|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 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, 2017
|
ARO
|
asset retirement obligation
|
ASU
|
accounting standard update issued by the FASB (see below)
|
CAISO
|
California Independent System Operator
|
Cal Fire
|
California Department of Forestry and Fire Protection
|
CCA
|
Community Choice Aggregator
|
CEC
|
California Energy Resources Conservation and Development Commission
|
CEMA
|
Catastrophic Event Memorandum Account
|
CPUC
|
California Public Utilities Commission
|
CRRs
|
congestion revenue rights
|
DER
|
distributed energy resources
|
Diablo Canyon
|
Diablo Canyon nuclear power plant
|
DOGGR
|
Division of Oil, Gas, and Geothermal Resources of the California Department of Conservation
|
DTSC
|
Department of Toxic Substances Control
|
EPS
|
earnings per common share
|
EV
|
electric vehicle
|
FASB
|
Financial Accounting Standards Board
|
FERC
|
Federal Energy Regulatory Commission
|
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)
|
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
|
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
|
ORA
|
Office of Ratepayer Advocates
|
PCIA
|
Power Charge Indifference Adjustment
|
PFM
|
petition for modification
|
RAMP
|
Risk Assessment Mitigation Phase
|
ROE
|
return on equity
|
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
|
|
(Unaudited)
|
||||||||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30, |
||||||||||||
(in millions, except per share amounts)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Operating Revenues
|
|
|
|
|
|
|
|
||||||||
Electric
|
$
|
3,312
|
|
|
$
|
3,323
|
|
|
$
|
6,263
|
|
|
$
|
6,388
|
|
Natural gas
|
922
|
|
|
927
|
|
|
2,027
|
|
|
2,130
|
|
||||
Total operating revenues
|
4,234
|
|
|
4,250
|
|
|
8,290
|
|
|
8,518
|
|
||||
Operating Expenses
|
|
|
|
|
|
|
|
||||||||
Cost of electricity
|
963
|
|
|
1,123
|
|
|
1,782
|
|
|
1,970
|
|
||||
Cost of natural gas
|
79
|
|
|
121
|
|
|
368
|
|
|
446
|
|
||||
Operating and maintenance
|
1,786
|
|
|
1,605
|
|
|
3,390
|
|
|
3,129
|
|
||||
Wildfire-related claims, net of insurance recoveries
|
2,125
|
|
|
(46
|
)
|
|
2,118
|
|
|
(53
|
)
|
||||
Depreciation, amortization, and decommissioning
|
746
|
|
|
712
|
|
|
1,498
|
|
|
1,424
|
|
||||
Total operating expenses
|
5,699
|
|
|
3,515
|
|
|
9,156
|
|
|
6,916
|
|
||||
Operating Income (Loss)
|
(1,465
|
)
|
|
735
|
|
|
(866
|
)
|
|
1,602
|
|
||||
Interest income
|
12
|
|
|
8
|
|
|
21
|
|
|
13
|
|
||||
Interest expense
|
(226
|
)
|
|
(225
|
)
|
|
(446
|
)
|
|
(443
|
)
|
||||
Other income, net
|
106
|
|
|
26
|
|
|
214
|
|
|
60
|
|
||||
Income (Loss) Before Income Taxes
|
(1,573
|
)
|
|
544
|
|
|
(1,077
|
)
|
|
1,232
|
|
||||
Income tax provision (benefit)
|
(593
|
)
|
|
134
|
|
|
(542
|
)
|
|
243
|
|
||||
Net Income (Loss)
|
(980
|
)
|
|
410
|
|
|
(535
|
)
|
|
989
|
|
||||
Preferred stock dividend requirement of subsidiary
|
4
|
|
|
4
|
|
|
7
|
|
|
7
|
|
||||
Income (Loss) Available for Common Shareholders
|
$
|
(984
|
)
|
|
$
|
406
|
|
|
$
|
(542
|
)
|
|
$
|
982
|
|
Weighted Average Common Shares Outstanding, Basic
|
516
|
|
|
511
|
|
|
516
|
|
|
510
|
|
||||
Weighted Average Common Shares Outstanding, Diluted
|
516
|
|
|
513
|
|
|
517
|
|
|
512
|
|
||||
Net Earnings (Loss) Per Common Share, Basic
|
$
|
(1.91
|
)
|
|
$
|
0.79
|
|
|
$
|
(1.05
|
)
|
|
$
|
1.93
|
|
Net Earnings (Loss) Per Common Share, Diluted
|
$
|
(1.91
|
)
|
|
$
|
0.79
|
|
|
$
|
(1.05
|
)
|
|
$
|
1.92
|
|
Dividends Declared Per Common Share
|
$
|
—
|
|
|
$
|
0.53
|
|
|
$
|
—
|
|
|
$
|
1.02
|
|
|
|
|
|
|
|
|
|
||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
|
(Unaudited)
|
||||||||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30, |
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net Income (Loss)
|
$
|
(980
|
)
|
|
$
|
410
|
|
|
$
|
(535
|
)
|
|
$
|
989
|
|
Other Comprehensive Income
|
|
|
|
|
|
|
|
||||||||
Pension and other post-retirement benefit plans obligations (net of taxes of $0, $0, $0, and $0, at respective dates)
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Total other comprehensive income (loss)
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Comprehensive Income (Loss)
|
(980
|
)
|
|
411
|
|
|
(535
|
)
|
|
990
|
|
||||
Preferred stock dividend requirement of subsidiary
|
4
|
|
|
4
|
|
|
7
|
|
|
7
|
|
||||
Comprehensive Income (Loss) Attributable to
Common Shareholders
|
$
|
(984
|
)
|
|
$
|
407
|
|
|
$
|
(542
|
)
|
|
$
|
983
|
|
|
|
|
|
|
|
|
|
||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
|
(Unaudited)
|
||||||
|
Balance At
|
||||||
(in millions)
|
June 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
|
|
||
Current Assets
|
|
|
|
|
|||
Cash and cash equivalents
|
$
|
517
|
|
|
$
|
449
|
|
Accounts receivable:
|
|
|
|
||||
Customers (net of allowance for doubtful accounts of $58 and $64
at respective dates)
|
1,169
|
|
|
1,243
|
|
||
Accrued unbilled revenue
|
995
|
|
|
946
|
|
||
Regulatory balancing accounts
|
1,563
|
|
|
1,222
|
|
||
Other
|
1,027
|
|
|
861
|
|
||
Regulatory assets
|
194
|
|
|
615
|
|
||
Inventories:
|
|
|
|
||||
Gas stored underground and fuel oil
|
107
|
|
|
115
|
|
||
Materials and supplies
|
380
|
|
|
366
|
|
||
Other
|
415
|
|
|
464
|
|
||
Total current assets
|
6,367
|
|
|
6,281
|
|
||
Property, Plant, and Equipment
|
|
|
|
||||
Electric
|
56,410
|
|
|
55,133
|
|
||
Gas
|
20,387
|
|
|
19,641
|
|
||
Construction work in progress
|
2,643
|
|
|
2,471
|
|
||
Other
|
2
|
|
|
3
|
|
||
Total property, plant, and equipment
|
79,442
|
|
|
77,248
|
|
||
Accumulated depreciation
|
(24,288
|
)
|
|
(23,459
|
)
|
||
Net property, plant, and equipment
|
55,154
|
|
|
53,789
|
|
||
Other Noncurrent Assets
|
|
|
|
||||
Regulatory assets
|
4,121
|
|
|
3,793
|
|
||
Nuclear decommissioning trusts
|
2,828
|
|
|
2,863
|
|
||
Income taxes receivable
|
66
|
|
|
65
|
|
||
Other
|
1,353
|
|
|
1,221
|
|
||
Total other noncurrent assets
|
8,368
|
|
|
7,942
|
|
||
TOTAL ASSETS
|
$
|
69,889
|
|
|
$
|
68,012
|
|
|
|
|
|
||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
|
(Unaudited)
|
||||||
|
Balance At
|
||||||
(in millions, except share amounts)
|
June 30,
2018 |
|
December 31,
2017 |
||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
||
Current
Liabilities
|
|
|
|
|
|
||
Short-term borrowings
|
$
|
1,450
|
|
|
$
|
931
|
|
Long-term debt, classified as current
|
193
|
|
|
445
|
|
||
Accounts payable:
|
|
|
|
||||
Trade creditors
|
1,477
|
|
|
1,646
|
|
||
Regulatory balancing accounts
|
1,303
|
|
|
1,120
|
|
||
Other
|
541
|
|
|
517
|
|
||
Disputed claims and customer refunds
|
215
|
|
|
243
|
|
||
Interest payable
|
209
|
|
|
217
|
|
||
Wildfire-related claims
|
2,860
|
|
|
561
|
|
||
Other
|
1,538
|
|
|
1,449
|
|
||
Total current liabilities
|
9,786
|
|
|
7,129
|
|
||
Noncurrent Liabilities
|
|
|
|
||||
Long-term debt
|
17,612
|
|
|
17,753
|
|
||
Regulatory liabilities
|
8,498
|
|
|
8,679
|
|
||
Pension and other post-retirement benefits
|
2,054
|
|
|
2,128
|
|
||
Asset retirement obligations
|
4,964
|
|
|
4,899
|
|
||
Deferred income taxes
|
5,667
|
|
|
5,822
|
|
||
Other
|
2,247
|
|
|
2,130
|
|
||
Total noncurrent liabilities
|
41,042
|
|
|
41,411
|
|
||
Contingencies and Commitments (Note 9)
|
|
|
|
|
|
||
Equity
|
|
|
|
||||
Shareholders' Equity
|
|
|
|
||||
Common stock, no par value, authorized 800,000,000 shares;
517,102,983 and 514,755,845 shares outstanding at respective dates
|
12,765
|
|
|
12,632
|
|
||
Reinvested earnings
|
6,057
|
|
|
6,596
|
|
||
Accumulated other comprehensive loss
|
(13
|
)
|
|
(8
|
)
|
||
Total shareholders'
equity
|
18,809
|
|
|
19,220
|
|
||
Noncontrolling Interest - Preferred Stock of Subsidiary
|
252
|
|
|
252
|
|
||
Total equity
|
19,061
|
|
|
19,472
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
69,889
|
|
|
$
|
68,012
|
|
|
|
|
|
||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
|
(Unaudited)
|
||||||
|
Six Months Ended June 30,
|
||||||
(in millions)
|
2018
|
|
2017
|
||||
Cash Flows from Operating Activities
|
|
|
|
||||
Net income (loss)
|
$
|
(535
|
)
|
|
$
|
989
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation, amortization, and decommissioning
|
1,498
|
|
|
1,424
|
|
||
Allowance for equity funds used during construction
|
(63
|
)
|
|
(34
|
)
|
||
Deferred income taxes and tax credits, net
|
(145
|
)
|
|
516
|
|
||
Disallowed capital expenditures
|
—
|
|
|
47
|
|
||
Other
|
104
|
|
|
121
|
|
||
Effect of changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(11
|
)
|
|
111
|
|
||
Wildfire-related insurance receivable
|
(144
|
)
|
|
54
|
|
||
Inventories
|
(6
|
)
|
|
(38
|
)
|
||
Accounts payable
|
39
|
|
|
19
|
|
||
Wildfire-related claims
|
2,299
|
|
|
(116
|
)
|
||
Income taxes receivable/payable
|
—
|
|
|
67
|
|
||
Other current assets and liabilities
|
(103
|
)
|
|
(92
|
)
|
||
Regulatory assets, liabilities, and balancing accounts, net
|
(12
|
)
|
|
(353
|
)
|
||
Other noncurrent assets and liabilities
|
(168
|
)
|
|
41
|
|
||
Net cash provided by operating activities
|
2,753
|
|
|
2,756
|
|
||
Cash Flows from Investing Activities
|
|
|
|
|
|
||
Capital expenditures
|
(2,897
|
)
|
|
(2,474
|
)
|
||
Proceeds from sales and maturities of nuclear decommissioning trust investments
|
802
|
|
|
794
|
|
||
Purchases of nuclear decommissioning trust investments
|
(815
|
)
|
|
(817
|
)
|
||
Other
|
15
|
|
|
8
|
|
||
Net
cash used in investing activities
|
(2,895
|
)
|
|
(2,489
|
)
|
||
Cash Flows from Financing Activities
|
|
|
|
|
|
||
Borrowings under revolving credit facilities
|
700
|
|
|
—
|
|
||
Net issuances (repayments) of commercial paper, net of discount of $1 and $3 at respective dates
|
(182
|
)
|
|
(339
|
)
|
||
Short-term debt financing
|
250
|
|
|
250
|
|
||
Short-term debt matured
|
(250
|
)
|
|
(250
|
)
|
||
Proceeds from issuance of long-term debt, net of discount and issuance costs of $0 and $11 at respective dates
|
350
|
|
|
734
|
|
||
Long-term debt matured or repurchased
|
(750
|
)
|
|
(345
|
)
|
||
Common stock issued
|
82
|
|
|
247
|
|
||
Common stock dividends paid
|
—
|
|
|
(488
|
)
|
||
Other
|
10
|
|
|
(75
|
)
|
||
Net cash provided by (used in) financing activities
|
210
|
|
|
(266
|
)
|
||
Net change in cash and cash equivalents
|
68
|
|
|
1
|
|
||
Cash and cash equivalents at January 1
|
449
|
|
|
177
|
|
||
Cash and cash equivalents at June 30
|
$
|
517
|
|
|
$
|
178
|
|
|
(Unaudited)
|
||||||||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30, |
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Operating Revenues
|
|
|
|
|
|
|
|
|
|
||||||
Electric
|
$
|
3,312
|
|
|
$
|
3,324
|
|
|
$
|
6,263
|
|
|
$
|
6,391
|
|
Natural gas
|
922
|
|
|
926
|
|
|
2,027
|
|
|
2,130
|
|
||||
Total operating revenues
|
4,234
|
|
|
4,250
|
|
|
8,290
|
|
|
8,521
|
|
||||
Operating Expenses
|
|
|
|
|
|
|
|
||||||||
Cost of electricity
|
963
|
|
|
1,123
|
|
|
1,782
|
|
|
1,970
|
|
||||
Cost of natural gas
|
79
|
|
|
121
|
|
|
368
|
|
|
446
|
|
||||
Operating and maintenance
|
1,786
|
|
|
1,604
|
|
|
3,390
|
|
|
3,129
|
|
||||
Wildfire-related claims, net of insurance recoveries
|
2,125
|
|
|
(46
|
)
|
|
2,118
|
|
|
(53
|
)
|
||||
Depreciation, amortization, and decommissioning
|
746
|
|
|
712
|
|
|
1,498
|
|
|
1,424
|
|
||||
Total operating expenses
|
5,699
|
|
|
3,514
|
|
|
9,156
|
|
|
6,916
|
|
||||
Operating Income (Loss)
|
(1,465
|
)
|
|
736
|
|
|
(866
|
)
|
|
1,605
|
|
||||
Interest income
|
11
|
|
|
7
|
|
|
20
|
|
|
12
|
|
||||
Interest expense
|
(222
|
)
|
|
(222
|
)
|
|
(439
|
)
|
|
(438
|
)
|
||||
Other income, net
|
108
|
|
|
24
|
|
|
217
|
|
|
55
|
|
||||
Income (Loss) Before Income Taxes
|
(1,568
|
)
|
|
545
|
|
|
(1,068
|
)
|
|
1,234
|
|
||||
Income tax provision (benefit)
|
(592
|
)
|
|
136
|
|
|
(544
|
)
|
|
256
|
|
||||
Net Income (Loss)
|
(976
|
)
|
|
409
|
|
|
(524
|
)
|
|
978
|
|
||||
Preferred stock dividend requirement
|
4
|
|
|
4
|
|
|
7
|
|
|
7
|
|
||||
Income (Loss) Available for Common Stock
|
$
|
(980
|
)
|
|
$
|
405
|
|
|
$
|
(531
|
)
|
|
$
|
971
|
|
|
|
|
|
|
|
|
|
||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
|
(Unaudited)
|
||||||||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30, |
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net Income (Loss)
|
$
|
(976
|
)
|
|
$
|
409
|
|
|
$
|
(524
|
)
|
|
$
|
978
|
|
Other Comprehensive Income
|
|
|
|
|
|
|
|
||||||||
Pension and other post-retirement benefit plans obligations (net of taxes of $0, $0, $0, and $0, at respective dates )
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Total other comprehensive income (loss)
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Comprehensive Income (Loss)
|
$
|
(975
|
)
|
|
$
|
409
|
|
|
$
|
(523
|
)
|
|
$
|
979
|
|
|
|
|
|
|
|
|
|
||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
|
(Unaudited)
|
||||||
|
Balance At
|
||||||
|
June 30,
2018 |
|
December 31, 2017
|
||||
(in millions)
|
|
||||||
ASSETS
|
|
|
|
|
|
||
Current Assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
484
|
|
|
$
|
447
|
|
Accounts receivable:
|
|
|
|
||||
Customers (net of allowance for doubtful accounts of $58 and $64
at respective dates)
|
1,169
|
|
|
1,243
|
|
||
Accrued unbilled revenue
|
995
|
|
|
946
|
|
||
Regulatory balancing accounts
|
1,563
|
|
|
1,222
|
|
||
Other
|
1,028
|
|
|
862
|
|
||
Regulatory assets
|
194
|
|
|
615
|
|
||
Inventories:
|
|
|
|
||||
Gas stored underground and fuel oil
|
107
|
|
|
115
|
|
||
Materials and supplies
|
380
|
|
|
366
|
|
||
Other
|
414
|
|
|
465
|
|
||
Total current assets
|
6,334
|
|
|
6,281
|
|
||
Property, Plant, and Equipment
|
|
|
|
||||
Electric
|
56,410
|
|
|
55,133
|
|
||
Gas
|
20,387
|
|
|
19,641
|
|
||
Construction work in progress
|
2,643
|
|
|
2,471
|
|
||
Total property, plant, and equipment
|
79,440
|
|
|
77,245
|
|
||
Accumulated depreciation
|
(24,285
|
)
|
|
(23,456
|
)
|
||
Net property, plant, and equipment
|
55,155
|
|
|
53,789
|
|
||
Other Noncurrent Assets
|
|
|
|
||||
Regulatory assets
|
4,121
|
|
|
3,793
|
|
||
Nuclear decommissioning trusts
|
2,828
|
|
|
2,863
|
|
||
Income taxes receivable
|
64
|
|
|
64
|
|
||
Other
|
1,226
|
|
|
1,094
|
|
||
Total other noncurrent assets
|
8,239
|
|
|
7,814
|
|
||
TOTAL ASSETS
|
$
|
69,728
|
|
|
$
|
67,884
|
|
|
|
|
|
||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
|
(Unaudited)
|
||||||
|
Balance At
|
||||||
|
June 30,
2018 |
|
December 31, 2017
|
||||
(in millions. except share amounts)
|
|
||||||
LIABILITIES AND EQUITY
|
|
|
|
||||
Current Liabilities
|
|
|
|
|
|
||
Short-term borrowings
|
$
|
1,400
|
|
|
$
|
799
|
|
Long-term debt, classified as current
|
193
|
|
|
445
|
|
||
Accounts payable:
|
|
|
|
||||
Trade creditors
|
1,477
|
|
|
1,644
|
|
||
Regulatory balancing accounts
|
1,303
|
|
|
1,120
|
|
||
Other
|
561
|
|
|
538
|
|
||
Disputed claims and customer refunds
|
215
|
|
|
243
|
|
||
Interest payable
|
208
|
|
|
214
|
|
||
Wildfire-related claims
|
2,860
|
|
|
561
|
|
||
Other
|
1,551
|
|
|
1,457
|
|
||
Total current liabilities
|
9,768
|
|
|
7,021
|
|
||
Noncurrent Liabilities
|
|
|
|
||||
Long-term debt
|
17,262
|
|
|
17,403
|
|
||
Regulatory liabilities
|
8,498
|
|
|
8,679
|
|
||
Pension and other post-retirement benefits
|
1,950
|
|
|
2,026
|
|
||
Asset retirement obligations
|
4,964
|
|
|
4,899
|
|
||
Deferred income taxes
|
5,806
|
|
|
5,963
|
|
||
Other
|
2,263
|
|
|
2,146
|
|
||
Total noncurrent liabilities
|
40,743
|
|
|
41,116
|
|
||
Contingencies and Commitments (Note 9)
|
|
|
|
|
|
||
Shareholders' Equity
|
|
|
|
||||
Preferred stock
|
258
|
|
|
258
|
|
||
Common stock, $5 par value, authorized 800,000,000 shares; 264,374,809 shares outstanding at respective dates
|
1,322
|
|
|
1,322
|
|
||
Additional paid-in capital
|
8,505
|
|
|
8,505
|
|
||
Reinvested earnings
|
9,127
|
|
|
9,656
|
|
||
Accumulated other comprehensive income
|
5
|
|
|
6
|
|
||
Total shareholders' equity
|
19,217
|
|
|
19,747
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
69,728
|
|
|
$
|
67,884
|
|
|
|
|
|
||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
|
|
(Unaudited)
|
||||||
|
Six Months Ended June 30,
|
||||||
(in millions)
|
2018
|
|
2017
|
||||
Cash Flows from Operating Activities
|
|
|
|
|
|
||
Net income (loss)
|
$
|
(524
|
)
|
|
$
|
978
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation, amortization, and decommissioning
|
1,498
|
|
|
1,424
|
|
||
Allowance for equity funds used during construction
|
(63
|
)
|
|
(34
|
)
|
||
Deferred income taxes and tax credits, net
|
(149
|
)
|
|
534
|
|
||
Disallowed capital expenditures
|
—
|
|
|
47
|
|
||
Other
|
57
|
|
|
127
|
|
||
Effect of changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(11
|
)
|
|
113
|
|
||
Wildfire-related insurance receivable
|
(144
|
)
|
|
54
|
|
||
Inventories
|
(6
|
)
|
|
(38
|
)
|
||
Accounts payable
|
40
|
|
|
45
|
|
||
Wildfire-related claims
|
2,299
|
|
|
(116
|
)
|
||
Income taxes receivable/payable
|
—
|
|
|
75
|
|
||
Other current assets and liabilities
|
(95
|
)
|
|
(72
|
)
|
||
Regulatory assets, liabilities, and balancing accounts, net
|
(12
|
)
|
|
(353
|
)
|
||
Other noncurrent assets and liabilities
|
(168
|
)
|
|
40
|
|
||
Net cash provided by operating activities
|
2,722
|
|
|
2,824
|
|
||
Cash Flows from Investing Activities
|
|
|
|
||||
Capital expenditures
|
(2,897
|
)
|
|
(2,474
|
)
|
||
Proceeds from sales and maturities of nuclear decommissioning trust investments
|
802
|
|
|
794
|
|
||
Purchases of nuclear decommissioning trust investments
|
(815
|
)
|
|
(817
|
)
|
||
Other
|
15
|
|
|
8
|
|
||
Net
cash used in investing activities
|
(2,895
|
)
|
|
(2,489
|
)
|
||
Cash Flows from Financing Activities
|
|
|
|
||||
Borrowings under revolving credit facilities
|
650
|
|
|
—
|
|
||
Net issuances (repayments) of commercial paper, net of discount of $0 and $3 at respective dates
|
(50
|
)
|
|
(339
|
)
|
||
Short-term debt financing
|
250
|
|
|
250
|
|
||
Short-term debt matured
|
(250
|
)
|
|
(250
|
)
|
||
Proceeds from issuance of long-term debt, net of discount and issuance costs of $0 and $11 at respective dates
|
—
|
|
|
734
|
|
||
Long-term debt matured or repurchased
|
(400
|
)
|
|
(345
|
)
|
||
Preferred stock dividends paid
|
—
|
|
|
(7
|
)
|
||
Common stock dividends paid
|
—
|
|
|
(514
|
)
|
||
Equity contribution from PG&E Corporation
|
—
|
|
|
190
|
|
||
Other
|
10
|
|
|
(68
|
)
|
||
Net cash provided by (used in) financing activities
|
210
|
|
|
(349
|
)
|
||
Net change in cash and cash equivalents
|
37
|
|
|
(14
|
)
|
||
Cash and
cash equivalents at January 1
|
447
|
|
|
71
|
|
||
Cash and cash equivalents at June 30
|
$
|
484
|
|
|
$
|
57
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
Three Months Ended June 30,
|
||||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Service cost for benefits earned
|
$
|
129
|
|
|
$
|
118
|
|
|
$
|
17
|
|
|
$
|
15
|
|
Interest cost
|
172
|
|
|
178
|
|
|
18
|
|
|
19
|
|
||||
Expected return on plan assets
|
(256
|
)
|
|
(192
|
)
|
|
(32
|
)
|
|
(25
|
)
|
||||
Amortization of prior service cost
|
(2
|
)
|
|
(2
|
)
|
|
3
|
|
|
4
|
|
||||
Amortization of net actuarial loss
|
2
|
|
|
5
|
|
|
(2
|
)
|
|
1
|
|
||||
Net periodic benefit cost
|
45
|
|
|
107
|
|
|
4
|
|
|
14
|
|
||||
Regulatory account transfer
(1)
|
39
|
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
84
|
|
|
$
|
84
|
|
|
$
|
4
|
|
|
$
|
14
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
Six Months Ended June 30,
|
||||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Service cost for benefits earned
|
$
|
257
|
|
|
$
|
236
|
|
|
$
|
33
|
|
|
$
|
30
|
|
Interest cost
|
344
|
|
|
357
|
|
|
35
|
|
|
38
|
|
||||
Expected return on plan assets
|
(511
|
)
|
|
(385
|
)
|
|
(65
|
)
|
|
(49
|
)
|
||||
Amortization of prior service cost
|
(3
|
)
|
|
(4
|
)
|
|
7
|
|
|
8
|
|
||||
Amortization of net actuarial loss
|
3
|
|
|
11
|
|
|
(3
|
)
|
|
2
|
|
||||
Net periodic benefit cost
|
90
|
|
|
215
|
|
|
7
|
|
|
29
|
|
||||
Regulatory account transfer
(1)
|
77
|
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
167
|
|
|
$
|
169
|
|
|
$
|
7
|
|
|
$
|
29
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits |
|
Other
Benefits |
|
Total
|
||||||
(in millions, net of income tax)
|
Three Months Ended June 30, 2018
|
||||||||||
Beginning balance
|
$
|
(30
|
)
|
|
$
|
17
|
|
|
$
|
(13
|
)
|
Amounts reclassified from other comprehensive income:
|
|
|
|
|
|
||||||
Amortization of prior service cost (net of taxes of $1 and $1, respectively)
(1)
|
(1
|
)
|
|
2
|
|
|
1
|
|
|||
Amortization of net actuarial loss (net of taxes of $1 and $1, respectively)
(1)
|
1
|
|
|
(1
|
)
|
|
—
|
|
|||
Regulatory account transfer (net of taxes of $0 and $0, respectively)
(1)
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Reclassification of stranded income tax to retained earnings (net of taxes of $0 and $0, respectively)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net current period other comprehensive gain (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Ending balance
|
$
|
(30
|
)
|
|
$
|
17
|
|
|
$
|
(13
|
)
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other
Benefits |
|
Total
|
||||||
(in millions, net of income tax)
|
Three Months Ended June 30, 2017
|
||||||||||
Beginning balance
|
$
|
(25
|
)
|
|
$
|
16
|
|
|
$
|
(9
|
)
|
Amounts reclassified from other comprehensive income:
(1)
|
|
|
|
|
|
||||||
Amortization of prior service cost (net of taxes of $1 and $1, respectively)
|
(1
|
)
|
|
3
|
|
|
2
|
|
|||
Amortization of net actuarial loss (net of taxes of $2 and $1, respectively)
|
3
|
|
|
—
|
|
|
3
|
|
|||
Regulatory account transfer (net of taxes of $1 and $2, respectively)
|
(2
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|||
Net current period other comprehensive gain (loss)
|
—
|
|
|
1
|
|
|
1
|
|
|||
Ending balance
|
$
|
(25
|
)
|
|
$
|
17
|
|
|
$
|
(8
|
)
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Benefits
|
|
Total
|
||||||
(in millions, net of income tax)
|
Six Months Ended June 30, 2018
|
||||||||||
Beginning balance
|
$
|
(25
|
)
|
|
$
|
17
|
|
|
$
|
(8
|
)
|
Amounts reclassified from other comprehensive income:
|
|
|
|
|
|
||||||
Amortization of prior service cost (net of taxes of $1 and $2, respectively)
(1)
|
(2
|
)
|
|
5
|
|
|
3
|
|
|||
Amortization of net actuarial loss (net of taxes of $1 and $1, respectively)
(1)
|
2
|
|
|
(2
|
)
|
|
—
|
|
|||
Regulatory account transfer (net of taxes of $0 and $1, respectively)
(1)
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|||
Reclassification of stranded income tax to retained earnings (net of taxes of $0, and $0, respectively)
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||
Net current period other comprehensive gain (loss)
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
Ending balance
|
(30
|
)
|
|
17
|
|
|
(13
|
)
|
|||
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Benefits
|
|
Total
|
||||||
(in millions, net of income tax)
|
Six Months Ended June 30, 2017
|
||||||||||
Beginning balance
|
$
|
(25
|
)
|
|
$
|
16
|
|
|
$
|
(9
|
)
|
Amounts reclassified from other comprehensive income:
(1)
|
|
|
|
|
|
||||||
Amortization of prior service cost (net of taxes of $2 and $3, respectively)
|
(2
|
)
|
|
5
|
|
|
3
|
|
|||
Amortization of net actuarial loss (net of taxes of $5 and $1, respectively)
|
6
|
|
|
1
|
|
|
7
|
|
|||
Regulatory account transfer (net of taxes of $3 and $4, respectively)
|
(4
|
)
|
|
(5
|
)
|
|
(9
|
)
|
|||
Net current period other comprehensive gain (loss)
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Ending balance
|
(25
|
)
|
|
17
|
|
|
(8
|
)
|
|||
|
|
|
|
|
|
(in millions)
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||
Electric
|
|
|
|
||||
Revenue from contracts with customers
|
|
|
|
||||
Residential
|
$
|
1,039
|
|
|
$
|
2,375
|
|
Commercial
|
1,234
|
|
|
2,307
|
|
||
Industrial
|
354
|
|
|
678
|
|
||
Agricultural
|
318
|
|
|
443
|
|
||
Public street and highway lighting
|
18
|
|
|
38
|
|
||
Other
(1)
|
84
|
|
|
(118
|
)
|
||
Total revenue from contracts with customers - electric
|
3,047
|
|
|
5,723
|
|
||
Regulatory balancing accounts
(2)
|
265
|
|
|
540
|
|
||
Total electric operating revenue
|
$
|
3,312
|
|
|
$
|
6,263
|
|
|
|
|
|
||||
Natural gas
|
|
|
|
||||
Revenue from contracts with customers
|
|
|
|
||||
Residential
|
$
|
452
|
|
|
$
|
1,410
|
|
Commercial
|
119
|
|
|
315
|
|
||
Transportation service only
|
264
|
|
|
560
|
|
||
Other
(1)
|
(128
|
)
|
|
(179
|
)
|
||
Total revenue from contracts with customers - gas
|
707
|
|
|
2,106
|
|
||
Regulatory balancing accounts
(2)
|
215
|
|
|
(79
|
)
|
||
Total natural gas operating revenue
|
922
|
|
|
2,027
|
|
||
Total operating revenues
|
$
|
4,234
|
|
|
$
|
8,290
|
|
|
|
|
|
|
Asset Balance at
|
||||||
(in millions)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Pension benefits
|
$
|
1,877
|
|
|
$
|
1,954
|
|
Environmental compliance costs
|
784
|
|
|
837
|
|
||
Utility retained generation
|
297
|
|
|
319
|
|
||
Price risk management
|
63
|
|
|
65
|
|
||
Unamortized loss, net of gain, on reacquired debt
|
84
|
|
|
79
|
|
||
Catastrophic event memorandum account
(1)
|
654
|
|
|
274
|
|
||
Wildfire expense memorandum account
(2)
|
69
|
|
|
—
|
|
||
Other
|
293
|
|
|
265
|
|
||
Total long-term regulatory assets
|
$
|
4,121
|
|
|
$
|
3,793
|
|
|
|
|
|
|
Liability Balance at
|
||||||
(in millions)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Cost of removal obligations
|
$
|
5,775
|
|
|
$
|
5,547
|
|
Deferred income taxes
|
611
|
|
|
1,021
|
|
||
Recoveries in excess of AROs
|
467
|
|
|
624
|
|
||
Public purpose programs
|
636
|
|
|
590
|
|
||
Other
|
1,009
|
|
|
897
|
|
||
Total long-term regulatory liabilities
|
$
|
8,498
|
|
|
$
|
8,679
|
|
|
Receivable Balance at
|
||||||
(in millions)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Electric distribution
|
$
|
323
|
|
|
$
|
—
|
|
Electric transmission
|
110
|
|
|
139
|
|
||
Utility generation
|
120
|
|
|
—
|
|
||
Gas distribution and transmission
|
397
|
|
|
486
|
|
||
Energy procurement
|
95
|
|
|
71
|
|
||
Public purpose programs
|
32
|
|
|
103
|
|
||
Other
|
486
|
|
|
423
|
|
||
Total regulatory balancing accounts receivable
|
$
|
1,563
|
|
|
$
|
1,222
|
|
|
Payable Balance at
|
||||||
(in millions)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Electric distribution
|
$
|
—
|
|
|
$
|
72
|
|
Electric transmission
|
120
|
|
|
120
|
|
||
Utility generation
|
—
|
|
|
14
|
|
||
Energy procurement
|
151
|
|
|
149
|
|
||
Public purpose programs
|
513
|
|
|
452
|
|
||
Other
|
519
|
|
|
313
|
|
||
Total regulatory balancing accounts payable
|
$
|
1,303
|
|
|
$
|
1,120
|
|
(in millions)
|
Termination Date
|
|
Facility
Limit
|
|
Letters of
Credit
Outstanding
|
|
Borrowings
|
|
Facility
Availability
|
||||||||
PG&E Corporation
|
April 2022
|
|
$
|
300
|
|
(1)
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
250
|
|
Utility
|
April 2022
|
|
3,000
|
|
(2)
|
48
|
|
|
650
|
|
|
2,302
|
|
||||
Total revolving credit facilities
|
|
|
$
|
3,300
|
|
|
$
|
48
|
|
|
$
|
700
|
|
|
$
|
2,552
|
|
|
|
|
|
|
|
|
|
|
|
|
PG&E Corporation
|
|
Utility
|
||||
(in millions)
|
Total
Equity
|
|
Total
Shareholders' Equity
|
||||
Balance at December 31, 2017
|
$
|
19,472
|
|
|
$
|
19,747
|
|
Comprehensive income (loss)
|
(535
|
)
|
|
(523
|
)
|
||
Common stock issued
|
82
|
|
|
—
|
|
||
Share-based compensation
|
49
|
|
|
—
|
|
||
Preferred stock dividend requirement
|
—
|
|
|
(7
|
)
|
||
Preferred stock dividend requirement of subsidiary
|
(7
|
)
|
|
—
|
|
||
Balance at June 30, 2018
|
$
|
19,061
|
|
|
$
|
19,217
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions, except per share amounts)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Income (loss) available for common shareholders
|
$
|
(984
|
)
|
|
$
|
406
|
|
|
$
|
(542
|
)
|
|
$
|
982
|
|
Weighted average common shares outstanding, basic
|
516
|
|
|
511
|
|
|
516
|
|
|
510
|
|
||||
Add incremental shares from assumed conversions:
|
|
|
|
|
|
|
|
||||||||
Employee share-based compensation
|
—
|
|
|
2
|
|
|
1
|
|
|
2
|
|
||||
Weighted average common shares outstanding, diluted
|
516
|
|
|
513
|
|
|
517
|
|
|
512
|
|
||||
Total earnings (loss) per common share, diluted
|
$
|
(1.91
|
)
|
|
$
|
0.79
|
|
|
$
|
(1.05
|
)
|
|
$
|
1.92
|
|
|
|
|
|
Contract Volume at
|
||||
Underlying Product
|
|
Instruments
|
|
June 30,
2018 |
|
December 31,
2017 |
||
Natural Gas
(1)
(MMBtus
(2)
)
|
|
Forwards, Futures and Swaps
|
|
268,296,840
|
|
|
228,768,745
|
|
|
|
Options
|
|
36,205,752
|
|
|
60,736,806
|
|
Electricity (Megawatt-hours)
|
|
Forwards, Futures and Swaps
|
|
2,570,861
|
|
|
2,872,013
|
|
|
|
Congestion Revenue Rights
(3)
|
|
304,977,376
|
|
|
312,272,177
|
|
|
|
|
|
|
|
|
|
Commodity Risk
|
||||||||||||||
(in millions)
|
Gross Derivative
Balance
|
|
Netting
|
|
Cash Collateral
|
|
Total
Derivative
Balance
|
||||||||
Current assets – other
|
$
|
30
|
|
|
$
|
(2
|
)
|
|
$
|
4
|
|
|
$
|
32
|
|
Other noncurrent assets – other
|
89
|
|
|
—
|
|
|
—
|
|
|
89
|
|
||||
Current liabilities – other
|
(42
|
)
|
|
2
|
|
|
16
|
|
|
(24
|
)
|
||||
Noncurrent liabilities – other
|
(64
|
)
|
|
—
|
|
|
8
|
|
|
(56
|
)
|
||||
Total commodity risk
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
28
|
|
|
$
|
41
|
|
|
Commodity Risk
|
||||||||||||||
(in millions)
|
Gross Derivative
Balance
|
|
Netting
|
|
Cash Collateral
|
|
Total Derivative
Balance
|
||||||||
Current assets – other
|
$
|
30
|
|
|
$
|
(3
|
)
|
|
$
|
10
|
|
|
$
|
37
|
|
Other noncurrent assets – other
|
103
|
|
|
(1
|
)
|
|
—
|
|
|
102
|
|
||||
Current liabilities – other
|
(47
|
)
|
|
3
|
|
|
13
|
|
|
(31
|
)
|
||||
Noncurrent liabilities – other
|
(66
|
)
|
|
1
|
|
|
8
|
|
|
(57
|
)
|
||||
Total commodity risk
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
31
|
|
|
$
|
51
|
|
|
|
Commodity Risk
|
||||||||||||||
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Unrealized gain (loss) - regulatory assets and liabilities
(1)
|
|
$
|
5
|
|
|
$
|
(4
|
)
|
|
$
|
(7
|
)
|
|
$
|
(52
|
)
|
Realized gain (loss) - cost of electricity
(2)
|
|
(10
|
)
|
|
1
|
|
|
(28
|
)
|
|
(4
|
)
|
||||
Realized loss - cost of natural gas
(2)
|
|
—
|
|
|
(3
|
)
|
|
(1
|
)
|
|
(4
|
)
|
||||
Net commodity risk
|
|
$
|
(5
|
)
|
|
$
|
(6
|
)
|
|
$
|
(36
|
)
|
|
$
|
(60
|
)
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
||||||
(in millions)
|
June 30,
2018 |
|
December 31,
2017 |
||||
Derivatives in a liability position with credit risk-related
contingencies that are not fully collateralized
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
Related derivatives in an asset position
|
—
|
|
|
—
|
|
||
Collateral posting in the normal course of business related to
these derivatives
|
—
|
|
|
—
|
|
||
Net position of derivative contracts/additional collateral
posting requirements
(1)
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
|
|
|
•
|
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, 2018
|
||||||||||||||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(1)
|
|
Total
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term investments
|
$
|
473
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
473
|
|
|||
Nuclear decommissioning trusts
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term investments
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|||||
Global equity securities
|
1,873
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,873
|
|
|||||
Fixed-income securities
|
767
|
|
|
584
|
|
|
—
|
|
|
—
|
|
|
1,351
|
|
|||||
Assets measured at NAV
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||
Total nuclear decommissioning trusts
(2)
|
2,662
|
|
|
584
|
|
|
—
|
|
|
—
|
|
|
3,264
|
|
|||||
Price risk management instruments (Note 7)
|
|
|
|
|
|
|
|
|
|
||||||||||
Electricity
|
1
|
|
|
2
|
|
|
113
|
|
|
1
|
|
|
117
|
|
|||||
Gas
|
—
|
|
|
3
|
|
|
—
|
|
|
1
|
|
|
4
|
|
|||||
Total price risk management instruments
|
1
|
|
|
5
|
|
|
113
|
|
|
2
|
|
|
121
|
|
|||||
Rabbi trusts
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed-income securities
|
—
|
|
|
74
|
|
|
—
|
|
|
—
|
|
|
74
|
|
|||||
Life insurance contracts
|
—
|
|
|
68
|
|
|
—
|
|
|
—
|
|
|
68
|
|
|||||
Total rabbi trusts
|
—
|
|
|
142
|
|
|
—
|
|
|
—
|
|
|
142
|
|
|||||
Long-term disability trust
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term investments
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
Assets measured at NAV
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
155
|
|
|||||
Total long-term disability trust
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
159
|
|
|||||
TOTAL ASSETS
|
$
|
3,140
|
|
|
$
|
731
|
|
|
$
|
113
|
|
|
$
|
2
|
|
|
$
|
4,159
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Price risk management instruments (Note 7)
|
|
|
|
|
|
|
|
|
|
||||||||||
Electricity
|
$
|
6
|
|
|
$
|
20
|
|
|
$
|
79
|
|
|
$
|
(26
|
)
|
|
$
|
79
|
|
Gas
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
TOTAL LIABILITIES
|
$
|
6
|
|
|
$
|
21
|
|
|
$
|
79
|
|
|
$
|
(26
|
)
|
|
$
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements
|
||||||||||||||||||
|
December 31, 2017
|
||||||||||||||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(1)
|
|
Total
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term investments
|
$
|
385
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
385
|
|
Nuclear decommissioning trusts
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term investments
|
23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|||||
Global equity securities
|
1,967
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,967
|
|
|||||
Fixed-income securities
|
733
|
|
|
562
|
|
|
—
|
|
|
—
|
|
|
1,295
|
|
|||||
Assets measured at NAV
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||
Total nuclear decommissioning trusts
(2)
|
2,723
|
|
|
562
|
|
|
—
|
|
|
—
|
|
|
3,303
|
|
|||||
Price risk management instruments (Note 7)
|
|
|
|
|
|
|
|
|
|
||||||||||
Electricity
|
—
|
|
|
3
|
|
|
129
|
|
|
6
|
|
|
138
|
|
|||||
Gas
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Total price risk management instruments
|
—
|
|
|
4
|
|
|
129
|
|
|
6
|
|
|
139
|
|
|||||
Rabbi trusts
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed-income securities
|
—
|
|
|
72
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|||||
Life insurance contracts
|
—
|
|
|
71
|
|
|
—
|
|
|
—
|
|
|
71
|
|
|||||
Total rabbi trusts
|
—
|
|
|
143
|
|
|
—
|
|
|
—
|
|
|
143
|
|
|||||
Long-term disability trust
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term investments
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||
Assets measured at NAV
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
167
|
|
|||||
Total long-term disability trust
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
175
|
|
|||||
TOTAL ASSETS
|
$
|
3,116
|
|
|
$
|
709
|
|
|
$
|
129
|
|
|
$
|
6
|
|
|
$
|
4,145
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Price risk management instruments (Note 7)
|
|
|
|
|
|
|
|
|
|
||||||||||
Electricity
|
$
|
10
|
|
|
$
|
15
|
|
|
$
|
87
|
|
|
$
|
(25
|
)
|
|
$
|
87
|
|
Gas
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
TOTAL LIABILITIES
|
$
|
10
|
|
|
$
|
16
|
|
|
$
|
87
|
|
|
$
|
(25
|
)
|
|
$
|
88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at
|
|
|
|
|
|
|
||||||
(in millions)
|
|
June 30, 2018
|
|
|
|
|
|
|
||||||
Fair Value Measurement
|
|
Assets
|
|
Liabilities
|
|
Valuation
Technique |
|
Unobservable
Input |
|
Range
(1)
|
||||
Congestion revenue rights
|
|
$
|
113
|
|
|
$
|
32
|
|
|
Market approach
|
|
CRR auction prices
|
|
$ (18.61) - 32.26
|
Power purchase agreements
|
|
$
|
—
|
|
|
$
|
47
|
|
|
Discounted cash flow
|
|
Forward prices
|
|
$ 18.81 - 38.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at
|
|
|
|
|
|
|
||||||
(in millions)
|
|
December 31, 2017
|
|
|
|
|
|
|
||||||
Fair Value Measurement
|
|
Assets
|
|
Liabilities
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Range
(1)
|
||||
Congestion revenue rights
|
|
$
|
129
|
|
|
$
|
24
|
|
|
Market approach
|
|
CRR auction prices
|
|
$ (16.03) - 11.99
|
Power purchase agreements
|
|
$
|
—
|
|
|
$
|
63
|
|
|
Discounted cash flow
|
|
Forward prices
|
|
$ 18.81 - 38.80
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Risk Management Instruments
|
||||||
(in millions)
|
2018
|
|
2017
|
||||
Asset (liability) balance as of April 1
|
$
|
40
|
|
|
$
|
49
|
|
Net realized and unrealized gains:
|
|
|
|
||||
Included in regulatory assets and liabilities or balancing accounts
(1)
|
(6
|
)
|
|
(1
|
)
|
||
Asset (liability) balance as of June 30
|
$
|
34
|
|
|
$
|
48
|
|
|
|
|
|
|
Price Risk Management Instruments
|
||||||
(in millions)
|
2018
|
|
2017
|
||||
Asset (liability) balance as of January 1
|
$
|
42
|
|
|
$
|
55
|
|
Net realized and unrealized gains:
|
|
|
|
||||
Included in regulatory assets and liabilities or balancing accounts
(1)
|
(8
|
)
|
|
(7
|
)
|
||
Asset (liability) balance as of June 30
|
$
|
34
|
|
|
$
|
48
|
|
|
|
|
|
|
At June 30, 2018
|
|
At December 31, 2017
|
||||||||||||
(in millions)
|
Carrying Amount
|
|
Level 2 Fair Value
|
|
Carrying Amount
|
|
Level 2 Fair Value
|
||||||||
PG&E Corporation
(1)
|
$
|
350
|
|
|
$
|
350
|
|
|
$
|
350
|
|
|
$
|
350
|
|
Utility
|
16,696
|
|
|
16,413
|
|
|
17,090
|
|
|
19,128
|
|
||||
|
|
|
|
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
||||||||
As of June 30, 2018
|
Amortized
Cost |
|
Total
Unrealized Gains |
|
Total
Unrealized Losses |
|
Total Fair
Value |
||||||||
Nuclear decommissioning trusts
|
|
|
|
|
|
|
|
||||||||
Short-term investments
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22
|
|
Global equity securities
|
482
|
|
|
1,412
|
|
|
(3
|
)
|
|
1,891
|
|
||||
Fixed-income securities
|
1,338
|
|
|
36
|
|
|
(23
|
)
|
|
1,351
|
|
||||
Total
(1)
|
$
|
1,842
|
|
|
$
|
1,448
|
|
|
$
|
(26
|
)
|
|
$
|
3,264
|
|
As of December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Nuclear decommissioning trusts
|
|
|
|
|
|
|
|
||||||||
Short-term investments
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23
|
|
Global equity securities
|
524
|
|
|
1,463
|
|
|
(2
|
)
|
|
1,985
|
|
||||
Fixed-income securities
|
1,252
|
|
|
51
|
|
|
(8
|
)
|
|
1,295
|
|
||||
Total
(1)
|
$
|
1,799
|
|
|
$
|
1,514
|
|
|
$
|
(10
|
)
|
|
$
|
3,303
|
|
|
|
|
|
|
|
|
|
|
As of
|
||
(in millions)
|
June 30, 2018
|
||
Less than 1 year
|
$
|
66
|
|
1–5 years
|
405
|
|
|
5–10 years
|
360
|
|
|
More than 10 years
|
520
|
|
|
Total maturities of fixed-income securities
|
$
|
1,351
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Proceeds from sales and maturities of nuclear decommissioning trust investments
|
$
|
308
|
|
|
$
|
324
|
|
|
$
|
802
|
|
|
$
|
794
|
|
Gross realized gains on securities
|
11
|
|
|
13
|
|
|
48
|
|
|
42
|
|
||||
Gross realized losses on securities
|
(5
|
)
|
|
(3
|
)
|
|
(9
|
)
|
|
(8
|
)
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Butte fire
|
|
|
|
|
|
|
|
||||||||
Insurance recoveries
|
$
|
—
|
|
|
$
|
(46
|
)
|
|
$
|
(7
|
)
|
|
$
|
(53
|
)
|
Total Butte fire
|
—
|
|
|
(46
|
)
|
|
(7
|
)
|
|
(53
|
)
|
||||
Northern California wildfires
|
|
|
|
|
|
|
|
||||||||
Claims
|
2,500
|
|
|
—
|
|
|
2,500
|
|
|
—
|
|
||||
Insurance recoveries
|
(375
|
)
|
|
—
|
|
|
(375
|
)
|
|
—
|
|
||||
Total Northern California wildfires
|
2,125
|
|
|
—
|
|
|
2,125
|
|
|
—
|
|
||||
Total wildfire-related claims, net of insurance recoveries
|
$
|
2,125
|
|
|
$
|
(46
|
)
|
|
$
|
2,118
|
|
|
$
|
(53
|
)
|
|
Balance At
|
||||||
(in millions)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Butte fire
|
$
|
360
|
|
|
$
|
561
|
|
Northern California wildfires
|
2,500
|
|
|
—
|
|
||
Total wildfire-related claims
|
$
|
2,860
|
|
|
$
|
561
|
|
Loss Accrual (in millions)
|
|
|
||
Balance at December 31, 2015
|
|
$
|
—
|
|
Accrued losses
|
|
750
|
|
|
Payments
(1)
|
|
(60)
|
|
|
Balance at December 31, 2016
|
|
690
|
|
|
Accrued losses
|
|
350
|
|
|
Payments
(1)
|
|
(479)
|
|
|
Balance at December 31, 2017
|
|
561
|
|
|
Accrued losses
|
|
—
|
|
|
Payments
(1)
|
|
(201
|
)
|
|
Balance at June 30, 2018
|
|
$
|
360
|
|
|
|
|
|
Balance at
|
||||||
|
June 30,
|
|
December 31,
|
||||
(in millions)
|
2018
|
|
2017
|
||||
Topock natural gas compressor station
|
$
|
339
|
|
|
$
|
334
|
|
Hinkley natural gas compressor station
|
153
|
|
|
147
|
|
||
Former manufactured gas plant sites owned by the Utility or third parties
(1)
|
350
|
|
|
320
|
|
||
Utility-owned generation facilities (other than fossil fuel-fired),
other facilities, and third-party disposal sites (2) |
112
|
|
|
115
|
|
||
Fossil fuel-fired generation facilities and sites
(3)
|
142
|
|
|
123
|
|
||
Total environmental remediation liability
|
$
|
1,096
|
|
|
$
|
1,039
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||
|
Earnings
|
|
Earnings per Common Share (Diluted)
|
|
Earnings
|
|
Earnings per Common Share (Diluted)
|
||||||||||||||||||||||||
(in millions, except per share amounts)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||
PG&E Corporation’s Earnings (Loss) on a GAAP basis
|
$
|
(984
|
)
|
|
$
|
406
|
|
|
$
|
(1.91
|
)
|
|
$
|
0.79
|
|
|
$
|
(542
|
)
|
|
$
|
982
|
|
|
$
|
(1.05
|
)
|
|
$
|
1.92
|
|
Items Impacting Comparability:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Northern California wildfire-related costs, net of insurance
(2)
|
1,592
|
|
|
—
|
|
|
3.08
|
|
|
—
|
|
|
1,608
|
|
|
—
|
|
|
3.11
|
|
|
—
|
|
||||||||
Pipeline-related expenses
(3)
|
9
|
|
|
17
|
|
|
0.02
|
|
|
0.03
|
|
|
16
|
|
|
33
|
|
|
0.03
|
|
|
0.06
|
|
||||||||
Butte fire-related costs, net of insurance
(4)
|
7
|
|
|
(17
|
)
|
|
0.01
|
|
|
(0.03
|
)
|
|
11
|
|
|
(15
|
)
|
|
0.02
|
|
|
(0.03
|
)
|
||||||||
2017 insurance premiums cost recoveries
(5)
|
(23
|
)
|
|
—
|
|
|
(0.04
|
)
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
(0.04
|
)
|
|
—
|
|
||||||||
Diablo Canyon settlement-related disallowance
(6)
|
—
|
|
|
32
|
|
|
—
|
|
|
0.06
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
0.06
|
|
||||||||
Legal and regulatory-related expenses
(7)
|
—
|
|
|
2
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
0.01
|
|
||||||||
Fines and penalties
(8)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
0.07
|
|
||||||||
GT&S revenue timing impact
(9)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(88
|
)
|
|
—
|
|
|
(0.17
|
)
|
||||||||
PG&E Corporation’s Non- GAAP Earnings from Operations
(10)
|
$
|
601
|
|
|
$
|
440
|
|
|
$
|
1.16
|
|
|
$
|
0.86
|
|
|
$
|
1,070
|
|
|
$
|
984
|
|
|
$
|
2.07
|
|
|
$
|
1.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter 2018 vs. 2017
|
|
Year to Date 2018 vs. 2017
|
||||||||||||
(in millions, except per share amounts)
|
Earnings
|
|
Earnings per Common Share (Diluted)
|
|
Earnings
|
|
Earnings per Common Share (Diluted)
|
||||||||
2017 Non- GAAP Earnings from Operations
(1)
|
$
|
440
|
|
|
$
|
0.86
|
|
|
$
|
984
|
|
|
$
|
1.92
|
|
Timing and duration of nuclear refueling outages
|
43
|
|
|
0.08
|
|
|
12
|
|
|
0.02
|
|
||||
Resolution of regulatory items
(2)
|
29
|
|
|
0.06
|
|
|
29
|
|
|
0.06
|
|
||||
Insurance premium cost recoveries
(3)
|
27
|
|
|
0.05
|
|
|
27
|
|
|
0.05
|
|
||||
Timing of taxes
(4)
|
26
|
|
|
0.05
|
|
|
1
|
|
|
—
|
|
||||
Growth in rate base earnings
(5)
|
23
|
|
|
0.04
|
|
|
65
|
|
|
0.12
|
|
||||
Miscellaneous
|
38
|
|
|
0.07
|
|
|
10
|
|
|
0.02
|
|
||||
Timing of 2017 GRC cost recovery
(6)
|
(18
|
)
|
|
(0.03
|
)
|
|
—
|
|
|
—
|
|
||||
Decrease in authorized return on equity
(7)
|
(7
|
)
|
|
(0.01
|
)
|
|
(14
|
)
|
|
(0.02
|
)
|
||||
Increase in shares outstanding
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|
(0.02
|
)
|
||||
Tax impact of stock compensation
(8)
|
—
|
|
|
—
|
|
|
(44
|
)
|
|
(0.08
|
)
|
||||
2018 Non-GAAP Earnings from Operations
(1)
|
$
|
601
|
|
|
$
|
1.16
|
|
|
$
|
1,070
|
|
|
$
|
2.07
|
|
|
|
|
|
|
|
|
|
•
|
The Impact of the Northern California Wildfires.
PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows could be materially affected by potential losses resulting from the Northern California wildfires. Following accounting rules, PG&E Corporation and the Utility recorded a pre-tax charge in the amount of $2.5 billion for the quarter ended June 30, 2018 ($1.8 billion after-tax) for claims in connection with 14 of the Northern California wildfires. This charge 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. If the Utility’s facilities, such as its electric distribution and transmission lines, are determined to be the substantial cause of one or more remaining 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, which liability, in the aggregate, could be substantial and have a material adverse effect on PG&E Corporation and the Utility. In addition to such 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, and other damages under other theories of liability, including if the Utility were found to have been negligent, which liability, in the aggregate, could be substantial and have a material adverse effect on PG&E Corporation and the Utility. In addition, the Utility incurred costs of $274 million for clean-up and repair of the Utility’s facilities (including $116 million in capital expenditures) through June 30, 2018, in connection with these wildfires. At June 30, 2018, the CEMA balance related to the Northern California wildfires was $96 million and reflects an approximately $40 million reduction to the regulatory asset that was recorded in the three months ended June 30, 2018 for costs that are no longer probable of recovery. Failure to obtain a substantial or full recovery of these costs or any conclusion that such recovery is no longer probable, could have a material adverse effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows. Further, the Utility could be subject to material fines or penalties if the CPUC or any other law enforcement agency brought an enforcement action and determined that the Utility failed to comply with applicable laws and regulations. (See Notes 3 and 9 of the Notes to the Condensed Consolidated Financial Statements in Item 1.)
|
•
|
The Applicability of the Doctrine of Inverse Condemnation to PG&E Corporation's and the Utility’s Current Wildfire Litigation.
The doctrine of inverse condemnation, if applied by courts in litigation to which PG&E Corporation and the Utility are subject, could expose PG&E Corporation and the Utility to substantial liabilities from such litigation and materially affect PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows. Although the imposition of liability is premised on the assumption that utilities have the ability to recover these costs from their customers, there can be no guarantee that the CPUC would authorize cost recovery even if a court decision imposes liability under the doctrine of inverse condemnation. In November 2017, the CPUC denied recovery of costs that San Diego Gas & Electric Company stated it incurred as a result of the doctrine of inverse condemnation, holding that the inverse condemnation principles of strict liability are not relevant to the CPUC’s prudent manager standard. San Diego Gas & Electric, the Utility, and Southern California Edison filed requests for rehearing of that decision. On July 12, 2018, the CPUC voted out a decision denying the requests for rehearing. PG&E Corporation and the Utility are also challenging the appropriateness of applying inverse condemnation to investor-owned utilities in the Butte Fire litigation and the Northern California wildfires litigation. (See Note 9 of the Notes to the Condensed Consolidated Financial Statements in Item 1.)
|
•
|
The Timing and Outcome of Pending Wildfire Legislation.
The applicability of inverse condemnation to investor-owned utilities could be impacted by actions of the California state legislature. On March 13, 2018, Governor Brown along with Democratic and Republican legislative leaders issued a joint statement indicating an intent to partner on solutions to protect Californians from the threat of natural disasters and climate change, including an update to liability rules and regulations for utility services. On July 2, 2018, Governor Brown and Democratic and Republican legislative leaders announced the formation of a Wildfire Preparedness and Response Conference Committee to respond to the increasing wildfire danger in California. The committee will consider provisions of the plan outlined by the Governor in March 2018 to update rules and regulations for utility service in light of the changing climate and increased severity and frequency of weather events. The Governor’s press release states that “legislation would implement these changes in the future, and nothing in the bill would affect any potential liability for last year’s historic and massively destructive wildfires.”
|
•
|
Uncertainties Related to Capital Expenditures.
The Utility’s need to invest in and enhance its infrastructure, including new and innovative approaches to address the growing wildfire risk, requires the Utility to continue to raise new capital. Over the last five years, PG&E Corporation and the Utility together have raised $2 to $3 billion per year in debt and equity to funds these types of investments and to refinance earlier investments. However, PG&E Corporation’s and the Utility’s ability to raise capital is impacted by ongoing uncertainty associated with both the 2017 Northern California Wildfires and future risks resulting from climate change. These uncertainties have led to credit rating downgrades with ongoing scrutiny and weakened demand for PG&E Corporation stock.
|
•
|
The Utility's Compliance with the CPUC Capital Structure
. The CPUC’s capital structure decisions require the Utility to maintain a minimum 52% average equity ratio 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 below 51%. The net charges the Utility recorded in connection with the Northern California wildfires for the quarter ended June 30, 2018, and described herein, will not result in noncompliance by the Utility with its authorized capital structure. However, in the future, maintaining compliance with the Utility’s authorized capital structure may require PG&E Corporation to issue a significant amount of equity, depending on the timing and amount of any claims payments and whether additional charges are recorded. If the Utility submits an application to the CPUC for a waiver to its capital structure condition, there can be no assurance that the CPUC would grant such waiver.
|
•
|
The Cost of Insurance
. The Utility expects to enter into various contracts providing liability insurance for coverage beginning August 1, 2018. The combined risk transfer products are expected to provide aggregate coverage from $1 billion to $1.5 billion, a portion of which is expected to cover non-wildfire events. The Utility anticipates annualized costs of approximately $350 million for insurance premiums for this coverage, an increase of approximately $225 million per year as compared to annualized premium costs for coverage that began in August 2017. Insurance premiums in excess of the Utility’s authorized revenue requirements will be tracked in the WEMA. Failure to obtain a substantial or full recovery of such costs or any conclusion that such recovery is no longer probable, could have a material adverse effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows.
|
•
|
The Tax Cuts and Jobs Act.
On December 22, 2017, the U.S. government enacted expansive tax legislation commonly referred to as the Tax Act. Among other provisions, the Tax Act reduced the federal income tax rate from 35% to 21% beginning on January 1, 2018 and eliminated bonus depreciation for utilities. On March 30, 2018, the Utility submitted PFMs of the CPUC's final decisions in the Utility's 2017 GRC, and the 2015 GT&S rate case. Additionally, the Utility submitted updated testimony in connection with the 2019 GT&S rate case. These submittals reflect the effects of the Tax Act on these rate cases. On May 14, 2018, the Utility filed a proposal to reflect the impact of the Tax Act on its TO tariff rates effective, March 1, 2018, in the resolution of the TO19 rate case. The Utility is unable to predict the timing and outcome of the CPUC's and FERC's decisions in connection with these submittals. (See Note 9 of the Notes to the Condensed Consolidated Financial Statements in Item 1.)
|
•
|
The Outcome of Enforcement, Litigation, and Regulatory Matters.
The Utility’s financial results may continue to be impacted by the outcome of current and future enforcement, litigation, and regulatory matters, including the impact of the Northern California wildfires, the Butte fire, the safety culture OII and any related fines, penalties, or other ratemaking tools that could be imposed by the CPUC, including the outcome of phase two of the ex parte OII, the potential recommendations that the third-party monitor (retained by the Utility in the first quarter of 2017 as part of its compliance with the sentencing terms of the Utility’s January 27, 2017 federal criminal conviction) may make, and potential penalties in connection with the Utility’s safety and other self-reports. (See Note 9 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 and TO19 rate cases, as well as the remand decision by the Ninth Circuit regarding an ROE incentive adder for transmission facilities, and the 2018 CEMA filing. 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 “Regulatory Matters" below.)
|
•
|
The Amount and Timing of the Utility's Financing Needs.
PG&E Corporation’s and the Utility’s ability to access the capital markets, ability to borrow under its loan financing arrangements, and the terms and rates of future financings could be materially affected by the outcome of, or market perception of, the matters discussed in Note 9 of the Notes to the Condensed Consolidated Financial Statements, including liabilities incurred in relation to the Northern California wildfires, adverse effects on PG&E Corporation’s and the Utility’s ability to comply with consolidated debt to total capitalization ratio covenants in their financing arrangements and regulatory capital structure requirements, adverse changes in their respective credit ratings, general economic and market conditions, and other factors. PG&E Corporation contributes equity to the Utility as needed to maintain the Utility’s CPUC-authorized capital structure. For the six months ended June 30, 2018, PG&E Corporation issued $82 million of common stock and made no equity contributions to the Utility. PG&E Corporation may seek to issue additional equity to pay claims, losses, fines, and penalties that may be required by the outcome of litigation and enforcement matters. Additional issuances of equity, if any, could have a material dilutive impact on PG&E Corporation’s EPS.
|
•
|
The Changes in the Utility Industry.
The Utility is committed to delivering safe, reliable, sustainable, and affordable electric and gas services to its customers. Increasing demands from state laws and policies relating to increased renewable energy resources, the reduction of GHG emissions, the expansion of energy efficiency goals, the development and widespread deployment of distributed generation and self-generation resources, and the development of energy storage technologies have increased pressure on the Utility to achieve efficiencies in its operations while continuing to provide customers with safe, reliable, and affordable service. The utility industry is also undergoing transformative change driven by technological advancements enabling customer choice (for example, customer-owned generation and energy storage) and state climate policy supporting a decarbonized economy. California’s environmental policy objectives are accelerating the pace and scope of the industry change. The electric grid is a critical enabler of the adoption of new energy technologies that support California's climate change and GHG reduction objectives, which continue to be publicly supported by California policy makers notwithstanding a recent change in the federal approach to such matters. In order to enable the California clean energy economy, sustained investments are required in grid modernization, renewable integration projects, energy efficiency programs, energy storage options, EV infrastructure, and state infrastructure modernization (e.g., rail and water projects). In addition, these changes brought about by technological advancements and climate policy may cause a reduction in natural gas usage and increase natural gas costs. The combination of reduced natural gas load and increased costs could result in higher natural gas customer bills and potential cost recovery risk.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Consolidated Total
|
$
|
(984
|
)
|
|
$
|
406
|
|
|
$
|
(542
|
)
|
|
$
|
982
|
|
PG&E Corporation
|
(4
|
)
|
|
1
|
|
|
(11
|
)
|
|
11
|
|
||||
Utility
|
$
|
(980
|
)
|
|
$
|
405
|
|
|
$
|
(531
|
)
|
|
$
|
971
|
|
|
Three Months Ended June 30, 2018
|
|
Three Months Ended June 30, 2017
|
||||||||||||||||||||
|
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
|
$
|
1,979
|
|
|
$
|
1,333
|
|
|
$
|
3,312
|
|
|
$
|
1,948
|
|
|
$
|
1,376
|
|
|
$
|
3,324
|
|
Natural gas operating revenues
|
752
|
|
|
170
|
|
|
922
|
|
|
760
|
|
|
166
|
|
|
926
|
|
||||||
Total operating revenues
|
2,731
|
|
|
1,503
|
|
|
4,234
|
|
|
2,708
|
|
|
1,542
|
|
|
4,250
|
|
||||||
Cost of electricity
|
—
|
|
|
963
|
|
|
963
|
|
|
—
|
|
|
1,123
|
|
|
1,123
|
|
||||||
Cost of natural gas
|
—
|
|
|
79
|
|
|
79
|
|
|
—
|
|
|
121
|
|
|
121
|
|
||||||
Operating and maintenance
|
1,244
|
|
|
542
|
|
|
1,786
|
|
|
1,293
|
|
|
311
|
|
|
1,604
|
|
||||||
Wildfire-related claims, net of insurance recoveries
|
2,125
|
|
|
—
|
|
|
2,125
|
|
|
(46
|
)
|
|
—
|
|
|
(46
|
)
|
||||||
Depreciation, amortization, and decommissioning
|
746
|
|
|
—
|
|
|
746
|
|
|
712
|
|
|
—
|
|
|
712
|
|
||||||
Total operating expenses
|
4,115
|
|
|
1,584
|
|
|
5,699
|
|
|
1,959
|
|
|
1,555
|
|
|
3,514
|
|
||||||
Operating income (loss)
|
(1,384
|
)
|
|
(81
|
)
|
|
(1,465
|
)
|
|
749
|
|
|
(13
|
)
|
|
736
|
|
||||||
Interest income
|
11
|
|
|
—
|
|
|
11
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||
Interest expense
|
(222
|
)
|
|
—
|
|
|
(222
|
)
|
|
(222
|
)
|
|
—
|
|
|
(222
|
)
|
||||||
Other income, net
|
27
|
|
|
81
|
|
|
108
|
|
|
11
|
|
|
13
|
|
|
24
|
|
||||||
Income (loss) before income taxes
|
$
|
(1,568
|
)
|
|
$
|
—
|
|
|
$
|
(1,568
|
)
|
|
$
|
545
|
|
|
$
|
—
|
|
|
$
|
545
|
|
Income tax provision (benefit)
(1)
|
|
|
|
|
(592
|
)
|
|
|
|
|
|
136
|
|
||||||||||
Net income (loss)
|
|
|
|
|
(976
|
)
|
|
|
|
|
|
409
|
|
||||||||||
Preferred stock dividend requirement
(1)
|
|
|
|
|
4
|
|
|
|
|
|
|
4
|
|
||||||||||
Income (Loss) Available for Common Stock
|
|
|
|
|
$
|
(980
|
)
|
|
|
|
|
|
$
|
405
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||||
|
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
|
$
|
3,915
|
|
|
$
|
2,348
|
|
|
$
|
6,263
|
|
|
$
|
3,930
|
|
|
$
|
2,461
|
|
|
$
|
6,391
|
|
Natural gas operating revenues
|
1,490
|
|
|
537
|
|
|
2,027
|
|
|
1,539
|
|
|
591
|
|
|
2,130
|
|
||||||
Total operating revenues
|
5,405
|
|
|
2,885
|
|
|
8,290
|
|
|
5,469
|
|
|
3,052
|
|
|
8,521
|
|
||||||
Cost of electricity
|
—
|
|
|
1,782
|
|
|
1,782
|
|
|
—
|
|
|
1,970
|
|
|
1,970
|
|
||||||
Cost of natural gas
|
—
|
|
|
368
|
|
|
368
|
|
|
—
|
|
|
446
|
|
|
446
|
|
||||||
Operating and maintenance
|
2,494
|
|
|
896
|
|
|
3,390
|
|
|
2,466
|
|
|
663
|
|
|
3,129
|
|
||||||
Wildfire-related claims, net of insurance recoveries
|
2,118
|
|
|
—
|
|
|
2,118
|
|
|
(53
|
)
|
|
—
|
|
|
(53
|
)
|
||||||
Depreciation, amortization, and decommissioning
|
1,498
|
|
|
—
|
|
|
1,498
|
|
|
1,424
|
|
|
—
|
|
|
1,424
|
|
||||||
Total operating expenses
|
6,110
|
|
|
3,046
|
|
|
9,156
|
|
|
3,837
|
|
|
3,079
|
|
|
6,916
|
|
||||||
Operating income (loss)
|
(705
|
)
|
|
(161
|
)
|
|
(866
|
)
|
|
1,632
|
|
|
(27
|
)
|
|
1,605
|
|
||||||
Interest income
|
20
|
|
|
—
|
|
|
20
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||||
Interest expense
|
(439
|
)
|
|
—
|
|
|
(439
|
)
|
|
(438
|
)
|
|
—
|
|
|
(438
|
)
|
||||||
Other income, net
|
56
|
|
|
161
|
|
|
217
|
|
|
28
|
|
|
27
|
|
|
55
|
|
||||||
Income (loss) before income taxes
|
$
|
(1,068
|
)
|
|
$
|
—
|
|
|
$
|
(1,068
|
)
|
|
$
|
1,234
|
|
|
$
|
—
|
|
|
$
|
1,234
|
|
Income tax provision (benefit)
(1)
|
|
|
|
|
(544
|
)
|
|
|
|
|
|
256
|
|
||||||||||
Net income (loss)
|
|
|
|
|
(524
|
)
|
|
|
|
|
|
978
|
|
||||||||||
Preferred stock dividend requirement
(1)
|
|
|
|
|
7
|
|
|
|
|
|
|
7
|
|
||||||||||
Income (Loss) Available for Common Stock
|
|
|
|
|
$
|
(531
|
)
|
|
|
|
|
|
$
|
971
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Federal statutory income tax rate
|
21.0
|
%
|
|
35.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
Increase (decrease) in income tax rate resulting from:
|
|
|
|
|
|
|
|
||||
State income tax (net of federal benefit)
(1)
|
8.6
|
%
|
|
3.0
|
%
|
|
11.5
|
%
|
|
2.3
|
%
|
Effect of regulatory treatment of fixed asset differences
(2)
|
6.2
|
%
|
|
(12.6
|
)%
|
|
16.8
|
%
|
|
(12.9
|
)%
|
Tax credits
|
0.2
|
%
|
|
(2.5
|
)%
|
|
0.6
|
%
|
|
(1.3
|
)%
|
Other, net
(3)
|
1.9
|
%
|
|
2.2
|
%
|
|
1.1
|
%
|
|
(2.4
|
)%
|
Effective tax rate
|
37.9
|
%
|
|
25.1
|
%
|
|
51.0
|
%
|
|
20.7
|
%
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Cost of purchased power
|
$
|
919
|
|
|
$
|
1,079
|
|
|
$
|
1,672
|
|
|
$
|
1,863
|
|
Fuel used in own generation facilities
|
44
|
|
|
44
|
|
|
110
|
|
|
107
|
|
||||
Total cost of electricity
|
$
|
963
|
|
|
$
|
1,123
|
|
|
$
|
1,782
|
|
|
$
|
1,970
|
|
Average cost of purchased power per kWh
(1)
|
$
|
0.125
|
|
|
$
|
0.114
|
|
|
$
|
0.124
|
|
|
$
|
0.111
|
|
Total purchased power (in millions of kWh)
(2)
|
7,333
|
|
|
9,425
|
|
|
13,443
|
|
|
16,716
|
|
||||
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Cost of natural gas sold
|
$
|
53
|
|
|
$
|
93
|
|
|
$
|
310
|
|
|
$
|
386
|
|
Transportation cost of natural gas sold
|
26
|
|
|
28
|
|
|
58
|
|
|
60
|
|
||||
Total cost of natural gas
|
$
|
79
|
|
|
$
|
121
|
|
|
$
|
368
|
|
|
$
|
446
|
|
Average cost per Mcf
(1)
of natural gas sold
|
$
|
1.20
|
|
|
$
|
2.27
|
|
|
$
|
2.40
|
|
|
$
|
2.88
|
|
Total natural gas sold (in millions of Mcf)
|
44
|
|
|
41
|
|
|
129
|
|
|
134
|
|
||||
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
||||||
(in millions)
|
2018
|
|
2017
|
||||
Net cash provided by operating activities
|
$
|
2,722
|
|
|
$
|
2,824
|
|
Net cash used in investing activities
|
(2,895
|
)
|
|
(2,489
|
)
|
||
Net cash provided by (used in) financing activities
|
210
|
|
|
(349
|
)
|
||
Net change in cash and cash equivalents
|
$
|
37
|
|
|
$
|
(14
|
)
|
•
|
the timing and amount of costs in connection with the Northern California wildfires (and the timing and amount of related insurance recoveries), as well as additional potential liabilities in connection with third-party claims and fines or penalties that could be imposed on the Utility if the CPUC or any other law enforcement agency brought an enforcement action and determined that the Utility failed to comply with applicable laws and regulations;
|
•
|
the timing and amounts of costs, including fines and penalties, that may be incurred in connection with the current and future enforcement, litigation, and regulatory matters, including the impact of the Butte fire and the timing and amount of related insurance recoveries, the safety culture OII, including other ratemaking tools that could be imposed by the CPUC as a result of phase two of the proceeding, the outcome of phase two of the ex parte OII, costs associated with potential recommendations that the third-party monitor may make related to the Utility’s conviction in the federal criminal trial, and potential penalties in connection with the Utility’s safety and other self-reports;
|
•
|
the timing and amount of premium payments related to wildfire insurance (see “Wildfire Insurance” in Note 9 of the Notes to the Condensed Consolidated Financial Statements in Item 1 for more information);
|
•
|
the Tax Act, which is expected to accelerate the timing of federal tax payments and reduce revenue requirements, resulting in lower operating cash flows (see “Overview” above and “Regulatory Matters” below for more information);
|
•
|
the timing and outcomes of the 2020 GRC, 2019 GT&S rate case, FERC TO18 and TO19 rate cases, 2018 CEMA filing, and other ratemaking and regulatory proceedings; and
|
•
|
the timing of the resolution of the Chapter 11 disputed claims and the amount of principal and interest on these claims that the Utility will be required to pay.
|
•
|
deferred consideration of replacement resources to the CPUC’s Integrated Resource Planning proceeding;
|
•
|
authorized rate recovery for up to $211.3 million (compared with the $352.1 million requested by the Utility) for an employee retention program;
|
•
|
authorized rate recovery for an employee retraining program of $11.3 million requested by the Utility;
|
•
|
rejected rate recovery of the proposed $85 million for the community impacts mitigation program on the grounds that rate recovery for such a program requires legislative authorization;
|
•
|
authorized rate recovery of $18.6 million of the total Diablo Canyon license renewal cost of $53 million and rate recovery of cancelled project costs equal to 100% of direct costs incurred prior to June 30, 2016, and 25% of direct costs incurred after June 30, 2016, based on a settlement agreement among the Utility, the Joint Parties, and certain other parties that the Utility filed with the CPUC in May 2017; and
|
•
|
approved the amortization of the book value for Diablo Canyon consistent with the Diablo Canyon closure schedule.
|
•
|
require the CPUC to approve the community impact mitigation settlement of $85 million, originally proposed in the joint settlement agreement;
|
•
|
direct the CPUC to manage its Integrated Resource Planning to ensure that there is no increase in GHG emissions as a result of the Diablo Canyon retirement; and
|
•
|
require the CPUC to approve full funding of the $352.1 million Diablo Canyon employee retention program, originally proposed in the joint settlement agreement.
|
•
|
strengthen fire prevention activities;
|
•
|
continue to ensure financial and other accountability for wildfires;
|
•
|
appropriately determine responsibility for wildfires;
|
•
|
ensure fair allocation of wildfire prevention and response costs in a manner that protects ratepayers; and
|
•
|
submit annually to the state more expansive and detailed wildfire and emergency preparedness plans.
|
•
|
how to define climate change adaption for the IOUs;
|
•
|
the climate-driven risks facing the IOUs;
|
•
|
data, tools, resources, and guidance to instruct utilities on how to incorporate adaption in their existing planning and operational processes; and
|
•
|
strategies to address climate change in CPUC proceedings, including impacts on disadvantaged communities.
|
•
|
the impact of the Northern California wildfires, including whether the Utility will be able to recover any costs for clean-up and repair of the Utility's facilities through CEMA; the timing and outcome of the remaining wildfire investigations, including into the causes of the wildfires and the extent to which the Utility will have liability associated with these fires; the timing and amount of insurance recoveries; whether the Utility will be able to recover costs in excess of insurance through regulatory mechanisms and the timing of such recovery; 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 and determined that the Utility failed to comply with applicable laws and regulations;
|
•
|
the timing and outcome of the Butte fire litigation, the timing and outcome of any proceeding to recover costs in excess of insurance through rates; the effect, if any, that the SED’s $8.3 million citations issued in connection with the Butte fire may have on the Butte fire litigation; and whether additional investigations and proceedings in connection with the 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 Northern California wildfires and the Butte fire, and the timing and outcome of pending wildfire legislation;
|
•
|
the timing and outcome of pending wildfire legislation;
|
•
|
the outcome of the Utility's community wildfire safety program 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; and the cost of the program, and the timing and outcome of any proceeding to recover such cost through rates;
|
•
|
the amount and timing of additional common stock and debt issuances by PG&E Corporation, including the dilutive impact of common stock issuances to fund PG&E Corporation's equity contributions to the Utility as the Utility incurs charges and costs, including fines, that it cannot recover through rates;
|
•
|
the timing and outcome of CPUC decision(s) related to the Utility’s March 2018 submissions to the CPUC and May 2018 submission to the FERC in connection with the impact of the Tax Act on the Utility’s rate cases and its implementation plan;
|
•
|
the timing and outcomes of the 2019 GT&S rate case, 2020 GRC, FERC TO18 and TO19 rate cases, 2018 CEMA, and other ratemaking and regulatory proceedings;
|
•
|
the costs of the Utility's insurance, and whether the Utility will be able to obtain full recovery of its significantly increased insurance premiums and the timing of such recovery;
|
•
|
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 and the Utility’s reputations caused by the Utility’s conviction in the federal criminal trial in 2017, the CPUC's investigations of natural gas and electric incidents, and the Northern California wildfires, improper communications between the CPUC and the Utility, and the Utility’s ongoing work to remove encroachments from transmission pipeline rights-of-way;
|
•
|
the outcome of the safety culture OII, including its phase two proceeding opened on May 8, 2017, 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 complaint filed by the CPUC and certain other parties with the FERC on February 2, 2017, that requests 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 PG&E 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 impact of comments and 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 California Governor Jerry Brown'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; and whether the Utility will be able to successfully implement its retention and retraining and development programs for Diablo Canyon employees as a result of its planned retirement by 2024 and 2025;
|
•
|
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;
|
•
|
the outcome of state initiatives and numerous bills introduced by state legislators to address climate resilience and augment disaster planning in response to the wildfires in California, that if passed, could affect the Utility’s cost recovery mechanisms, operational requirements, and resiliency plans for certain catastrophic events;
|
•
|
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;
|
•
|
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 that reductions in customer demand for electricity and natural gas 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 natural gas and electric services, and an increasing number of customers departing the Utility’s procurement service for CCAs;
|
•
|
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;
|
•
|
whether, as a result of Westinghouse’s Chapter 11 proceeding and its bankruptcy court approved plan of reorganization, the Utility will experience issues with nuclear fuel supply, nuclear fuel inventory, and related services and products that Westinghouse supplies, and whether the implementation of the plan or reorganization will affect the Utility’s contracts with Westinghouse;
|
•
|
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 on acceptable terms;
|
•
|
changes in credit ratings which could, among other things, result in cash collateral postings, higher borrowing costs and fewer financing options, especially if PG&E Corporation or the Utility were to lose their investment grade credit ratings;
|
•
|
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 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, and whether they will continue impacting PG&E Corporation's and the Utility's ability to pay dividends;
|
•
|
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.
|
•
|
the breakdown or failure of equipment, electric transmission or distribution lines, or natural gas transmission and distribution pipelines, that can cause explosions, fires, or other catastrophic events;
|
•
|
an overpressure event occurring on natural gas facilities due to equipment failure, incorrect operating procedures or failure to follow correct operating procedures, or welding or fabrication-related defects, that results in the failure of downstream transmission pipelines or distribution assets and uncontained natural gas flow;
|
•
|
the failure to maintain adequate capacity to meet customer demand on the gas system that results in customer curtailments, controlled/uncontrolled gas outages, gas surges back into homes, serious personal injury or loss of life;
|
•
|
a prolonged statewide electrical black-out that results in damage to the Utility’s equipment or damage to property owned by customers or other third parties;
|
•
|
the failure to fully identify, evaluate, and control workplace hazards that result in serious injury or loss of life for employees or the public, environmental damage, or reputational damage;
|
•
|
the release of radioactive materials caused by a nuclear accident, seismic activity, natural disaster, or terrorist act;
|
•
|
the failure of a large dam or other major hydroelectric facility, or the failure of one or more levees that protect land on which the Utility’s assets are built;
|
•
|
the failure to take expeditious or sufficient action to mitigate operating conditions, facilities, or equipment, that the Utility has identified, or reasonably should have identified, as unsafe, which failure then leads to a catastrophic event (such as a wild land fire or natural gas explosion);
|
•
|
inadequate emergency preparedness plans and the failure to respond effectively to a catastrophic event that can lead to public or employee harm or extended outages;
|
•
|
operator or other human error;
|
•
|
an ineffective records management program that results in the failure to construct, operate and maintain
|
•
|
construction performed by third parties that damages the Utility’s underground or overhead facilities, including, for example, ground excavations or “dig-ins” that damage the Utility’s underground pipelines;
|
•
|
the release of hazardous or toxic substances into the air, water, or soil, including, for example, gas leaks from natural gas storage facilities; releases of greenhouse gases; flaking lead-based paint from the Utility’s facilities, and leaking or spilled insulating fluid from electrical equipment; and
|
•
|
attacks by third parties, including cyber-attacks, acts of terrorism, vandalism, or war.
|
10.1
|
|
|
|
*10.2
|
|
|
|
*10.3
|
|
|
|
*10.4
|
|
|
|
12.1
|
|
|
|
12.2
|
|
|
|
12.3
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
**32.1
|
|
|
|
**32.2
|
|
|
|
101.INS
|
XBRL Instance 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
Senior 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) |
The LTIP and Other Agreements
|
This Agreement and the above cover sheet constitute the entire understanding between you and PG&E Corporation regarding the Restricted Stock Units, subject to the terms of the LTIP. Any prior agreements, commitments, or negotiations are superseded. In the event of any conflict or inconsistency between the provisions of this Agreement or the above cover sheet and the LTIP, the LTIP will govern. Capitalized terms that are not defined in this Agreement or the above cover sheet are defined in the LTIP. In the event of any conflict between the provisions of this Agreement or the above cover sheet and the PG&E Corporation 2012 Officer Severance Policy, this Agreement or the above cover sheet will govern, as applicable. For purposes of this Agreement, employment with PG&E Corporation means employment with any member of the Participating Company Group.
|
Grant of Restricted Stock Units
|
PG&E Corporation grants you the number of Restricted Stock Units shown on the cover sheet of this Agreement. The Restricted Stock Units are subject to the terms and conditions of this Agreement and the LTIP.
|
Vesting of Restricted Stock Units
|
As long as you remain employed with PG&E Corporation, the total number of Restricted Stock Units originally subject to this Agreement, as shown on the cover sheet, will vest in accordance with the below vesting schedule (the “Normal Vesting Schedule”).
6/26/2020 - 3,910 shares
6/26/2021 - 7,822 shares
The amounts payable upon each vesting date are hereby designated separate payments for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Code”). Except as described below, all Restricted Stock Units subject to this Agreement which have not vested upon termination of your employment will then be cancelled. As set forth below, the Restricted Stock Units may vest earlier upon the occurrence of certain events.
|
Dividends
|
Restricted Stock Units will accrue Dividend Equivalents in the event that cash dividends are paid with respect to PG&E Corporation common stock having a record date prior to the date on which the RSUs are settled. Such Dividend Equivalents will be converted into cash and paid, if at all, upon settlement of the underlying Restricted Stock Units.
|
Settlement
|
Vested Restricted Stock Units will be settled in an equal number of shares of PG&E Corporation common stock, subject to the satisfaction of Withholding Taxes, as described below. PG&E Corporation will issue shares as soon as practicable after the Restricted Stock Units vest in accordance with the Normal Vesting Schedule (but not later than sixty (60) days after the applicable vesting date); provided, however, that such issuance will, if earlier, be made with respect to all of your outstanding vested Restricted Stock Units (after giving effect to the vesting provisions described below) as soon as practicable after (but not later than sixty (60) days after) the earliest to occur of your (1) Disability (as defined under Code Section 409A), (2) death, or (3) “separation from service,” within the meaning of Code Section 409A within 2 years following a Change in Control.
|
Voluntary Termination
|
In the event of your voluntary termination (other than Retirement), all unvested Restricted Stock Units will be cancelled on the date of termination.
|
Termination for Cause
|
If your employment with PG&E Corporation is terminated at any time by PG&E Corporation for cause, all unvested Restricted Stock Units will be cancelled on the date of termination. In general, termination for “cause” means termination of employment because of dishonesty, a criminal offense, or violation of a work rule, and will be determined by and in the sole discretion of PG&E Corporation. For the avoidance of doubt, you will not be eligible to retire if your employment is being or is terminated for cause.
|
Termination other than for Cause
|
If your employment with PG&E Corporation is terminated by PG&E Corporation other than for cause, any unvested Restricted Stock Units that would have vested within the 12 months following such termination had your employment continued will continue to vest and be settled pursuant to the Normal Vesting Schedule (without regard to the requirement that you be employed), subject to the earlier settlement provisions of this Agreement. All other unvested Restricted Stock Units will be cancelled unless your termination of employment was in connection with a Change in Control as provided below.
|
Leaves of Absence
|
For purposes of this Agreement, if you are on an approved leave of absence from PG&E Corporation, or a recipient of PG&E Corporation sponsored disability benefits, you will continue to be considered as employed. If you do not return to active employment upon the expiration of your leave of absence or the expiration of your PG&E Corporation sponsored disability benefits, you will be considered to have voluntarily terminated your employment. See above under “Voluntary Termination.”
Notwithstanding the foregoing, if the leave of absence exceeds six (6) months, and a return to service upon expiration of such leave is not guaranteed by statute or contract, then you will be deemed to have had a “separation from service” for purposes of any Restricted Stock Units that are settled hereunder upon such separation. To the extent an authorized leave of absence is due to a medically determinable physical or mental impairment that can be expected to result in death or to last for a continuous period of at least six (6) months and such impairment causes you to be unable to perform the duties of your position of employment or any substantially similar position of employment, the six (6) month period in the prior sentence will be twenty-nine (29) months.
PG&E Corporation reserves the right to determine which leaves of absence will be considered as continuing employment and when your employment terminates for all purposes under this Agreement.
|
Voting and Other Rights
|
You will not have voting rights with respect to the Restricted Stock Units until the date the underlying shares are issued (as evidenced by appropriate entry on the books of PG&E Corporation or its duly authorized transfer agent). No Restricted Stock Units and no shares of Stock that have not been issued hereunder may be sold, assigned, transferred, pledged, or otherwise encumbered, other than by will or the laws of decent and distribution, and the Restricted Stock Units may be exercised during the life of the Recipient only by the Recipient or the Recipient’s guardian or legal representative.
|
No Retention Rights
|
This Agreement is not an employment agreement and does not give you the right to be retained by PG&E Corporation. Except as otherwise provided in an applicable employment agreement, PG&E Corporation reserves the right to terminate your employment at any time and for any reason.
|
Recoupment of Awards
|
Awards are subject to recoupment in accordance with any applicable law and any recoupment policy adopted by the Corporation from time to time, including the PG&E Corporation and Pacific Gas and Electric Company Executive Incentive Compensation Recoupment Policy, as last revised on February 21, 2018 and available on the PG&E@Work internet site for the Long-Term Incentive Plan (the policy and location may be changed from time to time by PG&E Corporation).
|
Applicable Law
|
This Agreement will be interpreted and enforced under the laws of the State of California.
|
The LTIP and Other Agreements
|
This Agreement and the above cover sheet constitute the entire understanding between you and PG&E Corporation regarding the Restricted Stock Units, subject to the terms of the LTIP. Any prior agreements, commitments, or negotiations are superseded. In the event of any conflict or inconsistency between the provisions of this Agreement or the above cover sheet and the LTIP, the LTIP will govern. Capitalized terms that are not defined in this Agreement or the above cover sheet are defined in the LTIP. In the event of any conflict between the provisions of this Agreement or the above cover sheet and the PG&E Corporation 2012 Officer Severance Policy, this Agreement or the above cover sheet will govern, as applicable. For purposes of this Agreement, employment with PG&E Corporation means employment with any member of the Participating Company Group.
|
Grant of Restricted Stock Units
|
PG&E Corporation grants you the number of Restricted Stock Units shown on the cover sheet of this Agreement. The Restricted Stock Units are subject to the terms and conditions of this Agreement and the LTIP.
|
Vesting of Restricted Stock Units
|
As long as you remain employed with PG&E Corporation, the total number of Restricted Stock Units originally subject to this Agreement, as shown on the cover sheet, will vest in accordance with the below vesting schedule (the “Normal Vesting Schedule”).
6/26/2020 - 3,910 shares
6/26/2021 - 7,822 shares
The amounts payable upon each vesting date are hereby designated separate payments for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Code”). Except as described below, all Restricted Stock Units subject to this Agreement which have not vested upon termination of your employment will then be cancelled. As set forth below, the Restricted Stock Units may vest earlier upon the occurrence of certain events.
|
Dividends
|
Restricted Stock Units will accrue Dividend Equivalents in the event that cash dividends are paid with respect to PG&E Corporation common stock having a record date prior to the date on which the RSUs are settled. Such Dividend Equivalents will be converted into cash and paid, if at all, upon settlement of the underlying Restricted Stock Units.
|
Settlement
|
Vested Restricted Stock Units will be settled in an equal number of shares of PG&E Corporation common stock, subject to the satisfaction of Withholding Taxes, as described below. PG&E Corporation will issue shares as soon as practicable after the Restricted Stock Units vest in accordance with the Normal Vesting Schedule (but not later than sixty (60) days after the applicable vesting date); provided, however, that such issuance will, if earlier, be made with respect to all of your outstanding vested Restricted Stock Units (after giving effect to the vesting provisions described below) as soon as practicable after (but not later than sixty (60) days after) the earliest to occur of your (1) Disability (as defined under Code Section 409A), (2) death, or (3) “separation from service,” within the meaning of Code Section 409A within 2 years following a Change in Control.
|
Voluntary Termination
|
In the event of your voluntary termination (other than Retirement), all unvested Restricted Stock Units will be cancelled on the date of termination.
|
Termination for Cause
|
If your employment with PG&E Corporation is terminated at any time by PG&E Corporation for cause, all unvested Restricted Stock Units will be cancelled on the date of termination. In general, termination for “cause” means termination of employment because of dishonesty, a criminal offense, or violation of a work rule, and will be determined by and in the sole discretion of PG&E Corporation. For the avoidance of doubt, you will not be eligible to retire if your employment is being or is terminated for cause.
|
Termination other than for Cause
|
If your employment with PG&E Corporation is terminated by PG&E Corporation other than for cause, any unvested Restricted Stock Units that would have vested within the 12 months following such termination had your employment continued will continue to vest and be settled pursuant to the Normal Vesting Schedule (without regard to the requirement that you be employed), subject to the earlier settlement provisions of this Agreement. All other unvested Restricted Stock Units will be cancelled unless your termination of employment was in connection with a Change in Control as provided below.
|
Leaves of Absence
|
For purposes of this Agreement, if you are on an approved leave of absence from PG&E Corporation, or a recipient of PG&E Corporation sponsored disability benefits, you will continue to be considered as employed. If you do not return to active employment upon the expiration of your leave of absence or the expiration of your PG&E Corporation sponsored disability benefits, you will be considered to have voluntarily terminated your employment. See above under “Voluntary Termination.”
Notwithstanding the foregoing, if the leave of absence exceeds six (6) months, and a return to service upon expiration of such leave is not guaranteed by statute or contract, then you will be deemed to have had a “separation from service” for purposes of any Restricted Stock Units that are settled hereunder upon such separation. To the extent an authorized leave of absence is due to a medically determinable physical or mental impairment that can be expected to result in death or to last for a continuous period of at least six (6) months and such impairment causes you to be unable to perform the duties of your position of employment or any substantially similar position of employment, the six (6) month period in the prior sentence will be twenty-nine (29) months.
PG&E Corporation reserves the right to determine which leaves of absence will be considered as continuing employment and when your employment terminates for all purposes under this Agreement.
|
Voting and Other Rights
|
You will not have voting rights with respect to the Restricted Stock Units until the date the underlying shares are issued (as evidenced by appropriate entry on the books of PG&E Corporation or its duly authorized transfer agent). No Restricted Stock Units and no shares of Stock that have not been issued hereunder may be sold, assigned, transferred, pledged, or otherwise encumbered, other than by will or the laws of decent and distribution, and the Restricted Stock Units may be exercised during the life of the Recipient only by the Recipient or the Recipient’s guardian or legal representative.
|
No Retention Rights
|
This Agreement is not an employment agreement and does not give you the right to be retained by PG&E Corporation. Except as otherwise provided in an applicable employment agreement, PG&E Corporation reserves the right to terminate your employment at any time and for any reason.
|
Recoupment of Awards
|
Awards are subject to recoupment in accordance with any applicable law and any recoupment policy adopted by the Corporation from time to time, including the PG&E Corporation and Pacific Gas and Electric Company Executive Incentive Compensation Recoupment Policy, as last revised on February 21, 2018 and available on the PG&E@Work internet site for the Long-Term Incentive Plan (the policy and location may be changed from time to time by PG&E Corporation).
|
Applicable Law
|
This Agreement will be interpreted and enforced under the laws of the State of California.
|
The LTIP and Other Agreements
|
This Agreement and the above cover sheet constitute the entire understanding between you and PG&E Corporation regarding the Restricted Stock Units, subject to the terms of the LTIP. Any prior agreements, commitments, or negotiations are superseded. In the event of any conflict or inconsistency between the provisions of this Agreement or the above cover sheet and the LTIP, the LTIP will govern. Capitalized terms that are not defined in this Agreement or the above cover sheet are defined in the LTIP.
|
Grant of Restricted Stock Units
|
PG&E Corporation grants you the number of Restricted Stock Units shown on the cover sheet of this Agreement. The Restricted Stock Units are subject to the terms and conditions of this Agreement and the LTIP.
|
Vesting of Restricted Stock Units
|
In general, provided that you have not had a Separation from Service, your Restricted Stock Units will vest on the earlier of (i) the first anniversary of the Date of Grant shown on the cover sheet to this Agreement or (ii) the last day of the director’s elected term (the “Normal Vesting Date”). As set forth elsewhere in this Agreement, the Restricted Stock Units may vest earlier upon the occurrence of certain events.
|
Dividends
|
Your Restricted Stock Unit account will be credited quarterly on each dividend payment date with additional Restricted Stock Units (including fractions computed to three decimal places), determined by dividing (1) the amount of cash dividends paid on the number of shares of PG&E Corporation common stock represented by the Restricted Stock Units previously credited to your Restricted Stock Unit account by (2) the Fair Market Value of a share of PG&E Corporation common stock on the dividend payment date. Such additional Restricted Stock Units will be subject to the same terms and conditions and will be settled in the same manner and at the same time as the Restricted Stock Units covered by this Agreement.
|
Settlement
|
Vested Restricted Stock Units will be settled in an equal number of shares of PG&E Corporation common stock (a “Share”), rounded down to the nearest whole Share. PG&E Corporation will issue Shares in settlement of vested Restricted Stock Units upon the earliest of (1) the first anniversary of the Date of Grant (the “Normal Settlement Date”), (2) your Disability (as defined under Section 409A of the Code), (3) your death, or (4) your Separation from Service following a Change in Control. However, if you previously made a timely, valid deferral election to receive Shares in settlement of vested Restricted Stock Units after the Normal Settlement Date (commencing in January of a year following the Normal Settlement Date), then settlement will be according to the terms of your election and the LTIP, unless settled earlier in a lump sum as set forth in the LTIP upon occurrence of any of the events listed in sections (2) - (4) above. Further, if pursuant to any such deferral election you begin receiving any annual installments, then upon the subsequent occurrence of any of the events listed in sections (2) - (4) above, any unpaid installments will be settled in a lump sum upon occurrence of the event, except to the extent that such acceleration would result in taxation under Section 409A of the Code.
|
Separation of Service
|
If you have a Separation from Service, whether voluntarily or involuntarily, before the Normal Vesting Date, all Restricted Stock Units subject to this Agreement that have not vested on account of your death, Disability (within the meaning of Section 409A of the Code), or because you for any reason ceased to be on the Board (other than resignation) following a Change in Control will be automatically cancelled and forfeited; provided, however, that if you have a Separation from Service due to a pending Disability determination, forfeiture will not occur until a finding that such Disability has not occurred.
|
Death/Disability
|
In the event of your Disability (as defined in Section 409A of the Code) or death, all Restricted Stock Units credited to your account under this Agreement will immediately become fully vested and be settled in accordance with the settlement provisions described above.
|
Change in Control
|
In the event you cease to be on the Board for any reason (other than resignation) following the occurrence of a Change in Control, all Restricted Stock Units credited to your account under this Agreement will immediately become fully vested and be settled in accordance with the settlement provisions described above.
|
Delay
|
PG&E Corporation will delay the issuance of any Shares to the extent it is necessary to comply with Section 409A(a)(2)(B)(i) of the Code (relating to payments made to certain “key employees” of certain publicly traded companies); in such event, any Shares to which you would otherwise be entitled during the six (6) month period following the date of your Separation from Service (or shorter period ending on the date of your death following such Separation from Service) will instead be issued on the first business day following the expiration of the applicable delay period.
|
Withholding Taxes
|
PG&E Corporation generally will not be required to withhold taxes on taxable income recognized by you upon settlement of your Restricted Stock Units. However, any taxes that are required to be withheld will be payable by you in cash, by check, or through deductions from your compensation. Also, the Board may, in its discretion and subject to such restrictions as the Board may impose, permit you to satisfy such tax withholding obligations by electing to have PG&E Corporation withhold otherwise deliverable Shares having a fair market value equal to the amount that would be required to be withheld.
|
Voting and Other Rights
|
You will not have voting rights with respect to the Restricted Stock Units until the date the underlying Shares are issued (as evidenced by appropriate entry on the books of PG&E Corporation or its duly authorized transfer agent).
|
Applicable Law
|
This Agreement will be interpreted and enforced under the laws of the State of California.
|
(in millions)
|
|
Six Months Ended
June 30, |
|
Year Ended December 31,
|
||||||||||||||||||||
Earnings:
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
Net income
|
|
$
|
(524
|
)
|
|
$
|
1,691
|
|
|
$
|
1,402
|
|
|
$
|
862
|
|
|
$
|
1,433
|
|
|
$
|
866
|
|
Income tax provision (benefit)
|
|
(544
|
)
|
|
427
|
|
|
70
|
|
|
(19
|
)
|
|
384
|
|
|
326
|
|
||||||
Fixed charges
|
|
757
|
|
|
1,572
|
|
|
1,417
|
|
|
1,260
|
|
|
1,176
|
|
|
971
|
|
||||||
Total earnings
|
|
$
|
(311
|
)
|
|
$
|
3,690
|
|
|
$
|
2,889
|
|
|
$
|
2,103
|
|
|
$
|
2,993
|
|
|
$
|
2,163
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest on short-term borrowings and long-term debt, net
|
|
$
|
732
|
|
|
$
|
1,532
|
|
|
$
|
1,363
|
|
|
$
|
1,208
|
|
|
$
|
1,125
|
|
|
$
|
917
|
|
Interest on capital leases
|
|
—
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
6
|
|
|
7
|
|
||||||
AFUDC debt
|
|
25
|
|
|
38
|
|
|
51
|
|
|
48
|
|
|
45
|
|
|
47
|
|
||||||
Total fixed charges
|
|
$
|
757
|
|
|
$
|
1,572
|
|
|
$
|
1,417
|
|
|
$
|
1,260
|
|
|
$
|
1,176
|
|
|
$
|
971
|
|
Ratios of earnings to fixed charges
(1)
|
|
(0.41
|
)
|
|
2.35
|
|
|
2.04
|
|
|
1.67
|
|
|
2.55
|
|
|
2.23
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Six Months Ended
June 30, |
|
Year Ended December 31,
|
||||||||||||||||||||
Earnings:
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
Net income
|
|
$
|
(524
|
)
|
|
$
|
1,691
|
|
|
$
|
1,402
|
|
|
$
|
862
|
|
|
$
|
1,433
|
|
|
$
|
866
|
|
Income tax provision (benefit)
|
|
(544
|
)
|
|
427
|
|
|
70
|
|
|
(19
|
)
|
|
384
|
|
|
326
|
|
||||||
Fixed charges
|
|
757
|
|
|
1,572
|
|
|
1,417
|
|
|
1,260
|
|
|
1,176
|
|
|
971
|
|
||||||
Total earnings
|
|
$
|
(311
|
)
|
|
$
|
3,690
|
|
|
$
|
2,889
|
|
|
$
|
2,103
|
|
|
$
|
2,993
|
|
|
$
|
2,163
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest on short-term borrowings and long-term debt, net
|
|
$
|
732
|
|
|
$
|
1,532
|
|
|
$
|
1,363
|
|
|
$
|
1,208
|
|
|
$
|
1,125
|
|
|
$
|
917
|
|
Interest on capital leases
|
|
—
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
6
|
|
|
7
|
|
||||||
AFUDC debt
|
|
25
|
|
|
38
|
|
|
51
|
|
|
48
|
|
|
45
|
|
|
47
|
|
||||||
Total fixed charges
|
|
$
|
757
|
|
|
$
|
1,572
|
|
|
$
|
1,417
|
|
|
$
|
1,260
|
|
|
$
|
1,176
|
|
|
$
|
971
|
|
Preferred stock dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tax deductible dividends
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
9
|
|
Pre-tax earnings required to cover non-tax deductible preferred stock dividend requirements
|
|
14
|
|
|
7
|
|
|
5
|
|
|
5
|
|
|
6
|
|
|
7
|
|
||||||
Total preferred stock dividends
|
|
14
|
|
|
16
|
|
|
14
|
|
|
14
|
|
|
15
|
|
|
16
|
|
||||||
Total combined fixed charges and preferred stock dividends
|
|
$
|
771
|
|
|
$
|
1,588
|
|
|
$
|
1,431
|
|
|
$
|
1,274
|
|
|
$
|
1,191
|
|
|
$
|
987
|
|
Ratios of earnings to combined fixed charges and preferred stock dividends
(1)
|
|
(0.40
|
)
|
|
2.32
|
|
|
2.02
|
|
|
1.65
|
|
|
2.51
|
|
|
2.19
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Six Months Ended
June 30, |
|
Year Ended December 31,
|
||||||||||||||||||||
Earnings:
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
Net income
|
|
$
|
(535
|
)
|
|
$
|
1,660
|
|
|
$
|
1,407
|
|
|
$
|
888
|
|
|
$
|
1,450
|
|
|
$
|
828
|
|
Income tax provision (benefit)
|
|
(542
|
)
|
|
511
|
|
|
55
|
|
|
(27
|
)
|
|
345
|
|
|
268
|
|
||||||
Fixed charges
|
|
778
|
|
|
1,598
|
|
|
1,440
|
|
|
1,284
|
|
|
1,206
|
|
|
1,012
|
|
||||||
Pre-tax earnings required to cover the preferred stock dividend of consolidated subsidiaries
|
|
(14
|
)
|
|
(15
|
)
|
|
(14
|
)
|
|
(14
|
)
|
|
(15
|
)
|
|
(16
|
)
|
||||||
Total earnings
|
|
$
|
(313
|
)
|
|
$
|
3,754
|
|
|
$
|
2,888
|
|
|
$
|
2,131
|
|
|
$
|
2,986
|
|
|
$
|
2,092
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest on short-term borrowings and long-term debt, net
|
|
$
|
739
|
|
|
$
|
1,543
|
|
|
$
|
1,372
|
|
|
$
|
1,218
|
|
|
$
|
1,140
|
|
|
$
|
942
|
|
Interest on capital leases
|
|
—
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
6
|
|
|
7
|
|
||||||
AFUDC debt
|
|
25
|
|
|
38
|
|
|
51
|
|
|
48
|
|
|
45
|
|
|
47
|
|
||||||
Pre-tax earnings required to cover the preferred stock dividend of consolidated subsidiaries
|
|
14
|
|
|
15
|
|
|
14
|
|
|
14
|
|
|
15
|
|
|
16
|
|
||||||
Total fixed charges
|
|
$
|
778
|
|
|
$
|
1,598
|
|
|
$
|
1,440
|
|
|
$
|
1,284
|
|
|
$
|
1,206
|
|
|
$
|
1,012
|
|
Ratios of earnings to fixed charges
(1)
|
|
(0.40
|
)
|
|
2.35
|
|
|
2.01
|
|
|
1.66
|
|
|
2.48
|
|
|
2.07
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 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: July 26, 2018
|
/s/ GEISHA J. WILLIAMS
|
|
Geisha J. Williams
|
|
Chief Executive Officer and President
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 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
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b.
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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.
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Date: July 26, 2018
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/s/ JASON P. WELLS
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|
Jason P. Wells
|
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Senior Vice President and Chief Financial Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 of Pacific Gas and Electric Company;
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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: July 26, 2018
|
/s/ NICKOLAS STAVROPOULOS
|
|
Nickolas Stavropoulos
|
|
President and Chief Operating Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 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 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: July 26, 2018
|
/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/ GEISHA J. WILLIAMS
|
|
Geisha J. Williams
|
|
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
|
|
Senior 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/ NICKOLAS STAVROPOULOS
|
|
Nickolas Stavropoulos
|
|
President and Chief Operating 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
|