BALANCE SHEET COMPONENTS

Inventories

PGE’s inventories, which are recorded at average cost, consist primarily of materials and supplies for use in operations, maintenance, and capital activities, as well as fuel, which includes natural gas, coal, and oil for use in the Company’s generating plants. Periodically, the Company assesses inventory for purposes of determining that inventories are recorded at the lower of average cost or net realizable value.

Other Current Assets

Other current assets consist of the following (in millions):



	September 30, 2018		December 31, 2017
Prepaid expenses	$	31	$	50
Assets from price risk management activities	5		6
Margin deposits	5		11
Other	10		6
Other current assets	$	51	$	73

Electric Utility Plant, Net

Electric utility plant, net consists of the following (in millions):



	September 30, 2018			December 31, 2017
Electric utility plant	$	10,218		$	9,914
Construction work-in-progress	340			391
Total cost	10,558			10,305
Less: accumulated depreciation and amortization	(3,776		)	(3,564		)
Electric utility plant, net	$	6,782		$	6,741

Accumulated depreciation and amortization in the table above includes accumulated amortization related to intangible assets of $333 million and $296 million as of September 30, 2018 and December 31, 2017, respectively. Amortization expense related to intangible assets was $16 million and $43 million for the three and nine months ended September 30, 2018, respectively, and $11 million and $34 million for the three and nine months ended September 30, 2017, respectively. The Company’s intangible assets primarily consist of computer software development and hydro licensing costs.

Regulatory Assets and Liabilities

Regulatory assets and liabilities consist of the following (in millions):



	September 30, 2018					December 31, 2017
	Current			Noncurrent		Current			Noncurrent
Regulatory assets:
Price risk management	$	37		$	123	$	53		$	151
Pension and other postretirement plans	—			205		—			218
Debt issuance costs	—			17		—			19
Trojan decommissioning activities	—			26		—			—
Other	5			55		9			50
Total regulatory assets	$	42		$	426	$	62		$	438
Regulatory liabilities:
Asset retirement removal costs	$	—		$	964	$	—		$	933
Deferred income taxes	—			271		—			277
Trojan decommissioning activities	1			—		3			—
Asset retirement obligations	—			53		—			52
Tax Reform Deferral⁽¹⁾	—			37		—			—
Other	17			54		28			26
Total regulatory liabilities	$	18	⁽²⁾	$	1,379	$	31	⁽²⁾	$	1,288

(1) Related to the deferral of the 2018 net tax benefits due to the change in corporate tax rate under TCJA, including interest.

(2) Included in Accrued expenses and other current liabilities in the condensed consolidated balance sheets.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in millions):



	September 30, 2018		December 31, 2017
Accrued employee compensation and benefits	$	52	$	60
Accrued taxes payable	43		31
Accrued interest payable	43		27
Accrued dividends payable	33		31
Regulatory liabilities—current	18		31
Other	62		61
Total accrued expenses and other current liabilities	$	251	$	241

Asset Retirement Obligations

Asset retirement obligations (AROs) consist of the following (in millions):



	September 30, 2018		December 31, 2017
Trojan decommissioning activities	$	69	$	45
Utility plant	111		109
Non-utility property	16		13
Asset retirement obligations	$	196	$	167

Trojan decommissioning activities represents the present value of future decommissioning costs for the plant, which ceased operation in 1993. The remaining decommissioning activities primarily consist of the long-term operation and decommissioning of the Independent Spent Fuel Storage Installation (ISFSI), an interim dry storage facility that is licensed by the Nuclear Regulatory Commission (NRC). The ISFSI is to house the spent nuclear fuel at the former plant site until an off-site storage facility is available. Decommissioning of the ISFSI and final site restoration activities will begin once shipment of all the spent fuel to a U.S. Department of Energy facility is complete, which is not expected prior to 2034. The NRC mandated an increase in staffing for the next 16 years that increased the Trojan ARO in the first quarter of 2018 by $23 million.

Credit Facilities

As of September 30, 2018, PGE had a $500 million revolving credit facility scheduled to expire in November 2021. Pursuant to the terms of the agreement, the revolving credit facility may be used for general corporate purposes, as backup for commercial paper borrowings, and to permit the issuance of standby letters of credit. PGE may borrow for one, two, three, or six months at a fixed interest rate established at the time of the borrowing, or at a variable interest rate for any period up to the then remaining term of the credit facility. The facility contains a provision that requires annual fees based on PGE’s unsecured credit ratings, and contains customary covenants and default provisions, including a requirement that limits consolidated indebtedness, as defined in the agreement, to 65% of total capitalization. As of September 30, 2018, PGE was in compliance with this covenant with a 51.2% debt-to-total capital ratio.

The Company has a commercial paper program under which it may issue commercial paper for terms of up to 270 days, limited to the unused amount of credit under the revolving credit facility.

PGE classifies any borrowings under the revolving credit facility and outstanding commercial paper as Short-term debt on the condensed consolidated balance sheets.

Under the revolving credit facility, as of September 30, 2018, PGE had no borrowings outstanding and there were no commercial paper or letters of credit issued. As a result, as of September 30, 2018, the aggregate unused available credit capacity under the revolving credit facility was $500 million.

In addition, PGE has four letter of credit facilities that provide a total capacity of $220 million under which the Company can request letters of credit for original terms not to exceed one year. The issuance of such letters of credit is subject to the approval of the issuing institution. Under these facilities, letters of credit for a total of $59 million were outstanding as of September 30, 2018. Letters of credit issued are not reflected on the Company’s condensed consolidated balance sheets.

Pursuant to an order issued by the FERC, the Company is authorized to issue short-term debt in an aggregate amount of up to $900 million through February 6, 2020.

Long-term Debt

During the nine months ended September 30, 2018, PGE did not enter into any long-term debt transactions. Due to the upcoming repayment of long-term debt in 2019, $300 million was classified as current on the Company’s condensed consolidated balance sheets as of September 30, 2018.

On September 20, 2018 PGE issued a notice of redemption to exercise its option to redeem in full $24 million of Pollution Control Revenue Bonds on October 31, 2018. PGE has deposited with the trustee $24 million to cover principal and accrued interest, which is recorded within Cash and cash equivalents within the condensed consolidated balance sheets for the period ended September 30, 2018.

Defined Benefit Pension Plan Costs

Components of net periodic benefit cost under the defined benefit pension plan are as follows (in millions):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Service cost	$	5		$	4		$	15		$	12
Interest cost*	8			8			24			25
Expected return on plan assets*	(10		)	(10		)	(31		)	(30		)
Amortization of net actuarial loss*	4			3			12			9
Net periodic benefit cost	$	7		$	5		$	20		$	16

* The expense portion of non-service cost components are included in Miscellaneous income (expense), net within Other income on the Company’s condensed consolidated statements of income and comprehensive income pursuant to ASU 2017-07. See Note 1, Basis of Presentation for additional information.