REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS

3 Months Ended

Mar. 31, 2022

REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS

Regulatory Assets

Long-term regulatory assets are comprised of the following:


	Balance at
(in millions)	March 31, 2022		December 31, 2021
Pension benefits (1)	$	645	$	708
Environmental compliance costs	1,007		1,089
Utility retained generation (2)	121		133
Price risk management	213		216
Catastrophic event memorandum account (3)	983		1,119
Wildfire expense memorandum account (4)	350		347
Fire hazard prevention memorandum account (5)	75		75
Fire risk mitigation memorandum account (6)	50		44
Wildfire mitigation plan memorandum account (7)	461		424
Deferred income taxes (8)	2,036		1,849
Insurance premium costs (9)	186		207
Wildfire mitigation balancing account (10)	273		273
Vegetation management balancing account (11)	1,412		1,411
COVID-19 pandemic protection memorandum accounts (12)	48		49
Microgrid memorandum account (13)	164		163
Financing costs (14)	172		175
Other	971		925
Total long-term regulatory assets	$	9,167	$	9,207

(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 costs of responding to catastrophic events that have been declared a disaster or state of emergency by competent federal or state authorities. As of March 31, 2022 and December 31, 2021, $51 million and $49 million in COVID-19 related costs was recorded to CEMA regulatory assets, respectively. Recovery of CEMA costs is subject to CPUC review and approval.

(4) Represents incremental wildfire claims and outside legal expenses related to the 2021 Dixie fire. Recovery of WEMA costs is subject to CPUC review and approval.

(5) 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 is subject to CPUC review and approval.

(6) Includes costs associated with the 2019 WMP for the period from January 1, 2019 through June 4, 2019 and other incremental costs associated with fire risk mitigation. Recovery of FRMMA costs is subject to CPUC review and approval.

(7) Includes costs associated with the 2019 WMP for the period from June 5, 2019 through December 31, 2019, the 2020 WMP for the period from January 1, 2020 through December 31, 2020, the 2021 WMP for the period from January 1, 2021 through December 31, 2021 and the 2022 WMP for the period from January 1, 2022 through March 31, 2022. Recovery of WMPMA costs is subject to CPUC review and approval.

(8) Represents cumulative differences between amounts recognized for ratemaking purposes and expense recognized in accordance with GAAP.

(9) Represents excess liability insurance premium costs recorded to RTBA and adjustment mechanism for costs determined in other proceedings, as authorized in the 2020 GRC and 2019 GT&S rate cases, respectively.

(10) Includes costs associated with certain wildfire mitigation activities for the period from January 1, 2020 through March 31, 2022. Noncurrent balance represents costs above 115% of adopted revenue requirements, which are subject to CPUC review and approval.

(11) Represents costs from routine vegetation management and EVM activities previously recorded in the FRMMA/WMPMA, and tree mortality and fire risk reduction work previously recorded in CEMA for the period from January 1, 2020 through March 31, 2022. Recovery of VMBA costs above 120% of adopted revenue requirements is subject to CPUC review and approval.

(12) On April 16, 2020, the CPUC passed a resolution that established the CPPMA to recover costs associated with customer protections, including higher uncollectible costs related to a moratorium on electric and gas service disconnections for residential and small business customers. The CPPMA applies only to certain residential and small business customers and was approved on July 27, 2020 with an effective date of March 4, 2020. As of March 31, 2022, the Utility had recorded an under-collection of $28 million, representing incremental bad debt expense over what was collected in rates for the period the CPPMA was in effect. The remaining $20 million is associated with program costs and higher accounts receivable financing costs. As of December 31, 2021, the Utility had recorded an under-collection of $30 million, representing incremental bad debt expense over what was collected in rates for the period the CPPMA was in effect. The remaining $19 million is associated with program costs and higher accounts receivable financing costs. Recovery of CPPMA costs is subject to CPUC review and approval.

(13) Includes costs associated with temporary generation, infrastructure upgrades, and community grid enablement programs associated with the implementation of microgrids. Amounts incurred are subject to CPUC review and approval.

(14) Includes costs associated with long-term debt financing deemed recoverable under ASC 980. Noncurrent balance represents costs to be recovered more than twelve months from the current date and includes the following costs: hedging costs and exit financing fees for the Utility’s exit from bankruptcy in 2004 and PG&E Corporation’s and the Utility’s exit from bankruptcy in 2020; unamortized issuance costs, premiums and discounts related to pre-petition debt; AB1054 bond issuance costs; and debt CPUC fees. These costs and their amortization period are reviewable and approved in the Utility’s Cost of Capital or other regulatory filings.

Regulatory Liabilities

Long-term regulatory liabilities are comprised of the following:


	Balance at
(in millions)	March 31, 2022		December 31, 2021
Cost of removal obligations (1)	$	7,431	$	7,306
Recoveries in excess of AROs (2)	154		388
Public purpose programs (3)	1,043		946
Employee benefit plans (4)	1,234		1,229
Transmission tower wireless licenses (5)	442		446
SFGO sale (6)	323		343
Other	936		1,341
Total long-term regulatory liabilities	$	11,563	$	11,999

(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 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.

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

(4) Represents cumulative differences between incurred costs and amounts collected in rates for post-retirement medical, post-retirement life and long-term disability plans.

(5) Represents the portion of the net proceeds received from the sale of transmission tower wireless licenses that will be returned to customers. Of the $442 million, $307 million and $135 million will be refunded to FERC and CPUC jurisdiction customers, respectively. For more information, see Note 3 of the Notes to the Consolidated Financial Statements in Item 8 of the 2021 Form 10-K.

(6) Represents the noncurrent portion of the net gain on the sale of the SFGO, which closed on September 17, 2021, that is being distributed to customers over a five-year period, beginning in 2022.

Regulatory Balancing Accounts

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


	Balance at
(in millions)	March 31, 2022		December 31, 2021
Electric distribution	$	850	$	—
Energy procurement	505		310
Public purpose programs	345		321
Fire hazard prevention memorandum account	20		50
Fire risk mitigation memorandum account	5		14
Wildfire mitigation plan memorandum account	27		67
Wildfire mitigation balancing account	9		91
General rate case memorandum accounts	351		468
Vegetation management balancing account	305		127
Insurance premium costs	95		605
Wildfire expense memorandum account	—		440
Residential uncollectibles balancing accounts	104		127
Catastrophic event memorandum account	287		—
Other	262		379
Total regulatory balancing accounts receivable	$	3,165	$	2,999


	Balance at
(in millions)	March 31, 2022		December 31, 2021
Electric distribution	$	—	$	121
Electric transmission	132		24
Gas distribution and transmission	113		83
Energy procurement	224		211
Public purpose programs	286		259
Nuclear decommissioning adjustment mechanism	106		137
Other	815		286
Total regulatory balancing accounts payable	$	1,676	$	1,121

For more information, see Note 4 of the Notes to the Consolidated Financial Statements in Item 8 of the 2021 Form 10-K.