $41 million, respectively, related to the 2017 Northern California wildfires, as compared to $46 million and $68 million, respectively, in the same periods in 2018. 2018 Camp Fire Background On November 8, 2018, a wildfire began near the city of Paradise, Butte County, California (the “2018 Camp fire”), which is located in the Utility’s service territory. Cal Fire’s Camp Fire Incident Information Website as of July 9, 2019 (the “Cal Fire website”) indicated that the 2018 Camp fire consumed 153,336 acres. On the Cal Fire website, Cal Fire reported 85 fatalities and the destruction of 13,972 residences, 528 commercial structures and 4,293 other buildings resulting from the 2018 Camp fire. There have been no subsequent updates of this information on the Cal Fire website. On May 15, 2019, Cal Fire issued a news release announcing the results of its investigation into the cause of the 2018 Camp fire. According to the news release:
Cal Fire indicated in its news release that its investigation report for the 2018 Camp fire has been forwarded to the Butte County District Attorney. (See “District Attorneys’ Offices’ Investigations” below for further information regarding the investigations of the 2018 Camp fire.) As of the date of this filing, this investigation report has not been released publicly. PG&E Corporation and the Utility accept Cal Fire’s determination that the 2018 Camp fire ignited at the first ignition site. PG&E Corporation and the Utility have not been able to form a conclusion as to whether a second fire ignited as a result of vegetation contact with the Utility’s facilities. PG&E Corporation and the Utility are continuing to review the evidence concerning the 2018 Camp fire. PG&E Corporation and the Utility have not yet had access to all of the evidence collected by Cal Fire as part of its investigation or to the investigation report prepared by Cal Fire. Further, the CPUC’s SED is conducting investigations to assess the compliance of electric and communication companies’ facilities with applicable rules and regulations in areas impacted by the 2018 Camp fire. According to information made available by the CPUC, investigation topics include, but are not limited to, maintenance of facilities, vegetation management, and emergency preparedness and response. Various other entities may also be investigating the fire. It is uncertain when the investigations will be complete and whether the SED will release any preliminary findings before its investigations are complete. 2017 Northern California Wildfires Background Beginning on October 8, 2017, multiple wildfires spread through Northern California, including Napa, Sonoma, Butte, Humboldt, Mendocino, Lake, Nevada, and Yuba Counties, as well as in the area surrounding Yuba City (the “2017 Northern California wildfires”). According to the Cal Fire California Statewide Fire Summary dated October 30, 2017, at the peak of the 2017 Northern California wildfires, there were 21 major fires that, in total, burned over 245,000 acres and destroyed an estimated 8,900 structures. The 2017 Northern California wildfires resulted in 44 fatalities. Cal Fire has issued 19 investigation reports and two supplementary investigation reports that include its determination of the causes of 21 of the 2017 Northern California wildfires, and alleged that all of these fires, with the exception of the Tubbs fire, involved the Utility’s equipment. During the second quarter of 2018, Cal Fire issued news releases announcing its determination on the causes of 16 of the 2017 Northern California wildfires (the La Porte, McCourtney, Lobo, Honey, Redwood, Sulphur, Cherokee, 37, Blue, Norrbom, Adobe, Partrick, Pythian, Nuns, Pocket and Atlas fires, located in Mendocino, Lake, Butte, Sonoma, Humboldt, Nevada and Napa counties). According to the Cal Fire news releases:
Cal Fire stated in its news releases that the McCourtney, Lobo, Sulphur, Blue, Norrbom, Adobe, Partrick, Pythian, Pocket and Atlas fire investigations, and the investigation related to the Honey fire, have been referred to the appropriate county District Attorney’s offices for review “due to evidence of alleged violations of state law.” (See “District Attorneys’ Offices’ Investigations” below for further information regarding the investigations by the District Attorneys’ offices related to these fires.) Also during the second quarter of 2018, Cal Fire released its investigation reports related to the Redwood, Cherokee, 37, Nuns and La Porte fires. Cal Fire did not refer these fires to District Attorney offices for investigation. On October 9, 2018, Cal Fire issued a news release announcing the results of its investigation into the Cascade fire, located in Yuba County, concluding that the Cascade fire “was started by sagging power lines coming into contact during heavy winds” and that “the power line in question was owned by Pacific Gas and Electric Company.” On October 10, 2018, Cal Fire released its investigation report related to the Cascade fire. (See “District Attorneys’ Offices’ Investigations” below for further information regarding the investigations of the Cascade fire by the Office of the District Attorney of Yuba County.) On January 24, 2019, Cal Fire issued a news release and its investigation report into the cause of the Tubbs fire. Cal Fire has determined that the Tubbs fire was caused by a private electrical system adjacent to a residential structure. During the second quarter of 2019, Cal Fire released its investigation reports related to the Sulphur, Blue, Norrbom, Adobe, Partrick, Pythian, Pocket and Atlas fires. The Cal Fire investigation report for the Adobe fire included as Attachment 42.1 a “Supplementary Investigation Report” concerning the Pressley fire. The Cal Fire investigator concludes in the Supplementary Investigation Report that the Pressley fire was started by an ember cast from the Adobe fire. On July 24, 2019, the CPUC released copies of Cal Fire’s investigation report related to the Point fire and supplementary investigation reports related to the Youngs fire, which Cal Fire had not previously released publicly, as attachments to the SED’s own investigative reports for those fires. (The Youngs fire is the fire that the Utility has previously referred to as the Maacama fire.) The Cal Fire investigation report for the Point fire alleges that the fire was caused by a tree limb that broke off in high winds and fell into a power line, causing the power line to contact the ground. The Cal Fire investigators in the Youngs supplementary reports conclude that the fire was caused by a tree that fell into a power line, severing the line. Cal Fire has not yet released its investigation reports related to the McCourtney and Lobo fires because Cal Fire referred its investigations into these fires to local law enforcement and the information contained in its investigation reports related to these fires remains confidential. As described in Note 11, on June 27, 2019, the CPUC issued an OII disclosing the findings of a June 13, 2019 report by the SED, which, among other things, alleges that the Utility committed 27 violations in connection with 12 of the 2017 Northern California wildfires (specifically, the Adobe, Atlas, Cascade, Norrbom, Nuns, Oakmont/Pythian, Partrick, Pocket, Point, Potter/Redwood, Sulphur and Youngs fires). As described in the OII, the 27 alleged violations include failure to maintain vegetation clearances, failure to identify and abate hazardous trees, improper record keeping, incomplete patrol prior to re-energizing a circuit, failure to retain evidence, failure to report an incident, and failure to maintain clearances between lines. No violations were identified by the SED in connection with the Cherokee, La Porte and Tubbs fires. The 37 fire was determined by the SED to not be a reportable incident. The SED report does not address the Lobo and McCourtney fires because Cal Fire referred its investigations into these fires to local law enforcement and the information contained in its investigation reports related to these fires remains confidential. On a status conference call before the assigned ALJ on July 29, 2019, the SED informed the parties that because the Nevada County District Attorney had decided not to pursue criminal charges in connection with the Lobo and McCourtney fires, the SED may add alleged violations related to those fires and the 2018 Camp fire to the OII. As required by the OII, on July 29, 2019, the Utility filed its initial response to the OII. In the initial response, the Utility indicated that it intends to fully cooperate with the CPUC but also stated that it disagreed with certain of the alleged violations set forth in the OII. The Utility also filed a Corrective Actions Report and an Application to Develop a Mobile Application and Supporting Systems, both as required by the OII. Also as required by the OII, on August 5, 2019, the Utility submitted a report to respond to the information requests contained in the OII, relating to matters such as the Utility’s vegetation management procedures and practices, its use of recloser devices in high fire risk areas, its pro-active de-energization of powerlines during times of high fire danger and its recordkeeping and other practices. Further, the SED is conducting investigations into certain of the other 2017 Northern California wildfires, including the McCourtney and Lobo fires. Various other entities may also be investigating certain of the fires. It is uncertain when the investigations will be complete and whether the SED will release any preliminary findings before its investigations are complete. Third-Party Claims, Investigations and Other Proceedings Related to the 2018 Camp Fire and 2017 Northern California Wildfires If the Utility’s facilities, such as its electric distribution and transmission lines, are determined to be the substantial cause of one or more fires, and the doctrine of inverse condemnation applies, the Utility could be liable for property damage, business interruption, interest and attorneys’ fees without having been found negligent. California courts have imposed liability under the doctrine of inverse condemnation in legal actions brought by property holders against utilities on the grounds that losses borne by the person whose property was damaged through a public use undertaking should be spread across the community that benefited from such undertaking, and based on the assumption that utilities have the ability to recover these costs from their customers. Further, California courts have determined that the doctrine of inverse condemnation is applicable regardless of whether the CPUC ultimately allows recovery by the utility for any such costs. The CPUC may decide not to authorize cost recovery even if a court decision were to determine that the Utility is liable as a result of the application of the doctrine of inverse condemnation. (See “Loss Recoveries – Regulatory Recovery” below for further information regarding potential cost recovery related to the wildfires, including in connection with SB 901.) In addition to claims for property damage, business interruption, interest and attorneys’ fees, the Utility could be liable for fire suppression costs, evacuation costs, medical expenses, personal injury damages, punitive damages and other damages under other theories of liability, including if the Utility were found to have been negligent. Further, the Utility could be subject to material fines, penalties, or restitution orders if the CPUC or any law enforcement agency were to bring an enforcement action, including a criminal proceeding, and it were determined that the Utility had failed to comply with applicable laws and regulations. As of January 28, 2019, before the automatic stay arising as a result of the filing of the Chapter 11 Cases, PG&E Corporation and the Utility were aware of approximately 100 complaints on behalf of at least 4,200 plaintiffs related to the 2018 Camp fire, nine of which sought to be certified as class actions. The pending civil litigation against PG&E Corporation and the Utility related to the 2018 Camp fire, which is currently stayed as a result of the commencement of the Chapter 11 Cases, included claims under multiple theories of liability, including inverse condemnation, trespass, private nuisance, public nuisance, negligence, negligence per se, negligent interference with prospective economic advantage, negligent infliction of emotional distress, premises liability, violations of the Public Utilities Code, violations of the Health & Safety Code, malice and false advertising in violation of the California Business and Professions Code. The plaintiffs principally asserted that PG&E Corporation’s and the Utility’s alleged failure to maintain and repair their distribution and transmission lines and failure to properly maintain the vegetation surrounding such lines were the causes of the 2018 Camp fire. The plaintiffs sought damages and remedies that include wrongful death, personal injury, property damage, evacuation costs, medical expenses, establishment of a class action medical monitoring fund, punitive damages, attorneys’ fees and other damages. PG&E Corporation’s and the Utility’s obligations with respect to such claims are expected to be determined through the Chapter 11 process. As of January 28, 2019, before the automatic stay arising as a result of the filing of the Chapter 11 Cases, PG&E Corporation and the Utility were aware of approximately 750 complaints on behalf of at least 3,800 plaintiffs related to the 2017 Northern California wildfires, five of which sought to be certified as class actions. These cases were coordinated in the San Francisco County Superior Court. As of the Petition Date, the coordinated litigation was in the early stages of discovery. A trial with respect to the Atlas fire was scheduled to begin on September 23, 2019. The pending civil litigation against PG&E Corporation and the Utility related to the 2017 Northern California wildfires, included claims under multiple theories of liability, including inverse condemnation, trespass, private nuisance and negligence. This litigation, including the trial date with respect to the Atlas fire, currently is stayed as a result of the commencement of the Chapter 11 Cases. The plaintiffs principally asserted that PG&E Corporation’s and the Utility’s alleged failure to maintain and repair their distribution and transmission lines and failure to properly maintain the vegetation surrounding such lines were the causes of the 2017 Northern California wildfires. The plaintiffs sought damages that include wrongful death, personal injury, property damage, evacuation costs, medical expenses, punitive damages, attorneys’ fees and other damages. PG&E Corporation’s and the Utility’s obligations with respect to such claims are expected to be determined through the Chapter 11 process. However, the TCC has submitted a motion to the Bankruptcy Court seeking relief from the automatic stay to enable certain plaintiffs to pursue their claims outside of the Chapter 11 process, as further described under the heading “Motions to Lift the Automatic Stay for Certain Tubbs Fire-Related Claims” below. PG&E Corporation and the Utility have opposed such motions. Insurance carriers who have made payments to their insureds for property damage arising out of the 2017 Northern California wildfires filed 52 subrogation complaints in the San Francisco County Superior Court and the Sonoma County Superior Court as of January 28, 2019. These complaints allege, among other things, negligence, inverse condemnation, trespass and nuisance. The allegations were similar to the ones made by individual plaintiffs. As of January 28, 2019, insurance carriers have filed 39 similar subrogation complaints with respect to the 2018 Camp fire in the Sacramento County Superior Court and the Butte County Superior Court. PG&E Corporation’s and the Utility’s obligations with respect to such claims are expected to be determined through the Chapter 11 process. However, certain holders of subrogation claims have submitted motions to the Bankruptcy Court seeking relief from the automatic stay in order to pursue their claims outside of the Chapter 11 process, as further described under the heading “Motions to Lift the Automatic Stay for Certain Tubbs Fire-Related Claims” below. PG&E Corporation and the Utility have opposed such motions. Various government entities, including Yuba, Nevada, Lake, Mendocino, Napa and Sonoma Counties and the Cities of Santa Rosa and Clearlake, also asserted claims against PG&E Corporation and the Utility based on the damages that these government entities allegedly suffered as a result of the 2017 Northern California wildfires. Such alleged damages included, among other things, loss of natural resources, loss of public parks, property damages and fire suppression costs. The causes of action and allegations were similar to the ones made by individual plaintiffs and the insurance carriers. With respect to the 2018 Camp fire, Butte County has filed similar claims against PG&E Corporation and the Utility. As described below under the heading “Plan Support Agreements with Public Entities,” on June 18, 2019, PG&E Corporation and the Utility entered into agreements with certain government entities to potentially resolve their wildfire-related claims through the Chapter 11 process. As described in Note 2, on July 1, 2019, the Bankruptcy Court entered an order approving the Bar Date of October 21, 2019, at 5:00 p.m. (Pacific Time) for filing claims against PG&E Corporation and the Utility relating to the period prior to the Petition Date, including claims in connection with the 2018 Camp fire and the 2017 Northern California wildfires. The Bar Date is subject to certain exceptions, including for claims arising under section 503(b)(9) of the Bankruptcy Code, the bar date for which occurred on April 22, 2019. It is expected that numerous wildfire-related claims will be filed against PG&E Corporation and the Utility in connection with the 2018 Camp fire and the 2017 Northern California wildfires through the Bar Date. On July 18, 2019, PG&E Corporation and the Utility filed a motion for entry of an order establishing procedures and schedules for the estimation of PG&E Corporation’s and the Utility’s aggregate liability for certain claims arising out of the 2018 Camp fire and the 2017 Northern California wildfires, as further described under the heading “Motion for the Establishment of Wildfire Claims Estimation Procedures” below. PG&E Corporation and the Utility are continuing to review the evidence concerning the 2018 Camp fire and 2017 Northern California wildfires. PG&E Corporation and the Utility have not yet had access to all of the evidence collected by Cal Fire as part of its investigations or to the McCourtney and Lobo investigation reports prepared by Cal Fire. PG&E Corporation and the Utility and plaintiffs have reached an agreement to transfer available evidence collected by Cal Fire for the fires for which its investigation reports have been released to a shared storage facility. The transfer of the evidence is not yet complete. (See “District Attorneys’ Offices’ Investigations” below for information regarding certain investigations related to the 2018 Camp fire and 2017 Northern California wildfires.) Regardless of any determinations of cause by Cal Fire with respect to any pre-petition fire, ultimately PG&E Corporation’s and the Utility’s liability will be resolved through the Chapter 11 process, regulatory proceedings and any potential enforcement proceedings, all of which could take a number of years to resolve. The timing and outcome of these and other potential proceedings are uncertain. PG&E Corporation and the Utility, as part of their efforts to emerge from bankruptcy, are engaged in discussions with holders of claims related to the 2017 Northern California wildfires and the 2018 Camp fire in an attempt to reach a global settlement of such claims. As discussed under the heading “Plan Support Agreements with Public Entities,” PG&E Corporation and the Utility have entered into agreements with certain government entity claimholders to potentially resolve their wildfire-related claims. The most recent settlement offers made by PG&E Corporation and the Utility to subrogated insurance claimholders and individual claimholders as of the date of this filing are discussed in further detail below under the heading “2018 Camp Fire and 2017 Northern California Wildfires Accounting Charge.” PG&E Corporation and the Utility cannot predict the outcome or timing of discussions with other claimholders. Even if discussions with claimholders were successful, the consummation of such a global settlement would likely be contingent on numerous uncertain conditions, including Bankruptcy Court approval and governmental action. On March 16, 2018, PG&E Corporation and the Utility filed a demurrer to the inverse condemnation cause of action in the 2017 Northern California wildfires litigation. On May 21, 2018, the court overruled the motion. On July 20, 2018, PG&E Corporation and the Utility filed a writ in the Court of Appeal requesting appellate review of the trial court’s decision, which was denied on September 17, 2018. On September 27, 2018, PG&E Corporation and the Utility filed a petition for review to the California Supreme Court. On November 14, 2018, the California Supreme Court denied PG&E Corporation’s and the Utility’s petition for review. Motions to Lift the Automatic Stay for Certain Tubbs Fire-Related Claims On July 2, 2019, the TCC submitted a motion, pursuant to section 362(d)(1) of the Bankruptcy Code, for entry of an order terminating the automatic stay to permit certain individual plaintiffs (the “Tubbs Preference Plaintiffs”) to proceed to a jury trial on their claims against PG&E Corporation and the Utility arising from the Tubbs fire, and to request the San Francisco Superior Court in the coordinated litigation for the 2017 Northern California wildfires to order one or more of the cases of the Tubbs Preference Plaintiffs to trial with preference pursuant to California Code of Civil Procedure section 36. On July 9, 2019, the TCC submitted an amended motion to request relief from the stay with respect to additional individual plaintiffs to proceed to a jury trial on their claims against PG&E Corporation and the Utility arising from the Tubbs fire. On July 3, 2019, the Ad Hoc Subrogation Group submitted a motion for relief from the automatic stay to permit certain of the Ad Hoc Subrogation Group’s members to pursue their claims against PG&E Corporation and the Utility regarding the issue of PG&E Corporation’s and the Utility’s liability for the Tubbs fire in the San Francisco Superior Court in the coordinated litigation for the 2017 Northern California wildfires. On July 19, 2019, PG&E Corporation and the Utility filed an objection to the motions of the TCC and the Ad Hoc Subrogation Group, requesting that the motions be denied. Also on July 19, 2019, the UCC and the Shareholder Group filed objections to the motions of the TCC and the Ad Hoc Subrogation Group with the Bankruptcy Court, requesting that the motions be denied. The Shareholder Group also joined in PG&E Corporation’s and the Utility’s objection to the motions of the TCC and the Ad Hoc Subrogation Group. On July 22, 2019, the Bankruptcy Court issued an order continuing the hearings on the TCC’s and the Ad Hoc Subrogation Group’s motions for relief from the automatic stay to August 14, 2019. Motion for the Establishment of Wildfire Claims Estimation Procedures On July 18, 2019, PG&E Corporation and the Utility submitted a motion, pursuant to sections 105(a) and 502(c) of the Bankruptcy Code, for entry of an order establishing procedures and schedules for the estimation of PG&E Corporation’s and the Utility’s aggregate liability for contingent and/or unliquidated claims arising out of the 2015 Butte fire, the 2017 Northern California wildfires and the 2018 Camp fire (which are collectively referred to in this paragraph as “wildfire claims”). In the motion, PG&E Corporation and the Utility proposed, among other things, the following general parameters of the estimation process:
The motion is expected to be heard by the Bankruptcy Court on August 14, 2019. On August 7, 2019, certain third parties filed joinders and statements in support with the Bankruptcy Court with respect to PG&E Corporation’s and the Utility’s motion, including the Ad Hoc Noteholder Committee, the UCC and the Shareholder Group. Also on August 7, 2019, certain third parties filed objections to PG&E Corporation’s and the Utility’s motion with the Bankruptcy Court, including the City and County of San Francisco, the Ad Hoc Subrogation Group and the TCC. The objection of the City and County of San Francisco is limited to PG&E Corporation’s and the Utility’s proposal for the Bankruptcy Court to address the legal issue of whether, under the doctrine of inverse condemnation, PG&E Corporation and the Utility may be held strictly liable for wildfire claims asserting property damages even where it was not negligent. Plan Support Agreements with Public Entities On June 18, 2019, PG&E Corporation and the Utility entered into PSAs with certain local public entities providing for an aggregate of $1.0 billion to be paid by PG&E Corporation and the Utility to such public entities pursuant to PG&E Corporation and the Utility’s Chapter 11 plan of reorganization in order to settle such public entities’ claims against PG&E Corporation and the Utility relating to the 2018 Camp fire, 2017 Northern California wildfires and 2015 Butte fire (collectively, “Public Entity Wildfire Claims”). PG&E Corporation and the Utility’s Chapter 11 plan of reorganization currently is under development and has not yet been filed with the Bankruptcy Court. PG&E Corporation and the Utility have entered into a PSA with each of the following public entities or group of public entities, as applicable:
For purposes of each PSA, the local public entities that are party to such PSA are referred to herein as “Supporting Public Entities.” Each PSA provides that PG&E Corporation and the Utility’s Chapter 11 plan of reorganization will include, among other things, the following elements:
The “Settlement Amount” set forth in each PSA is as follows:
Each PSA provides that, subject to certain terms and conditions, the Supporting Public Entities will support PG&E Corporation and the Utility’s Chapter 11 plan of reorganization with respect to its treatment of their respective Public Entity Wildfire Claims, including by voting to accept PG&E Corporation and the Utility’s Chapter 11 plan of reorganization in the Chapter 11 Cases. Each PSA may be terminated by the applicable Supporting Public Entities under certain circumstances, including:
Each PSA may be terminated by PG&E Corporation and the Utility under certain circumstances, including if:
Potential Losses in Connection with the 2018 Camp Fire and 2017 Northern California Wildfires On May 8, 2019, the California Department of Insurance issued a news release announcing an update on property losses in connection with the 2018 wildfires in Southern California (which are not in the Utility’s service territory) and the 2018 Camp fire, indicating that “total claims over $12 billion as of April [2019]” in insured losses have been reported from the November 2018 fires, of which approximately $8.6 billion relates to statewide claims from the 2018 Camp fire. On September 6, 2018, the California Department of Insurance issued a news release announcing that insurers have received nearly 55,000 insurance claims totaling more than $12.28 billion in losses, of which approximately $10 billion relates to statewide claims from the 2017 Northern California wildfires. The dollar amounts announced by the California Department of Insurance represent an aggregate amount of approximately $18.6 billion of insurance claims made as of the above dates related to the 2018 Camp fire and 2017 Northern California wildfires. PG&E Corporation and the Utility expect that additional claims have been submitted and will continue to be submitted to insurers, particularly with respect to the 2018 Camp fire. These claims reflect insured property losses only. The $18.6 billion of insurance claims made as of the above dates does not account for uninsured or underinsured property losses, interest, attorneys’ fees, fire suppression and clean-up costs, evacuation costs, personal injury or wrongful death damages, medical expenses or other costs, such as potential punitive damages, fines or penalties, or losses related to claims that have not manifested yet (“future claims”), each of which could be significant. Potential liabilities related to the 2018 Camp fire and 2017 Northern California wildfires depend on various factors, including but not limited to the cause of each fire, contributing causes of the fires (including alternative potential origins, weather and climate related issues), the number, size and type of structures damaged or destroyed, the contents of such structures and other personal property damage, the number and types of trees damaged or destroyed, attorneys’ fees for claimants, the nature and extent of any personal injuries, including the loss of lives, the extent to which future claims arise, the amount of fire suppression and clean-up costs, other damages the Utility may be responsible for if found negligent, the amount of any penalties or fines that may be imposed by governmental entities, and the amount of any penalties, fines, or restitution orders that might result from any criminal charges brought. There are a number of unknown facts and legal considerations that may impact the amount of any potential liability. Among other things, there is uncertainty at this time as to the number of wildfire-related claims that will be filed in the Chapter 11 Cases, the number of current and future claims that will be allowed by the Bankruptcy Court, how claims for punitive damages and claims by variously situated persons will be treated and whether such claims will be allowed, and the impact that historical settlement values for wildfire claims and other factors may have on the estimation of wildfire liability in the Chapter 11 Cases. If PG&E Corporation and the Utility were to be found liable for certain or all of the costs, expenses and other losses described above with respect to the 2018 Camp fire and 2017 Northern California wildfires, the amount of such liability could exceed $30 billion, which amount does not include potential punitive damages, fines and penalties or damages related to claims that have not manifested yet. This estimate is based on a wide variety of data and other information available to PG&E Corporation and the Utility and their advisors, including various precedents involving similar claims, and accounts for property losses (including insured, uninsured and underinsured property losses), interest, attorneys’ fees, fire suppression and clean-up costs, evacuation costs, personal injury or wrongful death damages, medical expenses and certain other costs. This estimate is not intended to provide an upper end of the range of potential liability arising from the 2018 Camp fire and 2017 Northern California wildfires. In certain circumstances, PG&E Corporation’s and the Utility’s liability could be substantially greater than such amount. If PG&E Corporation and the Utility were to be found liable for any punitive damages, and such damages were allowed by the Bankruptcy Court, or if PG&E Corporation and the Utility were subject to fines or penalties, the amount of such punitive damages, fines and penalties could be significant. PG&E Corporation and the Utility have received significant fines and penalties in connection with past incidents. For example, in 2015, the CPUC approved a decision that imposed penalties on the Utility totaling $1.6 billion in connection with the natural gas explosion that occurred in the City of San Bruno, California on September 9, 2010 (the “San Bruno explosion”). These penalties represented nearly three times the underlying liability for the San Bruno explosion of approximately $558 million incurred for third-party claims, exclusive of shareholder derivative lawsuits and legal costs incurred. The amount of punitive damages, fines and penalties imposed on PG&E Corporation and the Utility could likewise be a significant amount in relation to the underlying liabilities with respect to the 2018 Camp fire and 2017 Northern California wildfires. PG&E Corporation’s and the Utility’s obligations with respect to such claims are expected to be determined through the Chapter 11 process. Regulatory proceedings are not subject to the automatic stay imposed as a result of the commencement of the Chapter 11 Cases; however, collection efforts in connection with fines or penalties arising out of such proceedings are stayed. 2018 Camp Fire and 2017 Northern California Wildfires Accounting Charge Following accounting rules, PG&E Corporation and the Utility record a liability when a loss is probable and reasonably estimable. In accordance with U.S. generally accepted accounting principles, PG&E Corporation and the Utility evaluate which potential liabilities are probable and the related range of reasonably estimated losses, and record a charge that is the amount within the range that is a better estimate than any other amount or the lower end of the range, if there is no better estimate. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of losses is estimable, often involves a series of complex judgments about future events. Loss contingencies are reviewed quarterly and estimates are adjusted to reflect the impact of all known information, such as negotiations, discovery, settlements and payments, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. 2018 Camp Fire In light of the current state of the law and the information currently available to the Utility, PG&E Corporation and the Utility have determined that it is probable they will incur a loss for claims in connection with the 2018 Camp fire. PG&E Corporation and the Utility recorded a charge in the amount of $10.5 billion for the year ended December 31, 2018. Based on additional facts and circumstances available to the Utility as of the date of this filing, including the entry into the PSAs and the status of PG&E Corporation’s and the Utility’s efforts to reach a resolution with other holders of wildfire-related claims, PG&E Corporation and the Utility recorded an additional charge for claims in connection with the 2018 Camp fire in the amount of $1.9 billion for the three months ended June 30, 2019. The aggregate liability of $12.4 billion for claims in connection with the 2018 Camp fire corresponds to the lower end of the range of PG&E Corporation’s and the Utility’s reasonably estimated probable losses, and is subject to change based on additional information. PG&E Corporation and the Utility currently believe that it is reasonably possible that the amount of the loss related to the 2018 Camp fire will be greater than the amount accrued, but are unable to reasonably estimate the additional loss and the upper end of the range because there are a number of unknown facts and legal considerations that may impact the amount of any potential liability, including the total scope and nature of claims that may be asserted against PG&E Corporation and the Utility. PG&E Corporation and the Utility intend to continue to review the available information and other information as it becomes available, including evidence in Cal Fire’s possession, evidence from or held by other parties, claims that have not yet been submitted, and additional information about the nature and extent of personal and business property damage and losses, the nature, number and severity of personal injuries, and information made available through the discovery process. The process for estimating losses associated with claims requires management to exercise significant judgment based on a number of assumptions and subjective factors, including but not limited to factors identified above and estimates based on currently available information and prior experience with wildfires. As more information becomes available, management estimates and assumptions regarding the financial impact of the 2018 Camp fire may change, which could result in material increases to the loss accrued. The $12.4 billion liability does not include any amounts for potential penalties or fines that may be imposed by governmental entities on PG&E Corporation or the Utility, or punitive damages, if any, or any losses related to future claims for damages that have not manifested yet, each of which could be significant. In addition, the charge does not include any amount in respect of FEMA reimbursement claims, claims for property damages related to federal land and other property or claims by certain state and local public entities that are not party to the PSAs, which amounts could be substantial. The charge also does not include any amounts for potential losses in connection with the wildfire-related securities class action litigation described below. 2017 Northern California Wildfires In light of the current state of the law and the information currently available to the Utility, PG&E Corporation and the Utility have determined that it is probable they will incur a loss for claims in connection with all 21 of the 2017 Northern California wildfires identified above, the reasons for which are discussed in more detail in this section below. PG&E Corporation and the Utility recorded a charge in the amount of $2.5 billion during the quarter ended June 30, 2018 and a charge in the amount of $1.0 billion during the quarter ended December 31, 2018, for a total charge in the amount of $3.5 billion for the year ended December 31, 2018. Based on additional facts and circumstances available to the Utility as of the date of this filing, including additional information from Cal Fire, the entry into the PSAs and the status of PG&E Corporation’s and the Utility’s efforts to reach a resolution with other holders of wildfire-related claims, PG&E Corporation and the Utility recorded an additional charge for claims in connection with the 2017 Northern California wildfires in the amount of $2.0 billion for the three months ended June 30, 2019. The aggregate liability of $5.5 billion for claims in connection with the 2017 Northern California wildfires corresponds to the lower end of the range of PG&E Corporation’s and the Utility’s reasonably estimated probable losses and is subject to change based on additional information. In the case of the Tubbs and 37 fires, PG&E Corporation and the Utility continue to believe that if the claims related to these fires were litigated on the merits, it would not be probable that they would incur a loss for such claims. However, as a result of PG&E Corporation’s and the Utility’s most recent settlement offer to holders of claims related to the Tubbs and 37 fires as of the date of this filing, PG&E Corporation and the Utility have determined that it is probable they will incur a loss for claims in connection with such fires. With respect to 17 of the other 19 of the 2017 Northern California wildfires (the La Porte, McCourtney, Lobo, Honey, Redwood, Sulphur, Cherokee, Blue, Pocket, Atlas, Cascade, Point and Sonoma/Napa merged fires (which include the Nuns, Norrbom, Adobe, Partrick and Pythian fires)), PG&E Corporation and the Utility previously determined that it is probable they would incur a loss for claims in connection with such fires if such claims were litigated on the merits. With respect to 2 of the other 19 of the 2017 Northern California wildfires (the Youngs and Pressley fires), PG&E Corporation and the Utility have determined that it is probable they would incur a loss for claims in connection with such fires if such claims were litigated on the merits based on information that became available to PG&E Corporation and the Utility after the filing of their last Quarterly Report on Form 10-Q. PG&E Corporation and the Utility currently believe that it is reasonably possible that the amount of the loss related to the 2017 Northern California wildfires will be greater than the amount accrued, but are unable to reasonably estimate the additional loss and the upper end of the range because there are a number of unknown facts and legal considerations that may impact the amount of any potential liability, including the total scope and nature of claims that may be asserted against PG&E Corporation and the Utility. PG&E Corporation and the Utility intend to continue to review the available information and other information as it becomes available, including evidence in Cal Fire’s possession, evidence from or held by other parties, claims that have not yet been submitted, and additional information about the nature and extent of personal and business property damage and losses, the nature, number and severity of personal injuries, and information made available through the discovery process. The process for estimating losses associated with claims requires management to exercise significant judgment based on a number of assumptions and subjective factors, including but not limited to factors identified above and estimates based on currently available information and prior experience with wildfires. As more information becomes available, management estimates and assumptions regarding the financial impact of the 2017 Northern California wildfires may change, which could result in material increases to the loss accrued. The $5.5 billion liability does not include any amounts for potential penalties or fines that may be imposed by governmental entities on PG&E Corporation or the Utility, or punitive damages, if any, or any losses related to future claims for damages that have not manifested yet, each of which could be significant. In addition, the charge does not include any amount in respect of FEMA reimbursement claims, claims for property damages related to federal land and other property or claims by certain state and local public entities that are not party to the PSAs, which amounts could be substantial. The charge also does not include any amounts for potential losses in connection with the wildfire-related securities class action litigation described below. Additional Information Related to 2018 Camp Fire and 2017 Northern California Wildfires Accounting Charge The aggregate liability of $17.9 billion for claims in connection with the 2018 Camp fire and the 2017 Northern California wildfires is comprised of (i) $8.5 billion for subrogated insurance claimholders, (ii) $7.5 billion for individual claimholders (including those with uninsured and underinsured property losses, among other claims), (iii) $1.0 billion for the Supporting Public Entities with respect to their Public Entity Wildfire Claims pursuant to the PSAs and (iv) $900 million for clean-up and fire suppression costs. The aggregate liabilities of $8.5 billion for subrogated insurance claimholders and $7.5 billion for individual claimholders are based on PG&E Corporation’s and the Utility’s estimates of probable loss developed from data and other information available to PG&E Corporation and the Utility and PG&E Corporation’s and the Utility’s most recent settlement offers to representatives of such claimholders as of the date of this filing. PG&E Corporation and the Utility cannot predict the outcome or timing of discussions with such claimholders. With respect to the $1.0 billion liability for claims held by the Supporting Public Entities, while PG&E Corporation and the Utility previously disclosed the existence of claims asserted by such entities, PG&E Corporation and the Utility had not previously taken a charge related to these claims as the amount of the liability could not be reasonably estimated. As described above, the aggregate liability of $17.9 billion for claims in connection with the 2018 Camp fire and the 2017 Northern California wildfires corresponds to the lower end of the range of PG&E Corporation’s and the Utility’s reasonably estimated probable losses and is subject to change based on additional information. (See “Potential Losses in Connection with the 2018 Camp Fire and 2017 Northern California Wildfires” above.) As of the date of this filing, PG&E Corporation and the Utility believe that the settlement discussions with representatives of subrogated insurance claimholders are in a particularly critical period of the negotiation. PG&E Corporation and the Utility believe that the potential exists for material developments in the negotiation in the near term. Accordingly, if PG&E Corporation, the Utility and such claimholders reach agreement, PG&E Corporation’s and the Utility’s probable loss contingency for the subrogated insurance claims may increase by a material amount, which would result in an additional accrual above the $8.5 billion reflected in this filing. Any such increase could be substantial and could be taken in the third quarter of 2019. In their motion submitted to the Bankruptcy Court on July 23, 2019, the Ad Hoc Subrogation Group stated that holders of subrogated insurance claims hold in excess of $20 billion of wildfire-related claims against PG&E Corporation and the Utility. In the “Restructuring Term Sheet” attached to such motion, the Ad Hoc Subrogation Group proposed terms for a plan of reorganization that would settle all such subrogated insurance claims for consideration valued at $15.8 billion. PG&E Corporation and the Utility cannot predict the outcome or timing of discussions with such claimholders. Loss Recoveries PG&E Corporation and the Utility had insurance coverage for liabilities, including wildfire. Additionally, there are several mechanisms that allow for recovery of costs from customers. Potential for recovery is described below. Failure to obtain a substantial or full recovery of costs related to the 2018 Camp fire and 2017 Northern California wildfires or any conclusion that such recovery is no longer probable could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows. In addition, the inability to recover costs in in a timely manner could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows. Insurance PG&E Corporation and the Utility had $842 million of insurance coverage for liabilities, including wildfire events, for the period from August 1, 2017 through July 31, 2018, subject to an initial self-insured retention of $10 million per occurrence and further retentions of approximately $40 million per occurrence. During the third quarter of 2018, PG&E Corporation and the Utility renewed their liability insurance coverage for wildfire events in an aggregate amount of approximately $1.4 billion for the period from August 1, 2018 through July 31, 2019, comprised of $700 million for general liability (subject to an initial self-insured retention of $10 million per occurrence), and $700 million for property damages only, which property damage coverage includes an aggregate amount of approximately $200 million through the reinsurance market where a catastrophe bond was utilized. PG&E Corporation and the Utility record a receivable for insurance recoveries when it is deemed probable that recovery of a recorded loss will occur. Through June 30, 2019, PG&E Corporation and the Utility recorded $1.38 billion for probable insurance recoveries in connection with the 2018 Camp fire and $842 million for probable insurance recoveries in connection with the 2017 Northern California wildfires. These amounts reflect an assumption that the cause of each fire is deemed to be a separate occurrence under the insurance policies. The amount of the receivable is subject to change based on additional information. PG&E Corporation and the Utility intend to seek full recovery for all insured losses and believe it is reasonably possible that they will record a receivable for the full amount of the insurance limits in the future. If PG&E Corporation and the Utility are unable to recover the full amount of their insurance, PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows could be materially affected. Even if PG&E Corporation and the Utility were to recover the full amount of their insurance, PG&E Corporation and the Utility expect their losses in connection with the 2018 Camp fire and 2017 Northern California wildfires will substantially exceed their available insurance. The following table presents changes in the insurance receivable for the six months ended June 30, 2019. The balance for insurance receivable is included in Other accounts receivable in PG&E Corporation’s and the Utility’s Condensed Consolidated Balance Sheets:
Regulatory Recovery On June 21, 2018, the CPUC issued a decision granting the Utility’s request to establish a WEMA to track specific incremental wildfire liability costs effective as of July 26, 2017. The decision does not grant the Utility rate recovery of any wildfire-related costs. Any such rate recovery would require CPUC authorization in a separate proceeding. The Utility may be unable to fully recover costs in excess of insurance, if at all. Rate recovery is uncertain, therefore the Utility has not recorded a regulatory asset related to any wildfire claims costs. Even if such recovery is possible, it could take a number of years to resolve and a number of years to collect. In addition, SB 901, signed into law on September 21, 2018, requires the CPUC to establish a customer harm threshold, directing the CPUC to limit certain disallowances in the aggregate, so that they do not exceed the maximum amount that the Utility can pay without harming ratepayers or materially impacting its ability to provide adequate and safe service (the “Customer Harm Threshold”). SB 901 also authorizes the CPUC to issue a financing order that permits recovery, through the issuance of recovery bonds (also referred to as “securitization”), of wildfire-related costs found to be just and reasonable by the CPUC and, only for the 2017 Northern California wildfires, any amounts in excess of the Customer Harm Threshold. SB 901 does not authorize securitization with respect to possible 2018 Camp fire costs. On January 10, 2019, the CPUC adopted an OIR, which establishes a process to develop criteria and a methodology to inform determinations of the Customer Harm Threshold in future applications under Section 451.2(a) of the Public Utilities Code for recovery of costs related to the 2017 Northern California wildfires. On March 29, 2019, the Assigned Commissioner issued a scoping memo, which confirmed that the CPUC in this proceeding would establish a Customer Harm Threshold methodology applicable only to 2017 fires, to be invoked in connection with a future application for cost recovery, and would not determine a specific financial outcome in this proceeding. On July 8, 2019, the CPUC issued a decision in the Customer Harm Threshold proceeding. The CPUC decision provides that “[a]n electrical corporation that has filed for relief under chapter 11 of the Bankruptcy Code may not access the Stress Test to recover costs in an application under Section 451.2(b), because the Commission cannot determine the corporation’s ‘financial status,’ which includes, among other considerations, its capital structure, liquidity needs, and liabilities, as required by Section 451.2(b).” This determination effectively bars PG&E Corporation and the Utility from access to relief under the Customer Harm Threshold during the pendency of the Chapter 11 Cases. On August 7, 2019, the Utility submitted to the CPUC an application for rehearing of the decision. The Utility indicated in its application, among other things, that the CPUC’s decision “is contrary to law because it bars a utility that has filed for Chapter 11 from accessing the CHT [Customer Harm Threshold], requires a utility to file a cost recovery application before the CHT [Customer Harm Threshold] will be determined, and erects ratepayer protection mechanisms as an extra-statutory hurdle for accessing the CHT [Customer Harm Threshold].” The Utility also argued that the CPUC should apply the Customer Harm Threshold methodology to costs related to the 2018 Camp fire. The decision otherwise adopts a methodology to determine the Customer Harm Threshold based on (1) the maximum additional debt that a utility can take on and maintain a minimum investment grade credit rating; (2) excess cash available to the utility; (3) a potential maximum regulatory adjustment of either 20% of the Customer Harm Threshold or 5% of the total disallowed wildfire liabilities, whichever is greater; and (4) an adjustment to preserve for ratepayers any tax benefits associated with the Customer Harm Threshold. The decision also requires a utility to include proposed ratepayer protection measures to mitigate harm to ratepayers as part of an application under Section 451.2(b). Failure to obtain a substantial or full recovery of costs related to wildfires could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows. Wildfire-Related Derivative Litigation Two purported derivative lawsuits alleging claims for breach of fiduciary duties and unjust enrichment were filed in the San Francisco County Superior Court on November 16, 2017 and November 20, 2017, respectively, naming as defendants current and certain former members of the Board of Directors and certain current and former officers of PG&E Corporation and the Utility. PG&E Corporation and the Utility are named as nominal defendants. These lawsuits were consolidated by the court on February 14, 2018, and are denominated In Re California North Bay Fire Derivative Litigation. On April 13, 2018, the plaintiffs filed a consolidated complaint. After the parties reached an agreement regarding a stay of the derivative proceeding pending resolution of the tort actions described above and any regulatory proceeding relating to the 2017 Northern California wildfires, on April 24, 2018, the court entered a stipulation and order to stay. The stay is subject to certain conditions regarding the plaintiffs’ access to discovery in other actions. On January 28, 2019, the plaintiffs filed a request to lift the stay for the purposes of amending their complaint to add allegations regarding the 2018 Camp fire. On August 3, 2018, a third purported derivative lawsuit, entitled Oklahoma Firefighters Pension and Retirement System v. Chew, et al., was filed in the U.S. District Court for the Northern District of California, naming as defendants certain current and former members of the Board of Directors and certain current and former officers of PG&E Corporation and the Utility. PG&E Corporation is named as a nominal defendant. The lawsuit alleges claims for breach of fiduciary duties and unjust enrichment as well as a claim under Section 14(a) of the federal Securities Exchange Act of 1934 alleging that PG&E Corporation’s and the Utility’s 2017 proxy statement contained misrepresentations regarding the companies’ risk management and safety programs. On October 15, 2018, PG&E Corporation filed a motion to stay the litigation. Prior to the scheduled hearing on this motion, this matter was automatically stayed by PG&E Corporation’s and the Utility’s commencement of bankruptcy proceedings, as discussed below. On October 23, 2018, a fourth purported derivative lawsuit, entitled City of Warren Police and Fire Retirement System v. Chew, et al., was filed in San Francisco County Superior Court, alleging claims for breach of fiduciary duty, corporate waste and unjust enrichment. It names as defendants certain current and former members of the Board of Directors and certain current and former officers of PG&E Corporation, and names PG&E Corporation as a nominal defendant. Plaintiff filed a request with the court seeking the voluntary dismissal of this matter without prejudice on January 18, 2019. On November 21, 2018, a fifth purported derivative lawsuit, entitled Williams v. Earley, Jr., et al., was filed in federal court in San Francisco, alleging claims identical to those alleged in the Oklahoma Firefighters Pension and Retirement System v. Chew, et al. lawsuit listed above against certain current and former officers and directors, and naming PG&E Corporation and the Utility as nominal defendants. This lawsuit includes allegations related to the 2017 Northern California wildfires and the 2018 Camp fire. This action was stayed by stipulation of the parties and order of the court on December 21, 2018, subject to resolution of the pending securities class action. On December 24, 2018, a sixth purported derivative lawsuit, entitled Bowlinger v. Chew, et al., was filed in San Francisco Superior Court, alleging claims for breach of fiduciary duty, abuse of control, corporate waste, and unjust enrichment in connection with the 2018 Camp fire against certain current and former officers and directors, and naming PG&E Corporation and the Utility as nominal defendants. The court has scheduled a case management conference for December 13, 2019. On January 25, 2019, a seventh purported derivative lawsuit, entitled Hagberg v. Chew, et al., was filed in San Francisco Superior Court, alleging claims for breach of fiduciary duty, abuse of control, corporate waste, and unjust enrichment in connection with the 2018 Camp fire against certain current and former officers and directors, and naming PG&E Corporation and the Utility as nominal defendants. On January 28, 2019, an eighth purported derivative lawsuit, entitled Blackburn v. Meserve, et al., was filed in federal court alleging claims for breach of fiduciary duty, unjust enrichment, and waste of corporate assets in connection with the 2017 Northern California wildfires and the 2018 Camp fire against certain current and former officers and directors, and naming PG&E Corporation as a nominal defendant. Due to the commencement of the Chapter 11 Cases, PG&E Corporation and the Utility filed notices in each of these proceedings on February 1, 2019, reflecting that the proceedings are automatically stayed pursuant to Section 362(a) of the Bankruptcy Code. On February 5, 2019, the plaintiff in Bowlinger v. Chew, et al. filed a response to the notice asserting that the automatic stay did not apply to his claims. PG&E Corporation and the Utility accordingly filed a Motion to Enforce the Automatic Stay with the Bankruptcy Court as to the Bowlinger action, which was granted. Wildfire-Related Securities Class Action Litigation In June 2018, two purported securities class actions were filed in the United States District Court for the Northern District of California, naming PG&E Corporation and certain of its current and former officers as defendants, entitled David C. Weston v. PG&E Corporation, et al. and Jon Paul Moretti v. PG&E Corporation, et al., respectively. The complaints alleged material misrepresentations and omissions related to, among other things, vegetation management and transmission line safety in various PG&E Corporation public disclosures. The complaints asserted claims under Section 10(b) and Section 20(a) of the federal Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and sought unspecified monetary relief, interest, attorneys’ fees and other costs. Both complaints identified a proposed class period of April 29, 2015 to June 8, 2018. On September 10, 2018, the court consolidated both cases and the litigation is now denominated In re PG&E Corporation Securities Litigation. The court also appointed the Public Employees Retirement Association of New Mexico as lead plaintiff. The plaintiff filed a consolidated amended complaint on November 9, 2018. After the plaintiff requested leave to amend their complaint to add allegations regarding the 2018 Camp fire, the plaintiff filed a second amended consolidated complaint on December 14, 2018. Due to the commencement of the Chapter 11 Cases, PG&E Corporation and the Utility filed a notice on February 1, 2019, reflecting that the proceedings are automatically stayed pursuant to Section 362(a) of the Bankruptcy Code. On February 15, 2019, PG&E Corporation and the Utility filed a complaint in Bankruptcy Court against the plaintiff seeking preliminary and permanent injunctive relief to extend the stay to the claims alleged against the individual officer defendants. On February 22, 2019, a purported securities class action was filed in the United States District Court for the Northern District of California, entitled York County on behalf of the York County Retirement Fund, et al. v. Rambo, et al. (the “York County Action”). The complaint names as defendants certain current and former officers and directors, as well as the underwriters of four public offerings of notes from 2016 to 2018. Neither PG&E Corporation nor the Utility is named as a defendant. The complaint alleges material misrepresentations and omissions in connection with the note offerings related to, among other things, PG&E Corporation’s and the Utility’s vegetation management and wildfire safety measures. The complaint asserts claims under Section 11 and Section 15 of the federal Securities Act of 1933, and seeks unspecified monetary relief, attorneys’ fees and other costs, and injunctive relief. On May 7, 2019, the York County Action was consolidated with In re PG&E Corporation Securities Litigation. On May 28, 2019, the plaintiffs in the consolidated securities actions filed a third amended consolidated class action complaint, which includes the claims asserted in the previously-filed actions and names as defendants PG&E Corporation, the Utility, certain current and former officers and directors, and the underwriters. The action remains stayed as to PG&E Corporation and the Utility, and PG&E Corporation and the Utility are currently seeking an order from the Bankruptcy Court to extend the stay to the officer, director, and underwriter defendants. District Attorneys’ Offices’ Investigations During the second quarter of 2018, Cal Fire issued news releases stating that it referred the investigations related to the McCourtney, Lobo, Honey, Sulphur, Blue, Norrbom, Adobe, Partrick, Pythian, Pocket and Atlas fires to the appropriate county District Attorney’s offices for review “due to evidence of alleged violations of state law.” On March 12, 2019, the Sonoma, Napa, Humboldt and Lake County District Attorneys announced that they would not prosecute PG&E Corporation or the Utility for the fires in those counties, which include the Sulphur, Blue, Norrbom, Adobe, Partrick, Pythian, Pocket and Atlas fires. PG&E Corporation and the Utility were the subject of criminal investigations or other actions by the Nevada County District Attorney’s Office to whom Cal Fire had referred its investigations into the McCourtney and Lobo fires. On July 23, 2019, the Nevada County District Attorney informed PG&E Corporation and the Utility of his decision not to pursue criminal charges in connection with the McCourtney and Lobo fires. The Honey fire was referred to the Butte County District Attorney’s Office, and in October 2018, the Utility reached an agreement to settle any civil claims or criminal charges that could have been brought by the Butte County District Attorney in connection with the Honey fire, as well as the La Porte and Cherokee fires (which were not referred). The settlement provides for funding by the Utility for at least four years of an enhanced fire prevention and communication program, in the amount of up to $1.5 million, not recoverable in rates. On October 9, 2018, the Office of the District Attorney of Yuba County announced its decision not to pursue criminal charges at such time against PG&E Corporation or the Utility pertaining to the Cascade fire. The District Attorney’s Office also indicated that it reserved the right “to review any additional information or evidence that may be submitted to it prior to the expiration of the criminal statute of limitations.” In addition, the Butte County District Attorney’s Office and the California Attorney General’s Office have opened a criminal investigation of the 2018 Camp fire. PG&E Corporation and the Utility have been informed by the Butte County District Attorney’s Office and the California Attorney General’s Office that a grand jury has been empaneled in Butte County, and the Utility was served with subpoenas in the grand jury investigation. The Utility has produced documents and continues to produce documents and respond to other requests for information in connection with the criminal investigation of the 2018 Camp fire, including, but not limited to, documents related to the operation and maintenance of equipment owned or operated by the Utility. The Utility has also cooperated with the Butte County District Attorney’s Office and the California Attorney General’s Office in the collection of physical evidence from equipment owned or operated by the Utility. PG&E Corporation and the Utility are unable to predict the outcome of the criminal investigation into the 2018 Camp fire. The Utility could be subject to material fines, penalties, or restitution if it is determined that the Utility failed to comply with applicable laws and regulations, as well as non-monetary remedies such as oversight requirements. The criminal investigation is not subject to the automatic stay imposed as a result of the commencement of the Chapter 11 Cases. Additional investigations and other actions may arise out of the other 2017 Northern California wildfires and the 2018 Camp fire. The timing and outcome for resolution of the remaining referrals by Cal Fire to the appropriate county District Attorneys’ offices are uncertain. SEC Investigation On March 20, 2019, PG&E Corporation learned that the SEC’s San Francisco Regional Office is conducting an investigation related to PG&E Corporation’s and the Utility’s public disclosures and accounting for losses associated with the 2018 Camp fire, the 2017 Northern California wildfires and the 2015 Butte fire. PG&E Corporation and the Utility are unable to predict the timing and outcome of the investigation. Clean-up and Repair Costs The Utility incurred costs of $655 million for clean-up and repair of the Utility’s facilities (including $236 million in capital expenditures) through June 30, 2019, in connection with the 2018 Camp fire. The Utility also incurred costs of $334 million for clean-up and repair of the Utility’s facilities (including $161 million in capital expenditures) through June 30, 2019, in connection with the 2017 Northern California wildfires. The Utility is authorized to track and seek recovery of clean-up and repair costs through CEMA. (CEMA requests are subject to CPUC approval.) The Utility capitalizes and records as regulatory assets costs that are probable of recovery. At June 30, 2019, the CEMA regulatory asset balances related to the 2018 Camp fire and 2017 Northern California wildfires were zero and $88 million, respectively, and are included in long-term regulatory assets on the Condensed Consolidated Balance Sheets. Additionally, the capital expenditures for clean-up and repair are included in property, plant and equipment at June 30, 2019. Should PG&E Corporation and the Utility conclude that recovery of any clean-up and repair costs included in the CEMA is no longer probable, PG&E Corporation and the Utility will record a charge in the period such conclusion is reached. Failure to obtain a substantial or full recovery of these costs could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows. Wildfire Assistance Fund On May 24, 2019, the Bankruptcy Court entered an order authorizing PG&E Corporation and the Utility to establish and fund a program (the “Wildfire Assistance Fund”) to assist those displaced by the 2018 Camp fire and 2017 Northern California wildfires with the costs of substitute or temporary housing (“Alternative Living Expenses”) and other urgent needs. The Wildfire Assistance Fund is intended to aid certain wildfire claimants who are either uninsured or still in need of assistance for Alternative Living Expenses or have other urgent needs. The Wildfire Assistance Fund will consist of $105 million deposited into a segregated account to be controlled by an independent third-party administrator appointed by the Bankruptcy Court, who will disburse and administer the funds. The administrator will be responsible for developing the specific eligibility requirements and application procedures for the distribution of the Wildfire Assistance Fund to eligible claimants. Up to $5 million of the Wildfire Assistance Fund may be used to pay the costs of administering the fund. The establishment of the Wildfire Assistance Fund is not an acknowledgment or admission by PG&E Corporation or the Utility of liability with respect to the 2018 Camp fire or 2017 Northern California wildfires. The Utility fully funded $105 million into the Wildfire Assistance Fund on August 2, 2019. 2015 Butte Fire In September 2015, a wildfire (the “2015 Butte fire”) ignited and spread in Amador and Calaveras Counties in Northern California. On April 28, 2016, Cal Fire released its report of the investigation of the origin and cause of the 2015 Butte fire. According to Cal Fire’s report, the 2015 Butte fire burned 70,868 acres, resulted in two fatalities, destroyed 549 homes, 368 outbuildings and four commercial properties, and damaged 44 structures. Cal Fire’s report concluded that the 2015 Butte fire was caused when a gray pine tree contacted the Utility’s electric line, which ignited portions of the tree, and determined that the failure by the Utility and/or its vegetation management contractors, ACRT Inc. and Trees, Inc., to identify certain potential hazards during its vegetation management program ultimately led to the failure of the tree. Third-Party Claims On May 23, 2016, individual plaintiffs filed a master complaint against the Utility and its two vegetation management contractors in the Superior Court of California, County of Sacramento. Subrogation insurers also filed a separate master complaint on the same date. The California Judicial Council previously had authorized the coordination of all cases in Sacramento County. As of January 28, 2019, 95 known complaints were filed against the Utility and its two vegetation management contractors in the Superior Court of California in the Counties of Calaveras, San Francisco, Sacramento, and Amador. The complaints involve approximately 3,900 individual plaintiffs representing approximately 2,000 households and their insurance companies. These complaints were part of, or were in the process of being added to, the coordinated proceeding. Plaintiffs sought to recover damages and other costs, principally based on the doctrine of inverse condemnation and negligence theory of liability. Plaintiffs also sought punitive damages. Several plaintiffs dismissed the Utility’s two vegetation management contractors from their complaints. The Utility does not expect the number of claimants to increase significantly in the future, because the statute of limitations for property damage and personal injury in connection with the 2015 Butte fire has expired. Further, due to the commencement of the Chapter 11 Cases, these plaintiffs have been stayed from continuing to prosecute pending litigation and from commencing new lawsuits against PG&E Corporation or the Utility on account of pre-petition obligations. On January 30, 2019, the Court in the coordinated proceeding issued an order staying the action. On April 28, 2017, the Utility moved for summary adjudication on plaintiffs’ claims for punitive damages. The court denied the Utility’s motion and the Utility filed a writ with the Court of Appeal of the State of California, Third Appellate District. The writ was granted on July 2, 2018, directing the trial court to enter summary adjudication in favor of the Utility and to deny plaintiffs’ claim for punitive damages under California Civil Code Section 3294. Plaintiffs sought rehearing and asked the California Supreme Court to review the Court of Appeal’s decision. Both requests were denied. Neither the trial nor appellate courts originally addressed whether plaintiffs can seek punitive damages at trial under Public Utilities Code Section 2106. However, the trial court, in November 2018, denied a motion filed by the Utility that would have confirmed that punitive damages under Public Utilities Code Section 2106 are unavailable. The Utility believes a loss related to punitive damages is unlikely, but possible. On June 22, 2017, the Superior Court of California, County of Sacramento ruled on a motion of several plaintiffs and found that the doctrine of inverse condemnation applied to the Utility with respect to the 2015 Butte fire. The court held, among other things, that the Utility had failed to put forth any evidence to support its contention that the CPUC would not allow the Utility to pass on its inverse condemnation liability through rate increases. While the ruling was binding only between the Utility and the plaintiffs in the coordination proceeding at the time of the ruling, others could make similar claims. On January 4, 2018, the Utility filed with the court a renewed motion for a legal determination of inverse condemnation liability, citing the November 30, 2017 CPUC decision denying the San Diego Gas & Electric Company application to recover wildfire costs in excess of insurance, and the CPUC declaration that it will not automatically allow utilities to spread inverse condemnation losses through rate increases. On May 1, 2018, the Superior Court of California, County of Sacramento issued its ruling on the Utility’s renewed motion in which the court affirmed, with minor changes, its tentative ruling dated April 25, 2018. The court determined that it was bound by earlier holdings of two appellate courts decisions, Barham and Pacific Bell. Further, the court stated that the Utility’s constitutional arguments should be made to the appellate courts and suggested that, to the extent the Utility raised the public policy implications of the November 30, 2017 CPUC decision in the San Diego Gas & Electric Company cost recovery proceeding, these arguments should be addressed to the Legislature or CPUC. The Utility filed a writ with the Court of Appeal seeking immediate review of the court’s decision. On June 18, 2018, after the writ was summarily denied, the Utility filed a Petition for Review with the California Supreme Court, which also was denied. On September 6, 2018, the court set a trial for some individual plaintiffs to begin on April 1, 2019. The Utility reached agreement with two plaintiffs in the litigation to stipulate to judgment against the Utility on inverse condemnation grounds. The court granted the Utility’s stipulated judgment motion on November 29, 2018 and the Utility filed its appeal on December 11, 2018. As a result of the filing of the Chapter 11 Cases, these lawsuits, including the trial and the appeal from the stipulated judgment, are stayed. In addition to the coordinated plaintiffs, Cal Fire, the OES, the County of Calaveras, the Calaveras County Water District, and four smaller public entities (three fire districts and the California Department of Veterans Affairs) brought suit or indicated that they intended to do so. The Calaveras County Water District and the four smaller public entities filed their complaints in August 2018 and September 2018. They were added to the coordinated proceedings. The Utility settled the claims of the three fire protection districts and the Calaveras County Water District. On April 13, 2017, Cal Fire filed a complaint with the Superior Court of California, County of Calaveras, seeking to recover over $87 million for its costs incurred on the theory that the Utility and its vegetation management contractors were negligent, or violated the law, among other claims. On July 31, 2017, Cal Fire dismissed its complaint against Trees, Inc., one of the Utility’s vegetation contractors. Cal Fire had requested that a trial of its claims be set in 2019, following any trial of the claims of the individual plaintiffs. On October 19, 2018, the Utility filed a motion for summary judgment arguing that Cal Fire cannot recover any fire suppression costs under the Third District Court of Appeal’s decision in Dep’t of Forestry & Fire Prot. v. Howell (2017) 18 Cal. App. 5th 154. The hearing on that motion was set for January 31, 2019, but the hearing and Cal Fire’s case against the Utility are now stayed. Prior to the stay, the Utility and Cal Fire were also engaged in a mediation process. Also, on February 20, 2018, the County of Calaveras filed suit against the Utility and the Utility’s vegetation management contractors to recover damages and other costs, based on the doctrine of inverse condemnation and negligence theory of liability. The County also sought punitive damages. On March 2, 2018, the County served a mediation demand seeking in excess of $167 million, having previously indicated that it intended to bring an approximately $85 million claim against the Utility. This claim included costs that the County of Calaveras allegedly incurred or expected to incur for infrastructure damage, erosion control, and other costs. The Utility and the County of Calaveras settled the County’s claims in November 2018 for $25.4 million. Further, in May 2017, the OES indicated that it intended to bring a claim against the Utility that it estimated to be approximately $190 million. This claim would include costs incurred by the OES for tree and debris removal, infrastructure damage, erosion control, and other claims related to the 2015 Butte fire. The Utility has not received any information or documentation from the OES since its May 2017 statement. In June 2017, the Utility entered into an agreement with the OES that extended its deadline to file a claim to December 2020. PG&E Corporation’s and the Utility’s obligations with respect to such outstanding claims are expected to be determined through the Chapter 11 process. As described in Note 2, on July 1, 2019, the Bankruptcy Court entered an order approving the Bar Date of October 21, 2019, at 5:00 p.m. (Pacific Time) for filing claims against PG&E Corporation and the Utility relating to the period prior to the Petition Date, including claims in connection with the 2015 Butte fire. The Bar Date is subject to certain exceptions, including for claims arising under section 503(b)(9) of the Bankruptcy Code, the bar date for which occurred on April 22, 2019. It is expected that numerous wildfire-related claims will be filed against PG&E Corporation and the Utility in connection with the 2015 Butte fire through the Bar Date. On July 18, 2019, PG&E Corporation and the Utility filed a motion for entry of an order establishing procedures and schedules for the estimation of PG&E Corporation’s and the Utility’s aggregate liability for certain claims arising out of the 2015 Butte fire, as further described under the heading “Motion for the Establishment of Wildfire Claims Estimation Procedures” above. Estimated Losses from Third-Party Claims In connection with the 2015 Butte fire, the Utility may be liable for property damages, business interruption, interest, and attorneys’ fees without having been found negligent, through the doctrine of inverse condemnation. In addition, the Utility may be liable for fire suppression costs, personal injury damages, and other damages if the Utility is found to have been negligent. While the Utility believes it was not negligent, there can be no assurance that a court would agree with the Utility. The Utility’s assessment of the estimated loss related to the 2015 Butte fire is based on assumptions about the number, size, and type of structures damaged or destroyed, the contents of such structures, the number and types of trees damaged or destroyed, as well as assumptions about personal injury damages, attorneys’ fees, fire suppression costs, and certain other damages. The Utility has determined that it is probable that it will incur a loss of $1.1 billion in connection with the 2015 Butte fire. While this amount includes the Utility’s assumptions about fire suppression costs (including its assessment of the Cal Fire loss), it does not include any portion of the estimated claim from the OES. The Utility still does not have sufficient information to reasonably estimate any liability it may have for that additional claim. The process for estimating costs associated with claims relating to the 2015 Butte fire requires management to exercise significant judgment based on a number of assumptions and subjective factors. As more information becomes known, management estimates and assumptions regarding the financial impact of the 2015 Butte fire may result in material increases to the loss accrued. PG&E Corporation’s and the Utility’s Condensed Consolidated Balance Sheets included liabilities for 2015 Butte fire third-party claims of $226 million and $212 million as of December 31, 2018 and June 30, 2019, respectively, reflecting payments of $14 million in January 2019, prior to the Petition Date. As of June 30, 2019, the Utility has paid $888 million of the $904 million in settlements to date in connection with the 2015 Butte fire. If the Utility records losses in connection with claims relating to the 2015 Butte fire that materially exceed the amount the Utility accrued for these liabilities, PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows could be materially affected in the reporting periods during which additional charges are recorded. Loss Recoveries The Utility has liability insurance from various insurers, that provides coverage for third-party liability attributable to the 2015 Butte fire in an aggregate amount of $922 million. The Utility records insurance recoveries when it is deemed probable that a recovery will occur and the Utility can reasonably estimate the amount or its range. Through June 30, 2019, the Utility recorded $922 million for probable insurance recoveries in connection with losses related to the 2015 Butte fire. While the Utility plans to seek recovery of all insured losses, it is unable to predict the ultimate amount and timing of such insurance recoveries. In addition, the Utility has received $60 million in cumulative reimbursements from the insurance policies of its vegetation management contractors. Recoveries of additional amounts under the insurance policies of the Utility’s vegetation management contractors, including policies where the Utility is listed as an additional insured, are uncertain. The balance for the insurance receivable is included in Other accounts receivable in PG&E Corporation’s and the Utility’s Condensed Consolidated Balance Sheets and was $85 million and $50 million as of December 31, 2018 and June 30, 2019, respectively, reflecting reimbursements of $35 million during the six months ended June 30, 2019. OTHER CONTINGENCIES AND COMMITMENTSPG&E Corporation and the Utility have significant contingencies arising from their operations, including contingencies related to enforcement and litigation matters and environmental remediation. A provision for a loss contingency is recorded when it is both probable that a liability has been incurred and the amount of the liability can reasonably be estimated. PG&E Corporation and the Utility evaluate which potential liabilities are probable and the related range of reasonably estimated losses and record a charge that reflects their best estimate or the lower end of the range, if there is no better estimate. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of losses is estimable, often involves a series of complex judgments about future events. PG&E Corporation’s and the Utility’s provision for loss and expense excludes anticipated legal costs, which are expensed as incurred. The Utility also has substantial financial commitments in connection with agreements entered into to support its operating activities. PG&E Corporation’s and the Utility’s financial condition, results of operations, and cash flows may be materially affected by the outcome of the following matters. Enforcement and Litigation Matters U.S. District Court Matters and Probation On August 9, 2016, the jury in the federal criminal trial against the Utility in the United States District Court for the Northern District of California, in San Francisco, found the Utility guilty on one count of obstructing a federal agency proceeding and five counts of violations of pipeline integrity management regulations of the Natural Gas Pipeline Safety Act. On January 26, 2017, the court imposed a sentence on the Utility in connection with the conviction. The court sentenced the Utility to a five-year corporate probation period, oversight by the Monitor for a period of five years, with the ability to apply for early termination after three years, a fine of $3 million to be paid to the federal government, certain advertising requirements, and community service. The probation includes a requirement that the Utility not commit any local, state, or federal crimes during the probation period. As part of the probation, the Utility has retained the Monitor at the Utility’s expense. The goal of the Monitor is to help ensure that the Utility takes reasonable and appropriate steps to maintain the safety of its gas and electric operations, and to maintain effective ethics, compliance and safety related incentive programs on a Utility-wide basis. On November 27, 2018, the court overseeing the Utility’s probation issued an order requiring that the Utility, the United States Attorney’s Office for the Northern District of California (the “USAO”) and the Monitor provide written answers to a series of questions regarding the Utility’s compliance with the terms of its probation, including what requirements of the Utility’s probation “might be implicated were any wildfire started by reckless operation or maintenance of PG&E power lines” or “might be implicated by any inaccurate, slow, or failed reporting of information about any wildfire by PG&E.” The court also ordered the Utility to provide “an accurate and complete statement of the role, if any, of PG&E in causing and reporting the recent 2018 Camp fire in Butte County and all other wildfires in California” since January 2017 (“Question 4 of the November 27 Order”). On December 5, 2018, the court issued an order requesting that the Office of the California Attorney General advise the court of its view on “the extent to which, if at all, the reckless operation or maintenance of PG&E power lines would constitute a crime under California law.” The responses of the Attorney General were submitted on December 28, 2018, and the responses of the Utility, the USAO and the Monitor were submitted on December 31, 2018. On January 3, 2019, the court issued a new order requiring that the Utility provide further information regarding the 2017 Atlas fire. The court noted that “[t]his order postpones the question of the adequacy of PG&E’s response” to Question 4 of the November 27 Order. On January 4, 2019, the court issued another order requiring that the Utility provide, “with respect to each of the eighteen October 2017 Northern California wildfires that [Cal Fire] has attributed to [the Utility’s] facilities,” information regarding the wind conditions in the vicinity of each fire’s origin and information about the equipment allegedly involved in each fire’s ignition. The responses of the Utility were submitted on January 10, 2019. On January 9, 2019, the court ordered the Utility to appear in court on January 30, 2019, as a result of the court’s finding that “there is probable cause to believe there has been a violation of the conditions of supervision” with respect to reporting requirements related to the 2017 Honey fire. In addition, on January 9, 2019, the court issued an order (the “January 9 Order”) proposing to add new conditions of probation that would require the Utility, among other things, to:
The Utility was ordered to show cause by January 23, 2019 as to why the Utility’s conditions of probation should not be modified as proposed. The Utility’s response was submitted on January 23, 2019. The court requested that Cal Fire file a public statement, and invited the CPUC to comment, by January 25, 2019. On January 30, 2019, the court found that the Utility had violated a condition of its probation with respect to reporting requirements related to the 2017 Honey fire. Also, on January 30, 2019, the court ordered the Utility to submit to the court on February 6, 2019 the 2019 Wildfire Safety Plan that the Utility was required to submit to the CPUC by February 6, 2019 in accordance with SB 901, and invited interested parties to comment on such plan by February 20, 2019. In addition, on February 14, 2019, the court ordered the Utility to provide additional information, including on its vegetation clearance requirements. The Utility submitted its response to the court on February 22, 2019. As of April 30, 2019, to the Utility’s knowledge, no parties have submitted comments to the court on the 2019 Wildfire Safety Plan. On March 5, 2019, the court issued an order proposing to add new conditions of probation that would require the Utility, among other things, to:
The court ordered all parties to show cause by March 22, 2019, as to why the Utility’s conditions of probation should not be modified as proposed. The responses of the Utility, the USAO, Cal Fire, the CPUC, and non-party victims were filed on March 22, 2019. At a hearing on April 2, 2019, the court indicated it would impose the new conditions of probation proposed on March 5, 2019, on the Utility, and on April 3, 2019, the court issued an order imposing the new terms though amended the second condition to clarify that “[f]or purposes of this condition, the operative wildfire mitigation plan will be the plan ultimately approved by the CPUC.” Also, on April 2, 2019, the court directed the parties to submit briefing by April 16, 2019, regarding whether the court can extend the term of probation beyond five years in light of the violation that has been adjudicated and whether the Monitor reports should be made public. The responses of the Utility, the USAO, and the Monitor were filed on April 16, 2019. The Utility’s response contended that the term of probation may not be extended beyond five years and the USAO’s response contended that whether the term of probation could be extended beyond five years was an open legal issue. The court held a sentencing hearing on the probation violation related to reporting requirements in connection with the 2017 Honey fire on May 7, 2019. After that hearing, the court imposed two additional conditions of probation by order dated May 14, 2019: (1) requiring that PG&E’s Board of Directors, Chief Executive Officer, senior executives, the Monitor and U.S. Probation Officer visit the towns of Paradise and San Bruno “to gain a firsthand understanding of the harm inflicted on those communities;” and (2) requiring that a committee of PG&E’s Board of Directors assume responsibility for tracking progress of the 2019 Wildfire Safety Plan and the additional terms of probation regarding wildfire safety, reporting in writing to the full Board at least quarterly. The court also stated that it was not going to rule at this time on whether the court has authority to extend probation and would leave that question “in abeyance.” The court did not discuss whether the Monitor reports should be made public. Members of PG&E Corporation’s Board of Directors and senior management attended site visits to the Town of Paradise on June 7, 2019 and the City of San Bruno on July 16, 2019, which were coordinated by the U.S. Probation Officer overseeing the Utility’s probation. In addition, the Compliance and Public Policy Committee, a committee of PG&E Corporation’s Board of Directors, will be responsible for tracking the Utility’s progress against the Utility’s wildfire mitigation plan, as approved by the CPUC, and compliance with the terms of the Utility’s probation regarding wildfire safety. On July 10, 2019, the court ordered the Utility to respond to a Wall Street Journal article titled “PG&E Knew for Years Its Lines Could Spark Wildfires, and Didn’t Fix Them” on a paragraph-by-paragraph basis, stating the extent to which each paragraph in the article is accurate. The court also ordered the Utility to disclose all political contributions made by the Utility since January 1, 2017, and provide additional explanations regarding those contributions and dividends distributed prior to filing the Chapter 11 Cases. The Utility filed its response with the court on July 31, 2019. In the response, the Utility disagreed with the Wall Street Journal article’s suggestion that the Utility knew of the specific maintenance conditions that caused the 2018 Camp fire and nonetheless deferred work that would have addressed those conditions. CPUC and FERC Matters Order Instituting an Investigation into the 2017 Northern California Wildfires On June 27, 2019, the CPUC issued an OII (the “2017 Northern California Wildfires OII”) to determine whether the Utility “violated any provision(s) of the California Public Utilities Code (PU Code), Commission General Orders (GO) or decisions, or other applicable rules or requirements pertaining to the maintenance and operation of its electric facilities that were involved in igniting fires in its service territory in 2017.” The 2017 Northern California Wildfires OII discloses the findings of a June 13, 2019 report by the SED, which, among other things, alleges that the Utility committed 27 violations in connection with 12 of the 2017 Northern California wildfires (specifically, the Adobe, Atlas, Cascade, Norrbom, Nuns, Oakmont/Pythian, Partrick, Pocket, Point, Potter/Redwood, Sulphur and Youngs fires). As described in the OII, the 27 alleged violations include failure to maintain vegetation clearances, failure to identify and abate hazardous trees, improper record keeping, incomplete patrol prior to re-energizing a circuit, failure to retain evidence, failure to report an incident, and failure to maintain clearances between lines. No violations were identified by the SED in connection with the Cherokee, La Porte and Tubbs fires. The 37 fire was determined by the SED to not be a reportable incident. The SED report does not address the Lobo and McCourtney fires because Cal Fire referred its investigations into these fires to local law enforcement and the information contained in its investigation reports related to these fires remains confidential. On a status conference call before the assigned ALJ on July 29, 2019, the SED informed the parties that because the Nevada County District Attorney had decided not to pursue criminal charges in connection with the Lobo and McCourtney fires, the SED may add alleged violations related to those fires and the 2018 Camp fire to the OII. The 2017 Northern California Wildfires OII requires the Utility to (i) show cause by July 29, 2019 why it should not be sanctioned for the 27 violations alleged in the SED report and (ii) submit a report by August 5, 2019, responding to information requests relating to “matters of concern that […] warrant further investigation and possible charges for violations of law.” These latter matters include the following: (i) the Utility’s vegetation management procedures and practices, (ii) the Utility’s procedures and practices regarding use of “recloser” devices in fire risk areas and during fire season, (iii) the Utility’s lack of procedures or policies for proactive de-energization of power lines during times of extreme fire danger, and (iv) the Utility’s record-keeping and other practices. The Utility is also required to take certain corrective actions and provide information regarding the qualifications of vegetation management personnel within 30 days of the issuance of the 2017 Northern California Wildfires OII. The Utility must also file an application to develop an open source, publicly available asset management system/database and mobile app, the costs of development and continued operation of which would be at shareholder expense. The OII also indicates that the assigned commissioner shall set a prehearing conference for 45 to 60 days after the initiation of the proceeding or as soon as practicable after the CPUC makes the assignment. The assigned commissioner will also issue a scoping memo setting forth the scope of the proceeding and establishing a procedural schedule. As required by the OII, on July 29, 2019, the Utility filed its initial response to the OII. In the initial response, the Utility indicated that it intends to fully cooperate with the CPUC but also stated that it disagreed with certain of the alleged violations set forth in the OII. The Utility also filed a Corrective Actions Report and an Application to Develop a Mobile Application and Supporting Systems, both as required by the OII. Also as required by the OII, on August 5, 2019, the Utility submitted a report to respond to the information requests contained in the OII, as explained above. Based on the information currently available, PG&E Corporation and the Utility believe it is probable that the CPUC will impose penalties, including fines or other remedies, on the Utility. The Utility is unable to reasonably estimate the amount or range of future charges that could be incurred given the CPUC’s wide discretion and the number of factors that can be considered in determining penalties. The Utility is unable to predict the timing and outcome of this proceeding. PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows could be materially affected if the Utility were required to pay a material amount of penalties or if the Utility were required to incur a material amount of costs that it cannot recover through rates. This proceeding is not subject to the automatic stay imposed as a result of the commencement of the Chapter 11 Cases; however, collection efforts in connection with fines or penalties arising out of this proceeding are stayed. Order Instituting an Investigation and Order to Show Cause into the Utility’s Locate and Mark practices On December 14, 2018, the CPUC issued an order instituting investigation and order to show cause (the “OII”) to assess the Utility’s practices and procedures related to the locating and marking of natural gas facilities. The OII directs the Utility to show cause as to why the CPUC should not find violations in this matter, and why the CPUC should not impose penalties, and/or any other forms of relief, if any violations are found. The Utility also is directed in the OII to provide a report on specific matters, including that it is conducting locate and mark programs in a safe manner. The OII cites a report by the SED dated December 6, 2018, which alleges that the Utility violated the law pertaining to the locating and marking of its gas facilities and falsified records related to its locate and mark activities between 2012 and 2017. As described in the OII, the SED cites reports issued in this matter by two consultants retained by the Utility, that (i) included certain facts and conclusions about the extent of inaccuracies in the Utility’s late tickets and the reasons for the inaccuracies, and (ii) provided an analysis, based on the available data, of tickets that should be properly categorized as late, and identification of associated dig-ins. As a result, the OII will determine whether the Utility violated any provision of the Public Utilities Code, general orders, federal law adopted by California, other rules, or requirements, and/or other state or federal law, by its locate and mark policies, practices, and related issues, and the extent to which the Utility’s practices with regard to locate and mark may have diminished system safety. The CPUC indicates that it has not concluded that the Utility has violated the law in any instance pertaining to late tickets, locating and marking, or any matter related to either, or to any other matter raised in this OII. However, if violations are found, the CPUC will consider what monetary fines and other remedies are appropriate, will review the duration of violations and, if supported by the evidence, it will consider ordering daily fines. On March 14, 2019, as directed by the CPUC, the Utility submitted a report that addressed the SED report and responded to the order to show cause. A prehearing conference was held on April 4, 2019, to establish scope and a procedural schedule. The assigned Commissioner and ALJ encouraged the SED and the Utility to reach a partial stipulation in order to streamline the proceeding. On April 24, 2019, the Utility provided notice of a settlement conference and the parties have continued settlement discussions. On May 7, 2019, the assigned Commissioner issued a scoping memo and ruling that included within the proceedings, in addition to the issues identified in the OII relating to the Utility’s locate and mark procedures, issues relating to the Utility’s use of “qualified electrical workers” for locating and marking underground infrastructure. On July 24, 2019, the SED submitted its opening testimony to the CPUC. A status conference with the ALJ was held on July 30, 2019. The parties continue settlement discussions. In accordance with the current procedural schedule issued by the ALJ on June 27, 2019, intervenor testimony is due August 16, 2019, and the Utility’s reply testimony is due September 18, 2019. The SED’s rebuttal testimony is due October 4, 2019. Evidentiary hearings are scheduled for October 21 to 25, 2019. Based on the information available to PG&E Corporation and the Utility as of the date of this filing, PG&E Corporation and the Utility believe it is probable that the Utility will incur penalties, including fines or other remedies. Accordingly, PG&E Corporation and the Utility recorded a charge during the quarter ended June 30, 2019 for an amount that is not material, which corresponds to the lower end of the range of PG&E Corporation's and the Utility's reasonably estimated losses and is subject to change based on additional information. PG&E Corporation and the Utility are unable to determine a better estimate within such range given the CPUC’s wide discretion and the number of factors that can be considered in determining penalties. The Utility is unable to predict the timing and outcome of this proceeding. PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows could be materially affected if the Utility were required to pay a material amount of penalties or if the Utility were required to incur a material amount of costs that it cannot recover through rates. This proceeding is not subject to the automatic stay imposed as a result of the commencement of the Chapter 11 Cases; however, collection efforts in connection with fines or penalties arising out of this proceeding are stayed. For more information about this proceeding, see Note 14 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K. Order Instituting an Investigation into Compliance with Ex Parte Communication Rules On April 26, 2018, the CPUC approved the revised PD issued on April 3, 2018, adopting the settlement agreement jointly submitted to the CPUC on March 28, 2017, as modified (the “settlement agreement”) by the Utility, the Cities of San Bruno and San Carlos, PAO (formerly known as the Office of Ratepayer Advocates or ORA), the SED, and TURN. The decision resulted in a total penalty of $97.5 million comprised of: (1) a $12 million payment to the California General Fund, (2) forgoing collection of $63.5 million of GT&S revenue requirements for the years 2018 ($31.75 million) and 2019 ($31.75 million), (3) a $10 million one-time revenue requirement adjustment to be amortized in equivalent annual amounts over the Utility’s next GRC cycle (i.e., the 2020 GRC), and (4) compensation payments to the Cities of San Bruno and San Carlos in a total amount of $12 million ($6 million to each city). In addition, the settlement agreement provides for certain non-financial remedies, including enhanced noticing obligations between the Utility and CPUC decision-makers, as well as certification of employee training on the CPUC ex parte communication rules. Under the terms of the settlement agreement, customers will bear no costs associated with the financial remedies set forth above. As a result of the CPUC’s April 26, 2018 decision, on May 17, 2018, the Utility made a $12 million payment to the California General Fund and $6 million payments to each of the Cities of San Bruno and San Carlos. At June 30, 2019, PG&E Corporation’s and the Utility’s Condensed Consolidated Balance Sheets include an $16 million accrual for a portion of the 2019 GT&S revenue requirement reduction. In accordance with accounting rules, adjustments related to revenue requirements are recorded in the periods in which they are incurred. The CPUC also ordered a second phase in this proceeding to determine if any of the additional communications that the Utility reported to the CPUC on September 21, 2017, violate the CPUC ex parte rules. On June 28, 2019, the Cities of San Bruno and San Carlos, PAO, the SED, TURN, and the Utility filed a joint motion with the CPUC seeking approval of a comprehensive settlement agreement that addresses all issues in the second phase of this proceeding. The settlement agreement proposed that the Utility pay a total penalty of $10 million comprised of: (1) a $2 million payment to the California General Fund, (2) forgoing collection of $5 million in revenue requirements during the term of its 2019 GT&S rate case, (3) forgoing collection of $1 million in revenue requirement during the term of its 2020 GRC cycle, and (4) compensation payments to the Cities of San Bruno and San Carlos in a total amount of $2 million ($1 million to each city). According to the terms of the settlement, these payments and forgone collection would not take place until a plan of reorganization is approved in the Chapter 11 Cases. In accordance with accounting rules, adjustments related to forgone collections would be recorded in the periods in which they are incurred. At June 30, 2019, PG&E Corporation’s and the Utility’s Consolidated Balance Sheets include a $4 million accrual for the amounts payable to the California General Fund and the Cities of San Bruno and San Carlos. The Utility is unable to predict whether the CPUC will approve the settlement. For more information about this proceeding, see Note 14 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K. Transmission Owner Rate Case Revenue Subject to Refund The FERC determines the amount of authorized revenue requirements, including the rate of return on electric transmission assets, that the Utility may collect in rates in the TO rate case. The FERC typically authorizes the Utility to charge new rates based on the requested revenue requirement, subject to refund, before the FERC has issued a final decision. The Utility bills and records revenue based on the amounts requested in its rate case filing and records a reserve for its estimate of the amounts that are probable of refund. Rates subject to refund went into effect on March 1, 2017, and March 1, 2018, for TO18 and TO19, respectively. Rates subject to refund for TO20 went into effect on May 1, 2019. On October 1, 2018, the ALJ issued an initial decision in the TO18 rate case and the Utility filed initial briefs on October 31, 2018, in response to the ALJ’s recommendations. The Utility expects the FERC to issue a decision in the TO18 rate case by late-2019, however, that decision will likely be the subject of requests for rehearing and appeal. On September 21, 2018, the Utility filed an all-party settlement with FERC, which was approved by FERC on December 20, 2018, in connection with TO19. As part of the settlement, the TO19 revenue requirement will be set at 98.85% of the revenue requirement for TO18 that will be determined upon issuance of a final unappealable decision in TO18. On November 30, 2018, the FERC issued an order accepting the Utility’s October 2018 filing of its TO20 formula rate case, subject to hearings and refund, and established May 1, 2019, as the effective date for rate changes. FERC also ordered that the hearings will be held in abeyance pending settlement discussions among the parties. The Utility is unable to predict the timing or outcome of FERC’s decisions in the TO18 and TO19 proceedings or the timing or outcome of the TO20 proceeding. Natural Gas Transmission Pipeline Rights-of-Way In 2012, the Utility notified the CPUC and the SED that the Utility planned to complete a system-wide survey of its transmission pipelines in an effort to address a self-reported violation whereby the Utility did not properly identify encroachments (such as building structures and vegetation overgrowth) on the Utility’s pipeline rights-of-way. The Utility also submitted a proposed compliance plan that set forth the scope and timing of remedial work to remove identified encroachments over a multi-year period and to pay penalties if the proposed milestones were not met. In March 2014, the Utility informed the SED that the survey had been completed and that remediation work, including removal of the encroachments, was expected to continue for several years. The SED has not addressed the Utility’s proposed compliance plan, and it is reasonably possible that the SED will impose fines on the Utility in the future based on the Utility’s failure to continuously survey its system and remove encroachments. The Utility is unable to reasonably estimate the amount or range of future charges that could be incurred given the SED’s wide discretion and the number of factors that can be considered in determining penalties. Other Matters PG&E Corporation and the Utility are subject to various claims, lawsuits, and regulatory proceedings that separately are not considered material. Accruals for contingencies related to such matters (excluding amounts related to the contingencies discussed above under “Enforcement and Litigation Matters”) totaled $98 million at December 31, 2018. These amounts were included in Other current liabilities in the Condensed Consolidated Balance Sheets. On the Petition Date, these amounts were moved to LSTC. PG&E Corporation and the Utility do not believe it is reasonably possible that the resolution of these matters will have a material impact on their financial condition, results of operations, or cash flows. 2015 GT&S Rate Case Capital Disallowance On June 23, 2016, the CPUC approved a final phase one decision in the Utility’s 2015 GT&S rate case. The phase one decision excluded from rate base $696 million of capital spending in 2011 through 2014 in excess of the amount adopted in the prior GT&S rate case. The decision permanently disallowed $120 million of that amount and ordered that the remaining $576 million be subject to an audit overseen by the CPUC staff, with the possibility that the Utility may seek recovery in a future proceeding. Additional charges may be required in the future based on the outcome of the CPUC’s audit of 2011 through 2014 capital spending. Capital disallowances are reflected in operating and maintenance expenses in the Condensed Consolidated Statements of Income. For more information, see Note 14 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K. Environmental Remediation Contingencies The Utility’s environmental remediation liability is primarily included in non-current liabilities on the Condensed Consolidated Balance Sheets and is comprised of the following:
(1) Primarily driven by the following sites: Vallejo, San Francisco East Harbor, Napa, Beach Street, San Francisco North Beach, and San Rafael MGP-Bio Marin MGP. (2) Primarily driven by the Geothermal landfill and Shell Pond site. (3) Primarily driven by the San Francisco Potrero Power Plant. The Utility’s gas compressor stations, former manufactured gas plant sites, power plant sites, gas gathering sites, and sites used by the Utility for the storage, recycling, and disposal of potentially hazardous substances are subject to requirements issued by the Environmental Protection Agency under the Federal Resource Conservation and Recovery Act in addition to other state hazardous waste laws. The Utility has a comprehensive program in place designed to comply with federal, state, and local laws and regulations related to hazardous materials, waste, remediation activities, and other environmental requirements. The Utility assesses and monitors the environmental requirements on an ongoing basis, and implements changes to its program as deemed appropriate. The Utility’s remediation activities are overseen by the DTSC, several California regional water quality control boards, and various other federal, state, and local agencies. The Utility’s environmental remediation liability at June 30, 2019, reflects its best estimate of probable future costs for remediation based on the current assessment data and regulatory obligations. Future costs will depend on many factors, including the extent of work necessary to implement final remediation plans and the Utility’s time frame for remediation. The Utility may incur actual costs in the future that are materially different than this estimate and such costs could have a material impact on results of operations, financial condition, and cash flows during the period in which they are recorded. At June 30, 2019, the Utility expected to recover $960 million of its environmental remediation liability for certain sites through various ratemaking mechanisms authorized by the CPUC. For more information, see remediation site descriptions below and see Note 14 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K. Natural Gas Compressor Station Sites The Utility is legally responsible for remediating groundwater contamination caused by hexavalent chromium used in the past at the Utility’s natural gas compressor stations. The Utility is also required to take measures to abate the effects of the contamination on the environment. Topock Site The Utility’s remediation and abatement efforts at the Topock site are subject to the regulatory authority of the California DTSC and the U.S. Department of the Interior. On April 24, 2018, the DTSC authorized the Utility to build an in-situ groundwater treatment system to convert hexavalent chromium into a non-toxic and non-soluble form of chromium. Construction activities began in October 2018 and will continue for several years. The Utility’s undiscounted future costs associated with the Topock site may increase by as much as $302 million if the extent of contamination or necessary remediation is greater than anticipated. The costs associated with environmental remediation at the Topock site are expected to be recovered primarily through the HSM, where 90% of the costs are recovered in rates. Hinkley Site The Utility has been implementing remediation measures at the Hinkley site to reduce the mass of the chromium plume in groundwater and to monitor and control movement of the plume. The Utility’s remediation and abatement efforts at the Hinkley site are subject to the regulatory authority of the California Regional Water Quality Control Board, Lahontan Region. In November 2015, the California Regional Water Quality Control Board, Lahontan Region adopted a clean-up and abatement order directing the Utility to contain and remediate the underground plume of hexavalent chromium and the potential environmental impacts. The final order states that the Utility must continue and improve its remediation efforts, define the boundaries of the chromium plume, and take other action. Additionally, the final order sets plume capture requirements, requires a monitoring and reporting program, and includes deadlines for the Utility to meet interim cleanup targets. The United States Geological Survey team is currently conducting a background study on the site to better define the chromium plume boundaries. A draft background study report is expected to be issued in 2019 and finalized in 2020. The Utility’s undiscounted future costs associated with the Hinkley site may increase by as much as $139 million if the extent of contamination or necessary remediation is greater than anticipated. The costs associated with environmental remediation at the Hinkley site will not be recovered through rates. Former Manufactured Gas Plants Former MGPs used coal and oil to produce gas for use by the Utility’s customers before natural gas became available. The by-products and residues of this process were often disposed of at the MGPs themselves. The Utility has undertaken a program to manage the residues left behind as a result of the manufacturing process; many of the sites in the program have been addressed. The Utility’s undiscounted future costs associated with MGP sites may increase by as much as $528 million if the extent of contamination or necessary remediation is greater than anticipated. The costs associated with environmental remediation at the MGP sites are recovered through the HSM, where 90% of the costs are recovered in rates. Utility-Owned Generation Facilities and Third-Party Disposal Sites Utility-owned generation facilities and third-party disposal sites often involve long-term remediation. The Utility’s undiscounted future costs associated with Utility-owned generation facilities and third-party disposal sites may increase by as much as $98 million if the extent of contamination or necessary remediation is greater than anticipated. The environmental remediation costs associated with the Utility-owned generation facilities and third-party disposal sites are recovered through the HSM, where 90% of the costs are recovered in rates. Fossil Fuel-Fired Generation Sites In 1998, the Utility divested its generation power plant business as part of generation deregulation. Although the Utility sold its fossil-fueled power plants, the Utility retained the environmental remediation liability associated with each site. The Utility’s undiscounted future costs associated with fossil fuel-fired generation sites may increase by as much as $86 million if the extent of contamination or necessary remediation is greater than anticipated. The environmental remediation costs associated with the fossil fuel-fired sites will not be recovered through rates. Insurance Wildfire Insurance In 2018, PG&E Corporation and the Utility renewed their liability insurance coverage for wildfire events in an aggregate amount of approximately $1.4 billion for the period from August 1, 2018 through July 31, 2019, comprised of $700 million for general wildfire liability in policies covering wildfire and non-wildfire events (subject to an initial self-insured retention of $10 million per occurrence), and $700 million for wildfire property damages only, which included approximately $200 million of coverage through the use of a catastrophe bond. For the period from August 1, 2019 through July 31, 2020, PG&E Corporation and the Utility have secured approximately $430 million for general wildfire liability (subject to an initial self-insured retention of $10 million per occurrence). PG&E Corporation and the Utility continue to pursue additional insurance coverage for the period from August 1, 2019 through July 30, 2020. Various coverage limitations applicable to different insurance layers could result in uninsured costs in the future depending on the amount and type of damages resulting from covered events. PG&E Corporation’s and the Utility’s cost of obtaining the wildfire and non-wildfire insurance coverage in place for the period of August 1, 2019 through July 31, 2020 (consisting of the $430 million general wildfire liability coverage described above and $520 million for non-wildfire general liability) is approximately $190 million, compared to the approximately $50 million that the Utility is currently recovering through rates through December 31, 2019. The Utility intends to seek recovery for the full amount of premium costs paid in excess of the amount the Utility currently is recovering from customers through the end of the current GRC period, which ends on December 31, 2019. PG&E Corporation and the Utility record a receivable for insurance recoveries when it is deemed probable that recovery of a recorded loss will occur. Through June 30, 2019, PG&E Corporation and the Utility recorded $1.38 billion for probable insurance recoveries in connection with the 2018 Camp fire and $842 million for probable insurance recoveries in connection with the 2017 Northern California wildfires. These amounts reflect an assumption that the cause of each fire is deemed to be a separate occurrence under the insurance policies. The amount of the receivable is subject to change based on additional information. PG&E Corporation and the Utility intend to seek full recovery for all insured losses and believe it is reasonably possible that they will record a receivable for the full amount of the insurance limits in the future. Nuclear Insurance The Utility maintains multiple insurance policies through NEIL and European Mutual Association for Nuclear Insurance, covering nuclear or non-nuclear events at the Utility’s two nuclear generating units at Diablo Canyon and the retired Humboldt Bay Unit 3. If NEIL losses in any policy year exceed accumulated funds, the Utility could be subject to a retrospective assessment. If NEIL were to exercise this assessment, as of the policy renewal on April 1, 2020, the maximum aggregate annual retrospective premium obligation for the Utility would be approximately $41 million. If European Mutual Association for Nuclear Insurance losses in any policy year exceed accumulated funds, the Utility could be subject to a retrospective assessment of approximately $5 million, as of the policy renewal on April 1, 2020. For more information about the Utility’s nuclear insurance coverage, see Note 14 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K. Tax Matters PG&E Corporation’s and the Utility’s unrecognized tax benefits may change significantly within the next 12 months due to the resolution of audits. As of June 30, 2019, it is reasonably possible that unrecognized tax benefits will decrease by approximately $10 million within the next 12 months. PG&E Corporation and the Utility believe that the majority of the decrease will not impact net income. PG&E Corporation does not believe that the Chapter 11 Cases resulted in loss of or limitation on the utilization of any of the tax carryforwards. PG&E Corporation will continue to monitor the status of tax carryforwards during the pendency of the Chapter 11 Cases. Purchase Commitments In the ordinary course of business, the Utility enters into various agreements to purchase power and electric capacity; natural gas supply, transportation, and storage; nuclear fuel supply and services; and various other commitments. At December 31, 2018, the Utility had undiscounted future expected obligations of approximately $40 billion. (See Note 14 of the Notes to the Consolidated Financial Statements in Item 8 of the 2018 Form 10-K.) The Utility has not entered into any new material commitments during the six months ended June 30, 2019.
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SUBSEQUENT EVENTS |
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Subsequent Events [Abstract] | |||||||||||||||||||||
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On July 12, 2019, the California Governor signed into law AB 1054, a bill which provides for the establishment of a statewide fund that will be available for eligible electric utility companies to pay eligible claims for liabilities arising from wildfires occurring after July 12, 2019 that are caused by the applicable electric utility company’s equipment, subject to the terms and conditions of AB 1054. Eligible claims are claims for third party damages resulting from any such wildfires, limited to the portion of such claims that exceeds the greater of (i) $1.0 billion in the aggregate in any calendar year and (ii) the amount of insurance coverage required to be in place for the electric utility company pursuant to Section 3293 of the Public Utilities Code, added by AB 1054. Each of California’s large investor-owned electric utility companies that are not currently subject to Chapter 11 (Southern California Edison and San Diego Gas & Electric Company) has elected to participate in the Wildfire Fund to be established under AB 1054. On July 23, 2019, the Utility notified the CPUC of its intent to participate in the Wildfire Fund (which participation is subject to the conditions set forth in AB 1054, including those conditions outlined below). The Wildfire Fund to be established under AB 1054 will be available for eligible electric utility companies to pay eligible claims for liabilities arising from wildfires occurring after July 12, 2019 that are caused by the applicable electric utility company’s equipment. Electric utility companies that draw from the fund will only be required to repay amounts that are determined by the CPUC in an application for cost recovery not to be just and reasonable, subject to a rolling three-year disallowance cap equal to 20% of the electric utility company’s transmission and distribution equity rate base. For the Utility, this disallowance cap is expected to be approximately $2.3 billion for the three-year period starting in 2019, subject to adjustment based on changes in the Utility’s total transmission and distribution equity rate base. The disallowance cap is inapplicable in certain circumstances, including if the Wildfire Fund administrator determines that the electric utility company’s actions or inactions that resulted in the applicable wildfire constituted “conscious or willful disregard for the rights and safety of others,” or the electric utility company fails to maintain a valid safety certification. Costs that the CPUC determines to be just and reasonable will not need to be repaid to the fund, resulting in a draw-down of the fund. The Wildfire Fund and disallowance cap will be terminated when the amounts therein are exhausted. The Wildfire Fund is expected to be capitalized with (i) $10.5 billion of proceeds of bonds supported by a 15-year extension of the Department of Water Resources charge to ratepayers, (ii) $7.5 billion in initial contributions from California’s three investor-owned electric utility companies and (iii) $300 million in annual contributions paid by California’s three investor-owned electric utility companies. The contributions from the investor-owned electric utility companies will be effectively borne by their respective shareholders, as they will not be permitted to recover these costs from ratepayers. The costs of the initial and annual contributions are allocated among the three investor-owned electric utility companies pursuant to a “Wildfire Fund allocation metric” set forth in AB 1054 based on land area in the applicable utility’s service territory classified as high fire threat districts and adjusted to account for risk mitigation efforts. The Utility’s initial Wildfire Fund allocation metric is expected to be 64.2% (representing an initial contribution of approximately $4.8 billion and annual contributions of approximately $193 million). In addition, all initial and annual contributions will be excluded from the measurement of the Utility’s authorized capital structure. AB 1054 provides that the Wildfire Fund will be established when Southern California Edison and San Diego Gas & Electric Company provide their initial contributions. In order to participate in the Wildfire Fund, within 60 days of the effective date of AB 1054, the Utility must obtain the Bankruptcy Court’s approval of the Utility’s election to pay the initial and annual Wildfire Fund contributions upon emergence from Chapter 11. The Utility would then be required to pay its share of the initial contribution to the Wildfire Fund upon emergence from Chapter 11, and meet certain eligibility requirements listed below, in order to participate in the Wildfire Fund. In such event (assuming the Utility satisfies the eligibility and other requirements set forth in AB 1054), the Wildfire Fund will be available to the Utility to pay for eligible claims arising between the effective date of AB 1054 and the Utility’s emergence from Chapter 11, subject to a limit of 40% of the amount of such claims. The balance of any such claims would need to be addressed through the Chapter 11 Cases. There are several additional eligibility requirements for the Utility, including that by June 30, 2020, the following conditions are satisfied:
On August 7, 2019, PG&E Corporation and the Utility submitted a motion with the Bankruptcy Court for the entry of an order authorizing PG&E Corporation and the Utility to participate in the Wildfire Fund and to make any initial and annual contributions to the Wildfire Fund upon emergence from Chapter 11. The motion is expected to be heard on August 28, 2019, and objections and other responses are due August 21, 2019. If the Utility satisfies the requirements to participate in the Wildfire Fund, the Utility will be required to fund its initial contribution upon its emergence from Chapter 11. The Utility’s required contributions to the Wildfire Fund will be substantial. Participation in the Wildfire Fund is expected to have a material impact on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows. The Utility is currently evaluating the accounting and tax treatment of the required initial and annual contributions. The timing and amount of any potential charges associated with shareholder contributions would also depend on various factors, including the final determination of an allocation of contributions among the Utility and California’s other large electric utility companies (San Diego Gas & Electric Company and Southern California Edison Company) and the timing of resolution of the Chapter 11 Cases. The Utility is currently developing a Chapter 11 plan of reorganization that would provide for the financing of such required contributions, but there can be no assurance that PG&E Corporation and the Utility will successfully develop, consummate or implement any such plan, which will ultimately require Bankruptcy Court, creditor and regulatory approval. Further, there can be no assurance that the expected benefits of participating in the Wildfire Fund ultimately outweigh its substantial costs.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | This quarterly report on Form 10-Q is a combined report of PG&E Corporation and the Utility. PG&E Corporation’s Condensed Consolidated Financial Statements include the accounts of PG&E Corporation, the Utility, and other wholly owned and controlled subsidiaries. The Utility’s Condensed Consolidated Financial Statements include the accounts of the Utility and its wholly owned and controlled subsidiaries. All intercompany transactions have been eliminated in consolidation. The Notes to the Condensed Consolidated Financial Statements apply to both PG&E Corporation and the Utility. PG&E Corporation and the Utility assess financial performance and allocate resources on a consolidated basis (i.e., the companies operate as one segment). The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with GAAP and in accordance with the interim period reporting requirements of Form 10-Q and reflect all adjustments (consisting only of normal recurring adjustments) that management believes are necessary for the fair presentation of PG&E Corporation’s and the Utility’s financial condition, results of operations, and cash flows for the periods presented. The information at December 31, 2018 in the Condensed Consolidated Balance Sheets included in this quarterly report was derived from the audited Consolidated Balance Sheets in Item 8 of the 2018 Form 10-K. This quarterly report should be read in conjunction with the 2018 Form 10-K.
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Use of Estimates and Assumptions | The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Some of the more significant estimates and assumptions relate to the Utility’s regulatory assets and liabilities, legal and regulatory contingencies, insurance recoveries, environmental remediation liabilities, AROs, pension and other post-retirement benefit plan obligations, and the valuation of pre-petition liabilities. Management believes that its estimates and assumptions reflected in the Condensed Consolidated Financial Statements are appropriate and reasonable. A change in management’s estimates or assumptions could result in an adjustment that would have a material impact on PG&E Corporation’s and the Utility’s financial condition and results of operations during the period in which such change occurred | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | Variable Interest Entities A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, or whose equity investors lack any characteristics of a controlling financial interest. An enterprise that has a controlling financial interest in a VIE is a primary beneficiary and is required to consolidate the VIE. Some of the counterparties to the Utility’s power purchase agreements are considered VIEs. Each of these VIEs was designed to own a power plant that would generate electricity for sale to the Utility. To determine whether the Utility has a controlling interest or was the primary beneficiary of any of these VIEs at June 30, 2019, the Utility assessed whether it absorbs any of the VIE’s expected losses or receives any portion of the VIE’s expected residual returns under the terms of the power purchase agreement, analyzed the variability in the VIE’s gross margin, and considered whether it had any decision-making rights associated with the activities that are most significant to the VIE’s performance, such as dispatch rights and operating and maintenance activities. The Utility’s financial obligation is limited to the amount the Utility pays for delivered electricity and capacity. The Utility did not have any decision-making rights associated with any of the activities that are most significant to the economic performance of any of these VIEs. Since the Utility was not the primary beneficiary of any of these VIEs at June 30, 2019, it did not consolidate any of them.
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Pension and Other Post-Retirement Benefits | Pension and Other Post-Retirement Benefits PG&E Corporation and the Utility sponsor a non-contributory defined benefit pension plan and cash balance plan. Both plans are included in “Pension Benefits” below. Post-retirement medical and life insurance plans are included in “Other Benefits” below. Non-service costs are reflected in Other income, net on the Condensed Consolidated Statements of Income. Service costs are reflected in Operating and maintenance on the Condensed Consolidated Statements of Income. |
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Revenue Recognition | Revenue Recognition Revenue from Contracts with Customers The Utility recognizes revenues when electricity and natural gas services are delivered. The Utility records unbilled revenues for the estimated amount of energy delivered to customers but not yet billed at the end of the period. Unbilled revenues are included in accounts receivable on the Condensed Consolidated Balance Sheets. Rates charged to customers are based on CPUC and FERC authorized revenue requirements. Revenues can vary significantly from period to period because of seasonality, weather, and customer usage patterns. Regulatory Balancing Account Revenue The CPUC authorizes most of the Utility’s revenues in the Utility’s GRC and its GT&S rate case, which generally occur every three or four years. The Utility’s ability to recover revenue requirements authorized by the CPUC in these rate cases is independent, or “decoupled,” from the volume of the Utility’s sales of electricity and natural gas services. The Utility recognizes revenues that have been authorized for rate recovery, are objectively determinable and probable of recovery, and are expected to be collected within 24 months. Generally, electric and natural gas operating revenue is recognized ratably over the year. The Utility records a balancing account asset or liability for differences between customer billings and authorized revenue requirements that are probable of recovery or refund. The CPUC also has authorized the Utility to collect additional revenue requirements to recover costs that the Utility has been authorized to pass on to customers, including costs to purchase electricity and natural gas, and to fund public purpose, demand response, and customer energy efficiency programs. In general, the revenue recognition criteria for pass-through costs billed to customers are met at the time the costs are incurred. The Utility records a regulatory balancing account asset or liability for differences between incurred costs and customer billings or authorized revenue meant to recover those costs, to the extent that these differences are probable of recovery or refund. As a result, these differences have no impact on net income. |
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Recently Adopted Accounting Standards and Accounting Standards Issued But Not Yet Adopted | Recently Adopted Accounting Standards Recognition of Lease Assets and Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which amends the guidance relating to the definition of a lease, the recognition of lease assets and lease liabilities on the balance sheet, and the disclosure of key information about leasing arrangements. Under the new standard, all lessees must recognize a ROU asset, reflecting the right to use the underlying asset for the lease term, and a lease liability, reflecting the obligation to make lease payments, on the balance sheet. Operating leases were previously not recognized on the balance sheet. PG&E Corporation and the Utility adopted the ASU on January 1, 2019. PG&E Corporation and the Utility elected certain practical expedients and will carry forward historical conclusions related to (1) contracts that contain leases, (2) existing lease and easement classification, and (3) initial direct costs. After adoption of the new standard, the Corporation and Utility elected to not separate lease and non-lease components. Additionally, PG&E Corporation and the Utility have elected not to restate comparative periods upon adoption. PG&E Corporation and the Utility determine if an arrangement is a lease at inception. As most of the leases do not provide implicit discount rates, the Utility uses an estimate of its incremental secured borrowing rates based on observed market data and other information available at the lease commencement date. The ROU assets and lease liabilities include only fixed lease payments. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease terms will only include options to extend or terminate the lease when it is reasonably certain that the Utility will exercise such options. The Utility recognizes lease expense in conformity with ratemaking. Operating leases are included in operating lease ROU assets and current and noncurrent operating lease liabilities on the Condensed Consolidated Balance Sheets. Finance leases are included in property, plant, and equipment, other current liabilities, and other noncurrent liabilities on the Condensed Consolidated Balance Sheets. Financing leases were immaterial for the six months ended June 30, 2019. Cash payments arising from operating leases were $848 million for the six months ended June 30, 2019 and are presented within operating activities on the Condensed Consolidated Statement of Cash Flows. Cash payments for the principal portion of the financing lease liability will continue to be presented within financing activities. Variable lease payments not included in the financing lease liability, if any, are presented within operating activities. On January 1, 2019, PG&E Corporation and the Utility recorded ROU assets and lease liabilities of $2.8 billion, representing the net present value of fixed lease payments and excluding any variable lease payments. This amount is presented within the supplemental disclosures of noncash activities for the six months ended, June 30, 2019. The majority of the Utility’s ROU assets and lease liabilities relate to various power purchase agreements. These power purchase agreements primarily consist of generation plants leased to meet customer demand plus applicable reserve margins, for terms between 5 years and 20 years. PG&E Corporation and the Utility have also recorded ROU assets and lease liabilities related to property and land leases. At June 30, 2019, the Utility’s operating leases had a weighted average remaining lease term of 6.1 years and a weighted average discount rate of 6.1%. The following table shows the lease expense recognized for the fixed and variable component of the Utility’s lease obligations:
The following table shows the Utility’s future expected operating lease payments:
(1) Represents the remaining expected operating lease payments from July 1, 2019 through December 31, 2019. The following table shows the Utility’s future expected obligations for power purchase and other lease commitments:
Accounting Standards Issued But Not Yet Adopted Fair Value Measurement In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurements, which amends the existing guidance relating to the disclosure requirements for fair value measurements. The ASU will be effective for PG&E Corporation and the Utility on January 1, 2020 with early adoption permitted. PG&E Corporation and the Utility are currently evaluating the impact the guidance will have on their Condensed Consolidated Financial Statements and related disclosures. Intangibles-Goodwill and Other In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This ASU will be effective for PG&E Corporation and the Utility on January 1, 2020 with early adoption permitted. PG&E Corporation and the Utility are currently evaluating the impact of the guidance on their Condensed Consolidated Financial Statements and related disclosures. Financial Instruments—Credit Losses In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which provides a model, known as the current expected credit loss model, to estimate the expected lifetime credit loss on financial assets, including trade and other receivables, rather than incurred losses over the remaining life of most financial assets measured at amortized cost. The guidance also requires use of an allowance to record estimated credit losses on available-for-sale debt securities. This ASU will be effective for PG&E Corporation and the Utility on January 1, 2020. PG&E Corporation and the Utility are currently evaluating the impact of the guidance on their Condensed Consolidated Financial Statements and related disclosures.
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Use of Derivative Instruments | Use of Derivative Instruments The Utility is exposed to commodity price risk as a result of its electricity and natural gas procurement activities. Procurement costs are recovered through customer rates. The Utility uses both derivative and non-derivative contracts to manage volatility in customer rates due to fluctuating commodity prices. Derivatives include contracts, such as power purchase agreements, forwards, futures, swaps, options, and CRRs that are traded either on an exchange or over-the-counter. By order dated April 8, 2019, the Bankruptcy Court authorized the Utility to continue these programs in the ordinary course of business in a manner consistent with its pre-petition practices. Derivatives are presented in the Utility’s Condensed Consolidated Balance Sheets recorded at fair value and on a net basis in accordance with master netting arrangements for each counter-party. The fair value of derivative instruments is further offset by cash collateral paid or received where the right of offset and the intention to offset exist. Price risk management activities that meet the definition of derivatives are recorded at fair value on the Condensed Consolidated Balance Sheets. These instruments are not held for speculative purposes and are subject to certain regulatory requirements. The Utility expects to fully recover in rates all costs related to derivatives under the applicable ratemaking mechanism in place as long as the Utility’s price risk management activities are carried out in accordance with CPUC directives. Therefore, all unrealized gains and losses associated with the change in fair value of these derivatives are deferred and recorded within the Utility’s regulatory assets and liabilities on the Condensed Consolidated Balance Sheets. Net realized gains or losses on commodity derivatives are recorded in the cost of electricity or the cost of natural gas with corresponding increases or decreases to regulatory balancing accounts for recovery from or refund to customers. The Utility elects the normal purchase and sale exception for eligible derivatives. Eligible derivatives are those that require physical delivery in quantities that are expected to be used by the Utility over a reasonable period in the normal course of business, and do not contain pricing provisions unrelated to the commodity delivered. These items are not reflected in the Condensed Consolidated Balance Sheets.
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Fair Value Measurements | PG&E Corporation and the Utility measure their cash equivalents, trust assets, and price risk management instruments at fair value. A three-tier fair value hierarchy is established that prioritizes the inputs to valuation methodologies used to measure fair value:
The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. |
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Valuation Techniques | Valuation Techniques The following describes the valuation techniques used to measure the fair value of the assets and liabilities shown in the tables above. There are no restrictions on the terms and conditions upon which the investments may be redeemed. Transfers between levels in the fair value hierarchy are recognized as of the end of the reporting period. There were no material transfers between any levels for the three and six months ended June 30, 2019 and 2018. Trust Assets Assets Measured at Fair Value In general, investments held in the trusts are exposed to various risks, such as interest rate, credit, and market volatility risks. Nuclear decommissioning trust assets and other trust assets are composed primarily of equity and fixed-income securities and also include short-term investments that are money market funds valued at Level 1. Global equity securities primarily include investments in common stock that are valued based on quoted prices in active markets and are classified as Level 1. Fixed-income securities are primarily composed of U.S. government and agency securities, municipal securities, and other fixed-income securities, including corporate debt securities. U.S. government and agency securities primarily consist of U.S. Treasury securities that are classified as Level 1 because the fair value is determined by observable market prices in active markets. A market approach is generally used to estimate the fair value of fixed-income securities classified as Level 2 using evaluated pricing data such as broker quotes, for similar securities adjusted for observable differences. Significant inputs used in the valuation model generally include benchmark yield curves and issuer spreads. The external credit ratings, coupon rate, and maturity of each security are considered in the valuation model, as applicable. Assets Measured at NAV Using Practical Expedient Investments in the nuclear decommissioning trusts and the long-term disability trust that are measured at fair value using the NAV per share practical expedient have not been classified in the fair value hierarchy tables above. The fair value amounts are included in the tables above in order to reconcile to the amounts presented in the Condensed Consolidated Balance Sheets. These investments include commingled funds that are composed of equity securities traded publicly on exchanges as well as fixed-income securities that are composed primarily of U.S. government securities and asset-backed securities. Price Risk Management Instruments Price risk management instruments include physical and financial derivative contracts, such as power purchase agreements, forwards, futures, swaps, options, and CRRs that are traded either on an exchange or over-the-counter. Power purchase agreements, forwards, and swaps are valued using a discounted cash flow model. Exchange-traded futures that are valued using observable market forward prices for the underlying commodity are classified as Level 1. Over-the-counter forwards and swaps that are identical to exchange-traded futures, or are valued using forward prices from broker quotes that are corroborated with market data are classified as Level 2. Exchange-traded options are valued using observable market data and market-corroborated data and are classified as Level 2. Long-dated power purchase agreements that are valued using significant unobservable data are classified as Level 3. These Level 3 contracts are valued using either estimated basis adjustments from liquid trading points or techniques, including extrapolation from observable prices, when a contract term extends beyond a period for which market data is available. Market and credit risk management utilizes models to derive pricing inputs for the valuation of the Utility’s Level 3 instruments using pricing inputs from brokers and historical data. |
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Contingencies and Commitments | PG&E Corporation and the Utility have significant contingencies arising from their operations, including contingencies related to enforcement and litigation matters and environmental remediation. A provision for a loss contingency is recorded when it is both probable that a liability has been incurred and the amount of the liability can reasonably be estimated. PG&E Corporation and the Utility evaluate which potential liabilities are probable and the related range of reasonably estimated losses and record a charge that reflects their best estimate or the lower end of the range, if there is no better estimate. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of losses is estimable, often involves a series of complex judgments about future events. PG&E Corporation’s and the Utility’s provision for loss and expense excludes anticipated legal costs, which are expensed as incurred. The Utility also has substantial financial commitments in connection with agreements entered into to support its operating activities. PG&E Corporation’s and the Utility’s financial condition, results of operations, and cash flows may be materially affected by the outcome of the following matters.
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BANKRUPTCY FILING (Tables) |
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Reorganizations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Liabilities Subject to Compromise | The following table presents LSTC as reported in the Condensed Consolidated Balance Sheets at June 30, 2019:
(1) PG&E Corporation amounts reflected under the column “PG&E Corporation” exclude the accounts of the Utility. (2) At June 30, 2019, PG&E Corporation and the Utility had $650 million and $21,526 million in aggregate principal amount of pre-petition indebtedness, respectively. Utility pre-petition financing debt also includes $285 million of accrued contractual interest to the Petition Date. See Note 5 for details of pre-petition debt reported as LSTC. (3) See Note 10 for information regarding pre-petition wildfire-related claims reported as LSTC. As described in Note 10 under the heading “Plan Support Agreements with Public Entities,” on June 18, 2019, PG&E Corporation and the Utility entered into agreements with certain local public entities to potentially resolve their wildfire-related claims through the Chapter 11 process. |
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Schedule of Debtor Reorganization Items | Reorganization items, net for the three months ended June 30, 2019 and from the Petition Date through June 30, 2019 include the following:
(1) PG&E Corporation amounts reflected under the column “PG&E Corporation” exclude the accounts of the Utility. (2) PG&E Corporation and the Utility incurred $416,667 and $250,000, respectively, in fees to the U.S. Trustee in the three months ended June 30, 2019.
(1) PG&E Corporation amounts reflected under the column “PG&E Corporation” exclude the accounts of the Utility. (2) PG&E Corporation and the Utility incurred $416,667 and $250,000, respectively, in fees to the U.S. Trustee through June 30, 2019. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost | The net periodic benefit costs reflected in PG&E Corporation’s Condensed Consolidated Financial Statements for the three and six months ended June 30, 2019 and 2018 were as follows:
(1) A portion of service costs are capitalized pursuant to ASU 2017-07. (2) The Utility recorded these amounts to a regulatory account since they are probable of recovery from, or refund to, customers in future rates.
(1) A portion of service costs are capitalized pursuant to ASU 2017-07. (2) The Utility recorded these amounts to a regulatory account since they are probable of recovery from, or refund to, customers in future rates
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Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss) | The changes, net of income tax, in PG&E Corporation’s accumulated other comprehensive income (loss) are summarized below:
(1) These components are included in the computation of net periodic pension and other post-retirement benefit costs. (See the “Pension and Other Post-Retirement Benefits” table above for additional details.)
(1) These components are included in the computation of net periodic pension and other post-retirement benefit costs. (See the “Pension and Other Post-Retirement Benefits” table above for additional details.)
(1) These components are included in the computation of net periodic pension and other post-retirement benefit costs. (See the “Pension and Other Post-Retirement Benefits” table above for additional details.)
(1) These components are included in the computation of net periodic pension and other post-retirement benefit costs. (See the “Pension and Other Post-Retirement Benefits” table above for additional details.)
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Summary of Revenues Disaggregated by Type of Customer | The following table presents the Utility’s revenues disaggregated by type of customer:
(1) This activity is primarily related to the change in unbilled revenue, partially offset by other miscellaneous revenue items. (2) These amounts represent revenues authorized to be billed or refunded to customers.
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Schedule of Lease Expense | The following table shows the lease expense recognized for the fixed and variable component of the Utility’s lease obligations:
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Schedule of Future Expected Operating Lease Payments and Expected Obligations for Power Purchase and Other Lease Commitments | The following table shows the Utility’s future expected operating lease payments:
(1) Represents the remaining expected operating lease payments from July 1, 2019 through December 31, 2019. The following table shows the Utility’s future expected obligations for power purchase and other lease commitments:
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REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Regulated Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Regulatory Assets | Long-term regulatory assets are comprised of the following:
(1) Payments into the pension and other benefits plans are based on annual contribution requirements. As these annual requirements continue indefinitely into the future, the Utility expects to continuously recover pension benefits. (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 2001 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) Includes the accelerated amortization of premiums and debt issuance costs on pre-petition debt. (4) Includes costs of responding to catastrophic events that have been declared a disaster or state of emergency by competent federal or state authorities. Recovery of CEMA costs are subject to CPUC review and approval. (5) Includes specific incremental wildfire liability costs the CPUC approved for tracking in June 2018. Recovery of WEMA costs are subject to CPUC review and approval. (6) Includes costs associated with the implementation of regulations and requirements adopted to protect the public from potential fire hazards associated with overhead power line facilities and nearby aerial communication facilities that have not been previously authorized in another proceeding. Recovery of FHPMA costs are subject to CPUC review and approval. (7) Includes costs associated with the 2019 Wildfire Safety Plan. Recovery of FHPMA costs are subject to CPUC review and approval. |
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Long-Term Regulatory Liabilities | Long-term regulatory liabilities are comprised of the following:
(1) Represents the cumulative differences between the recorded costs to remove assets and amounts collected in rates for expected costs to remove assets. (2) Represents the net of amounts owed to customers for deferred taxes collected at higher rates before the Tax Act and amounts owed to the Utility for reversal of deferred taxes subject to flow-through treatment. (3) Represents the cumulative differences between ARO expenses and amounts collected in rates. Decommissioning costs related to the Utility’s nuclear facilities are recovered through rates and are placed in nuclear decommissioning trusts. This regulatory liability also represents the deferral of realized and unrealized gains and losses on these nuclear decommissioning trust investments. (See Note 9 below.) (4) 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. (5) Represents cumulative differences between incurred costs and amounts collected in rates for Post-Retirement Medical, Post-Retirement Life and Long Term Disability Plans.
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Regulatory Balancing Accounts Receivable | Current regulatory balancing accounts receivable and payable are comprised of the following:
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Regulatory Balancing Accounts Payable |
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DEBT (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debtor-in-Possession Financing | The following table summarizes the Utility’s outstanding borrowings and availability under the DIP Facilities at June 30, 2019:
(1) May be extended to December 2021, subject to satisfaction of certain terms and conditions, including payment of a 25 basis point extension fee. |
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Schedule of Debt | The following table summarizes PG&E Corporation’s and the Utility’s outstanding debt subject to compromise:
(1) Debt subject to compromise must be reported at the amounts expected to be allowed by the Bankruptcy Court and the carrying values will be adjusted as claims are approved. Total Utility Debt Subject to Compromise does not include $285 million of accrued contractual interest to the Petition Date. At March 31, 2019, PG&E Corporation and the Utility wrote off $178 million of unamortized debt issuance costs and debt discount to present the debt subject to compromise at the outstanding face value. The write-offs are included within long-term regulatory assets in the Condensed Consolidated Balance Sheets. See Notes 2 and 4 for further details. (2) At June 30, 2019, the contractual LIBOR-based interest rate on loans was 3.87%. (3) At June 30, 2019, the contractual LIBOR-based interest rate on the term loan was 3.60%. (4) Pollution Control Bonds series 2008F and 2010E were reissued in June 2017. Although the stated maturity date for both series is 2026, these bonds have a mandatory redemption date of May 31, 2022. (5) Each series of these bonds is supported by a separate direct-pay letter of credit. Following the Utility’s Chapter 11 filing, investors in these bonds drew on the letter of credit facilities. The letter of credit facility supporting the Series 2009 A-B bonds matured on June 5, 2019. In December 2015, the maturity dates of the letter of credit facilities supporting the Series 1996 C, E, F, 1997 B bonds were extended to December 1, 2020. Although the stated maturity date of these bonds is 2026, each series will remain outstanding only if the Utility extends or replaces the letter of credit related to the series or otherwise obtains consent from the issuer to the continuation of the series without a credit facility. (6) At June 30, 2019, the contractual interest rate on the letter of credit facility supporting these bonds was 7.70%. (7) At June 30, 2019, the contractual interest rate on the letter of credit facility supporting these bonds ranged from 7.70% to 7.83%. (8) Also includes $79 million in letters of credit. (9) At June 30, 2019, the contractual LIBOR-based interest rate on the loans was 3.67%. (10) At June 30, 2019, the contractual LIBOR-based interest rate on the term loan was 3.00%.
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EARNINGS PER SHARE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of PG&E Corporation's Income Available for Common Shareholders and Weighted Average Common Shares Outstanding for Calculating Diluted EPS | The following is a reconciliation of PG&E Corporation’s income available for common shareholders and weighted average common shares outstanding for calculating diluted EPS:
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DERIVATIVES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Volumes Of Outstanding Derivative Contracts | The volumes of the Utility’s outstanding derivatives were as follows:
(1) Amounts shown are for the combined positions of the electric fuels and core gas supply portfolios. (2) Million British Thermal Units. (3) CRRs are financial instruments that enable the holders to manage variability in electric energy congestion charges due to transmission grid limitations.
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Schedule of Offsetting Assets | At June 30, 2019, the Utility’s outstanding derivative balances were as follows:
At December 31, 2018, the Utility’s outstanding derivative balances were as follows:
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Schedule of Offsetting Liabilities | At June 30, 2019, the Utility’s outstanding derivative balances were as follows:
At December 31, 2018, the Utility’s outstanding derivative balances were as follows:
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FAIR VALUE MEASUREMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Assets and liabilities measured at fair value on a recurring basis for PG&E Corporation and the Utility are summarized below. Assets held in rabbi trusts are held by PG&E Corporation and not the Utility.
(1) Includes the effect of the contractual ability to settle contracts under master netting agreements and margin cash collateral. (2) Represents amount before deducting $491 million, primarily related to deferred taxes on appreciation of investment value.
(1) Includes the effect of the contractual ability to settle contracts under master netting agreements and margin cash collateral. (2) Represents amount before deducting $408 million, primarily related to deferred taxes on appreciation of investment value.
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Level 3 Measurements and Sensitivity Analysis |
(1) Represents price per megawatt-hour.
(1) Represents price per megawatt-hour. |
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Level 3 Reconciliation | The following tables present the reconciliation for Level 3 price risk management instruments for the three and six months ended June 30, 2019 and 2018:
(1) The costs related to price risk management activities are fully passed through to customers in rates. Accordingly, unrealized gains and losses are deferred in regulatory liabilities and assets and net income is not impacted.
(1) The costs related to price risk management activities are fully passed through to customers in rates. Accordingly, unrealized gains and losses are deferred in regulatory liabilities and assets and net income is not impacted. |
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Carrying Amount and Fair Value of Financial Instruments | The carrying amount and fair value of PG&E Corporation’s and the Utility’s debt instruments were as follows (the table below excludes financial instruments with carrying values that approximate their fair values):
(1) On January 29, 2019 PG&E Corporation and the Utility filed for Chapter 11 protection. Debt held by PG&E Corporation and the Utility became debt subject to compromise and is valued at the allowed claim amount. For more information, see Note 2 and Note 4. (2) The Utility drew $350 million from the DIP Revolving Facility on February 1, 2019 which was subsequently repaid on April 3, 2019 using certain of the proceeds of the DIP Initial Term Loan Facility. |
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Schedule of Unrealized Gains (Losses) Related to Available-For-Sale Investments | The following table provides a summary of equity securities and available-for-sale debt securities:
(1) Represents amounts before deducting $491 million and $408 million for the periods ended June 30, 2019 and December 31, 2018, respectively, primarily related to deferred taxes on appreciation of investment value. |
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Schedule of Maturities on Debt Instruments | The fair value of fixed-income securities by contractual maturity is as follows:
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Schedule of Activity for Debt and Equity Securities | The following table provides a summary of activity for fixed income and equity securities:
|
WILDFIRE-RELATED CONTINGENCIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Environmental Remediation Liability | At June 30, 2019 and December 31, 2018, the Utility’s Condensed Consolidated Balance Sheets include estimated liabilities in respect of total wildfire-related claims as follows:
(1) On the Petition Date, all wildfire-related claims were classified as LSTC and all pending litigation was stayed. As of June 30, 2019, $100 million was reclassified from LSTC to current liabilities - wildfire-related claims to reflect Bankruptcy Court approval of contributions to the Wildfire Assistance Fund.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in Accruals Related to Third-Party Claims | The following table presents changes in the insurance receivable for the six months ended June 30, 2019. The balance for insurance receivable is included in Other accounts receivable in PG&E Corporation’s and the Utility’s Condensed Consolidated Balance Sheets:
|
OTHER CONTINGENCIES AND COMMITMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Environmental Remediation Liability | The Utility’s environmental remediation liability is primarily included in non-current liabilities on the Condensed Consolidated Balance Sheets and is comprised of the following:
(1) Primarily driven by the following sites: Vallejo, San Francisco East Harbor, Napa, Beach Street, San Francisco North Beach, and San Rafael MGP-Bio Marin MGP. (2) Primarily driven by the Geothermal landfill and Shell Pond site. (3) Primarily driven by the San Francisco Potrero Power Plant. |
ORGANIZATION AND BASIS OF PRESENTATION (Details) |
6 Months Ended |
---|---|
Jun. 30, 2019
segment
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments (segment) | 1 |
BANKRUPTCY FILING (Narrative) (Details) |
5 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jul. 17, 2019
unit
|
Feb. 01, 2019
USD ($)
|
Jan. 31, 2019
USD ($)
|
|
Debt Instrument [Line Items] | |||||
Contractual interest expense on prepetition liabilities not recorded in financial statements | $ 405,000,000 | ||||
DIP Credit Agreement | Line of Credit | Senior Secured Superpriority Debt | |||||
Debt Instrument [Line Items] | |||||
Amount arranged | $ 5,500,000,000 | $ 5,500,000,000 | $ 5,500,000,000 | $ 5,500,000,000 | |
Pacific Gas & Electric Co | |||||
Debt Instrument [Line Items] | |||||
Payments for reorganization items | 78,000,000 | ||||
PG&E Corporation | |||||
Debt Instrument [Line Items] | |||||
Payments for reorganization items | $ 15,000,000 | ||||
Subsequent Event | Pacific Gas & Electric Co | |||||
Debt Instrument [Line Items] | |||||
Number of collective bargaining units (unit) | unit | 2 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Components of Net Periodic Benefit Cost) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Pension Benefits | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost for benefits earned | $ 111 | $ 129 | $ 222 | $ 257 |
Interest cost | 190 | 172 | 379 | 344 |
Expected return on plan assets | (226) | (256) | (453) | (511) |
Amortization of prior service cost | (2) | (2) | (3) | (3) |
Amortization of net actuarial loss | 0 | 2 | 1 | 3 |
Net periodic benefit cost | 73 | 45 | 146 | 90 |
Regulatory account transfer | 10 | 39 | 21 | 77 |
Total | 83 | 84 | 167 | 167 |
Other Benefits | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost for benefits earned | 14 | 17 | 28 | 33 |
Interest cost | 19 | 18 | 38 | 35 |
Expected return on plan assets | (30) | (32) | (61) | (65) |
Amortization of prior service cost | 3 | 3 | 7 | 7 |
Amortization of net actuarial loss | (1) | (2) | (2) | (3) |
Net periodic benefit cost | 5 | 4 | 10 | 7 |
Regulatory account transfer | 0 | 0 | 0 | 0 |
Total | $ 5 | $ 4 | $ 10 | $ 7 |
BANKRUPTCY FILING (Schedule of Debtor Reorganization Items) (Details) - USD ($) |
3 Months Ended | 5 Months Ended | 6 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Reorganizations [Line Items] | |||||
Debtor-in-possession financing costs | $ 0 | $ 114,000,000 | |||
Legal and other | 76,000,000 | 100,000,000 | |||
Interest income | (21,000,000) | (32,000,000) | |||
Adjustments to LSTC | 0 | 0 | |||
Trustee fees | 1,000,000 | 1,000,000 | |||
Total reorganization items, net | 56,000,000 | $ 0 | 183,000,000 | $ 183,000,000 | $ 0 |
PG&E Corporation | |||||
Reorganizations [Line Items] | |||||
Debtor-in-possession financing costs | 0 | 17,000,000 | |||
Legal and other | 1,000,000 | 2,000,000 | |||
Interest income | (3,000,000) | (5,000,000) | |||
Adjustments to LSTC | 0 | 0 | |||
Trustee fees | 1,000,000 | 1,000,000 | |||
Total reorganization items, net | (1,000,000) | 15,000,000 | |||
Fees paid to the U.S. Trustee | 416,667 | 416,667 | |||
Utility | |||||
Reorganizations [Line Items] | |||||
Debtor-in-possession financing costs | 0 | 97,000,000 | |||
Legal and other | 75,000,000 | 98,000,000 | |||
Interest income | (18,000,000) | (27,000,000) | |||
Adjustments to LSTC | 0 | 0 | |||
Trustee fees | 0 | 0 | |||
Total reorganization items, net | 57,000,000 | $ 0 | 168,000,000 | $ 168,000,000 | $ 0 |
Fees paid to the U.S. Trustee | $ 250,000 | $ 250,000 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jan. 01, 2019 |
|
Lessee, Lease, Description [Line Items] | ||
Period for probable revenue recovery | 24 months | |
Cash payments arising from operating leases | $ 848 | |
ROU assets | 2,662 | |
Lease liabilities | $ 2,653 | |
Weighted average remaining lease term | 6 years 1 month 13 days | |
Weighted average discount rate | 6.10% | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Power purchase agreement, term | 5 years | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Power purchase agreement, term | 20 years | |
Accounting Standards Update 2016-02 | ||
Lessee, Lease, Description [Line Items] | ||
ROU assets | $ 2,800 | |
Lease liabilities | $ 2,800 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Lease Expense) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Accounting Policies [Abstract] | ||
Operating lease fixed cost | $ 114 | $ 236 |
Operating lease variable cost | 490 | 799 |
Total operating lease costs | $ 604 | $ 1,035 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Future Expected Operating Lease Payments and Expected Obligations for Power Purchase and Other Lease Commitments) (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Future Expected Operating Lease Payments | ||
2019 | $ 450 | |
2020 | 679 | |
2021 | 623 | |
2022 | 548 | |
2023 | 255 | |
Thereafter | 692 | |
Total lease payments | 3,247 | |
Less imputed interest | (594) | |
Total | $ 2,653 | |
Future Expected Obligations and Other Lease Commitments | ||
2019 | $ 684 | |
2020 | 677 | |
2021 | 621 | |
2022 | 546 | |
2023 | 252 | |
Thereafter | 581 | |
Total lease commitments | $ 3,361 |
REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS (Long-Term Regulatory Liabilities) (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Regulatory Liabilities [Line Items] | ||
Total long-term regulatory liabilities | $ 9,038 | $ 8,539 |
Cost of removal obligations | ||
Regulatory Liabilities [Line Items] | ||
Total long-term regulatory liabilities | 6,233 | 5,981 |
Deferred income taxes | ||
Regulatory Liabilities [Line Items] | ||
Total long-term regulatory liabilities | 4 | 283 |
Recoveries in excess of AROs | ||
Regulatory Liabilities [Line Items] | ||
Total long-term regulatory liabilities | 472 | 356 |
Public purpose programs | ||
Regulatory Liabilities [Line Items] | ||
Total long-term regulatory liabilities | 785 | 674 |
Employee benefit plans | ||
Regulatory Liabilities [Line Items] | ||
Total long-term regulatory liabilities | 423 | 421 |
Other | ||
Regulatory Liabilities [Line Items] | ||
Total long-term regulatory liabilities | $ 1,121 | $ 824 |
EQUITY (Details) - 401K Plan and Shared Based Compensation Plans shares in Millions, $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
shares
| |
Schedule Of Changes In Equity [Line Items] | |
Stock issued during period (in shares) | shares | 8.9 |
Cash proceeds from stock issuance | $ | $ 85 |
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Earnings Per Share [Abstract] | ||||
Loss attributable to common shareholders | $ (2,553) | $ (984) | $ (2,420) | $ (542) |
Weighted average common shares outstanding, basic (in shares) | 529 | 516 | 528 | 516 |
Add incremental shares from assumed conversions: | ||||
Employee share-based compensation (in shares) | 0 | 0 | 0 | 1 |
Weighted average common shares outstanding, diluted (in shares) | 529 | 516 | 528 | 517 |
Total loss per common share, diluted (in dollars per share) | $ (4.83) | $ (1.91) | $ (4.58) | $ (1.05) |
DERIVATIVES (Volumes of Outstanding Derivative Contracts, in Megawatt Hours Unless Otherwise Specified) (Details) |
Jun. 30, 2019
MWh
MMBTU
|
Dec. 31, 2018
MWh
MMBTU
|
---|---|---|
Forwards, Futures and Swaps | Natural Gas | ||
Derivative [Line Items] | ||
Contract Volume (mmbtu and mwh) | MMBTU | 174,575,917 | 177,750,349 |
Forwards, Futures and Swaps | Electricity | ||
Derivative [Line Items] | ||
Contract Volume (mmbtu and mwh) | 2,999,616 | 3,833,490 |
Options | Natural Gas | ||
Derivative [Line Items] | ||
Contract Volume (mmbtu and mwh) | MMBTU | 16,455,000 | 13,735,405 |
Options | Electricity | ||
Derivative [Line Items] | ||
Contract Volume (mmbtu and mwh) | 912,033 | 0 |
Congestion Revenue Rights | Electricity | ||
Derivative [Line Items] | ||
Contract Volume (mmbtu and mwh) | 329,571,344 | 340,783,089 |
FAIR VALUE MEASUREMENTS (Level 3 Reconciliation) (Details) - Level 3 - Price Risk Management Instruments - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning asset (liability) balance | $ 129 | $ 40 | $ 95 | $ 42 |
Net realized and unrealized gains: Included in regulatory assets and liabilities or balancing accounts | (20) | (6) | 14 | (8) |
Ending asset (liability) balance | $ 109 | $ 34 | $ 109 | $ 34 |
FAIR VALUE MEASUREMENTS (Schedule of Unrealized Gains (Losses) Related to Available-for-Sale Investments) (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 1,943 | $ 1,885 |
Total Unrealized Gains | 1,570 | 1,276 |
Total Unrealized Losses | (6) | (23) |
Total Fair Value | 3,507 | 3,138 |
Amount primarily related to deferred taxes on appreciation of investment value | 491 | 408 |
Short-term investments | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 16 | 29 |
Total Unrealized Gains | 0 | 0 |
Total Unrealized Losses | 0 | 0 |
Total Fair Value | 16 | 29 |
Global equity securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 496 | 568 |
Total Unrealized Gains | 1,486 | 1,246 |
Total Unrealized Losses | (4) | (5) |
Total Fair Value | 1,978 | 1,809 |
Fixed-income securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 1,431 | 1,288 |
Total Unrealized Gains | 84 | 30 |
Total Unrealized Losses | (2) | (18) |
Total Fair Value | $ 1,513 | $ 1,300 |
FAIR VALUE MEASUREMENTS (Schedule of Maturities on Debt Securities) (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Total maturities of fixed-income securities | $ 3,507 | $ 3,138 |
Fixed-income securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Less than 1 year | 26 | |
1–5 years | 541 | |
5–10 years | 340 | |
More than 10 years | 606 | |
Total maturities of fixed-income securities | $ 1,513 | $ 1,300 |
FAIR VALUE MEASUREMENTS (Schedule of Activity for Debt and Equity Securities) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Fair Value Disclosures [Abstract] | ||||
Proceeds from sales and maturities of nuclear decommissioning trust investments | $ 171 | $ 308 | $ 517 | $ 802 |
Gross realized gains on securities | 56 | 11 | 22 | 48 |
Gross realized losses on securities | $ (26) | $ (5) | $ (7) | $ (9) |
WILDFIRE-RELATED CONTINGENCIES (Summary of Estimated Liabilities) (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Loss Contingencies [Line Items] | ||
Wildfire-related claims reclassified to current liabilities | $ 100 | $ 14,226 |
Pacific Gas & Electric Co | ||
Loss Contingencies [Line Items] | ||
Total wildfire-related claims | 18,112 | 14,226 |
Wildfire-related claims reclassified from liabilities subject to compromise | 100 | |
Wildfire-related claims reclassified to current liabilities | 100 | 14,226 |
Pacific Gas & Electric Co | 2015 Butte fire | ||
Loss Contingencies [Line Items] | ||
Total wildfire-related claims | 212 | 226 |
Pacific Gas & Electric Co | 2017 Northern California wildfires | ||
Loss Contingencies [Line Items] | ||
Total wildfire-related claims | 5,500 | 3,500 |
Pacific Gas & Electric Co | 2018 Camp fire | ||
Loss Contingencies [Line Items] | ||
Total wildfire-related claims | $ 12,400 | $ 10,500 |
WILDFIRE-RELATED CONTINGENCIES (Wildfire-Related Claims Narrative) (Details) - Pacific Gas & Electric Co - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
2018 Camp fire | ||||
Loss Contingencies [Line Items] | ||||
Legal and other costs | $ 19 | $ 32 | ||
2017 Northern California wildfires | ||||
Loss Contingencies [Line Items] | ||||
Legal and other costs | $ 7 | $ 46 | $ 41 | $ 68 |
WILDFIRE-RELATED CONTINGENCIES (2018 Camp Fire Background) (Details) - Pacific Gas & Electric Co - 2018 Camp fire |
Jan. 04, 2019
a
residence
fatality
structure
|
---|---|
Loss Contingencies [Line Items] | |
Number of acres burned (acre) | a | 153,336 |
Number of fatalities (fatality) | 85 |
Number of residences destroyed (residence) | residence | 13,972 |
Number of commercial structures destroyed (structure) | structure | 528 |
Number of other buildings destroyed (building) | 4,293 |
WILDFIRE-RELATED CONTINGENCIES (Plan Support Agreements with Public Entities) (Details) - Settled Litigation |
Jun. 18, 2019
USD ($)
|
---|---|
Public Entity Wildfire Claims | |
Loss Contingencies [Line Items] | |
Settlement reached | $ 1,000,000,000.0 |
Fund to support defense or resolution of claims for each PSA | 10,000,000.0 |
2017 Northern California Wildfire Public Entities Claims | |
Loss Contingencies [Line Items] | |
Settlement reached | 415,000,000.0 |
Town Of Paradise Wildfire Claims | |
Loss Contingencies [Line Items] | |
Settlement reached | 270,000,000.0 |
County Of Butte Wildfire Claims | |
Loss Contingencies [Line Items] | |
Settlement reached | 252,000,000.0 |
Paradise Recreation & Park District Wildfire Claims | |
Loss Contingencies [Line Items] | |
Settlement reached | 47,500,000 |
County Of Yuba Wildfire Claims | |
Loss Contingencies [Line Items] | |
Settlement reached | 12,500,000 |
Calaveras County Water District Wildfire Claims | |
Loss Contingencies [Line Items] | |
Settlement reached | $ 3,000,000.0 |
WILDFIRE-RELATED CONTINGENCIES (Summary of Insurance Receivables) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Insurance Receivable [Roll Forward] | ||
Reimbursements | $ 35 | $ (144) |
2018 Camp fire | ||
Insurance Receivable [Roll Forward] | ||
Insurance Receivable, Beginning Balance | 1,380 | |
Accrued insurance recoveries | 0 | |
Reimbursements | 0 | |
Insurance Receivable, Ending Balance | 1,380 | |
2017 Northern California wildfires | ||
Insurance Receivable [Roll Forward] | ||
Insurance Receivable, Beginning Balance | 829 | |
Accrued insurance recoveries | 0 | |
Reimbursements | 0 | |
Insurance Receivable, Ending Balance | $ 829 |
WILDFIRE-RELATED CONTINGENCIES (Wildfire-Related Derivative Litigation) (Details) |
Nov. 20, 2017
lawsuit
|
---|---|
Derivative Lawsuits Filed in the San Francisco County Superior Court | Breach of Fiduciary Duties | |
Loss Contingencies [Line Items] | |
Number of lawsuits filed against company (lawsuit, complaint) | 2 |
WILDFIRE-RELATED CONTINGENCIES (Wildfire-Related Securities Class Action Litigation) (Details) - Securities Class Actions Filed in United States District Court for the Northern District of California |
Feb. 22, 2019
offering
|
Jun. 30, 2018
lawsuit
|
---|---|---|
Loss Contingencies [Line Items] | ||
Number of lawsuits filed against company (lawsuit, complaint) | lawsuit | 2 | |
Number of public offerings of notes with complaints against underwriters (offering) | offering | 4 |
WILDFIRE-RELATED CONTINGENCIES (District Attorneys Offices Investigations) (Details) - Pacific Gas & Electric Co - Complaints Brought By Butte County District Attorney - Loss from Wildfires $ in Millions |
1 Months Ended |
---|---|
Oct. 31, 2018
USD ($)
| |
Loss Contingencies [Line Items] | |
Settlement agreement term | 4 years |
Settlement expense | $ 1.5 |
WILDFIRE-RELATED CONTINGENCIES (Wildfire Assistance Fund) (Details) - USD ($) $ in Millions |
Aug. 02, 2019 |
Jun. 30, 2019 |
May 24, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|
Loss Contingencies [Line Items] | ||||
Wildfire-related claims | $ 100 | $ 14,226 | ||
2018 Camp Fire and 2017 Northern California Wildfires | ||||
Loss Contingencies [Line Items] | ||||
Wildfire Assistance Fund, amount sought | $ 105 | |||
Wildfire Assistance Fund, amount sought, portion available for administrative expenses | $ 5 | |||
Pacific Gas & Electric Co | ||||
Loss Contingencies [Line Items] | ||||
Wildfire-related claims | $ 100 | $ 14,226 | ||
Subsequent Event | 2018 Camp Fire and 2017 Northern California Wildfires | ||||
Loss Contingencies [Line Items] | ||||
Wildfire-related claims | $ 105 |
OTHER CONTINGENCIES AND COMMITMENTS (Enforcement and Litigation Matters) (Details) - Pacific Gas & Electric Co $ in Millions |
Apr. 16, 2019 |
Jan. 31, 2017
USD ($)
|
May 14, 2019
condition
|
Jan. 04, 2019
wildfire
|
Oct. 30, 2017
wildfire
|
Aug. 09, 2016
count
|
---|---|---|---|---|---|---|
2017 Northern California wildfires | ||||||
Loss Contingencies [Line Items] | ||||||
Number of wildfires (wildfire) | wildfire | 18 | 21 | ||||
Judicial Ruling | Unfavorable Regulatory Action | ||||||
Loss Contingencies [Line Items] | ||||||
Number of guilty counts of obstructing a federal agency proceeding | 1 | |||||
Number of guilty counts of violating pipeline integrity management regulations | 5 | |||||
Corporate probation period, term | 5 years | 5 years | ||||
Oversight by third-party monitor period, application for early termination, term | 3 years | |||||
Damages awarded, value | $ | $ 3 | |||||
Number of additional probation conditions (condition) | condition | 2 |
OTHER CONTINGENCIES AND COMMITMENTS (Other Matters) (Details) - USD ($) $ in Millions |
Jun. 23, 2016 |
Dec. 31, 2018 |
---|---|---|
Pacific Gas & Electric Co | ||
Loss Contingencies [Line Items] | ||
Accrued legal liabilities | $ 98 | |
Disallowance of Plant Costs | ||
Loss Contingencies [Line Items] | ||
Gas transmission and storage capital disallowance | $ 696 | |
Permanently disallowed capital | 120 | |
Amount subject to audit | $ 576 |
OTHER CONTINGENCIES AND COMMITMENTS (Schedule of Environmental Remediation Liability Composed) (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Disclosure Commitments And Contingencies Environmental Remediation Liability Composed [Abstract] | ||
Topock natural gas compressor station | $ 346 | $ 369 |
Hinkley natural gas compressor station | 142 | 146 |
Former manufactured gas plant sites owned by the Utility or third parties | 580 | 520 |
Utility-owned generation facilities (other than fossil fuel-fired), other facilities, and third-party disposal sites | 112 | 111 |
Fossil fuel-fired generation facilities and sites | 125 | 137 |
Total environmental remediation liability | $ 1,305 | $ 1,283 |
OTHER CONTINGENCIES AND COMMITMENTS (Nuclear Insurance) (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
nuclear_generating_unit
| |
Long-term Purchase Commitment [Line Items] | |
Number of nuclear generating units (nuclear generating unit) | nuclear_generating_unit | 2 |
Nuclear Electric Insurance Limited | |
Long-term Purchase Commitment [Line Items] | |
Amount of property damage and business interruption coverage provided by NEIL for Diablo Canyon | $ 41 |
European Mutual Association for Nuclear Insurance | |
Long-term Purchase Commitment [Line Items] | |
Amount of property damage coverage provided by NEIL | $ 5 |
OTHER CONTINGENCIES AND COMMITMENTS (Tax Matters) (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Pacific Gas & Electric Co | |
Disaggregation of Revenue [Line Items] | |
Unrecognized tax benefits, decrease resulting from settlements with taxing authorities | $ 10 |
OTHER CONTINGENCIES AND COMMITMENTS (Purchase Commitments) (Details) $ in Billions |
Dec. 31, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Recorded unconditional purchase obligation | $ 40 |
SUBSEQUENT EVENTS (Details) - Unfavorable Regulatory Action - Pacific Gas & Electric Co - Subsequent Event $ in Millions |
Jul. 12, 2019
USD ($)
|
---|---|
Subsequent Event [Line Items] | |
Disallowance cap, transmission and distribution equity rate base | $ 2,300 |
Expected wildfire fund allocation metric, percentage | 64.20% |
Expected wildfire fund allocation metric, initial contribution | $ 4,800 |
Expected wildfire fund allocation metric, annual contributions | $ 193 |
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