XML 58 R28.htm IDEA: XBRL DOCUMENT
v3.22.4

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES PG&E Corporation and the Utility use the asset and liability method of accounting for income taxes. The income tax provision includes current and deferred income taxes resulting from operations during the year. PG&E Corporation and the Utility estimate current period tax expense in addition to calculating DTAs and liabilities. DTAs and liabilities result from temporary tax and accounting timing differences, such as those arising from depreciation expense. PG&E Corporation and the Utility recognize a tax benefit if it is more likely than not that a tax position taken or expected to be taken in a tax return will be sustained upon examination by taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements is measured based on the largest amount of benefit that is greater than 50% likely of being realized upon settlement. As such, the difference between a tax position taken or expected to be taken in a tax return in future periods and the benefit recognized and measured pursuant to this guidance in the financial statements represents an unrecognized tax benefit. Investment tax credits are deferred and amortized to income over time. PG&E Corporation amortizes its investment tax credits over the projected investment recovery period. The Utility amortizes its investment tax credits over the life of the related property in accordance with regulatory treatment. PG&E Corporation files a consolidated U.S. federal income tax return that includes the Utility and domestic subsidiaries in which its ownership is 80% or more. PG&E Corporation files a combined state income tax return in California. PG&E Corporation and the Utility are parties to a tax-sharing agreement under which the Utility determines its income tax provision (benefit) on a stand-alone basis. The significant components of income tax provision (benefit) by taxing jurisdiction were as follows:
| PG&E Corporation |  | Utility
| Year Ended December 31,
(in millions) | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Current: |  |  |  |  |  |  |  |  |  |  |
Federal | $ | (1) |  |  | $ | — |  |  | $ | (26) |  |  | $ | (1) |  |  | $ | — |  |  | $ | (26) |
State | — |  |  | 1 |  |  | (34) |  |  | — |  |  | — |  |  | (34) |
Deferred: |  |  |  |  |  |  |  |  |  |  |
Federal | (943) |  |  | 543 |  |  | 258 |  |  | (852) |  |  | 588 |  |  | 290 |
State | (389) |  |  | 296 |  |  | 171 |  |  | (348) |  |  | 316 |  |  | 185 |
Tax credits | (5) |  |  | (4) |  |  | (7) |  |  | (5) |  |  | (4) |  |  | (7) |
Income tax provision (benefit) | $ | (1,338) |  |  | $ | 836 |  |  | $ | 362 |  |  | $ | (1,206) |  |  | $ | 900 |  |  | $ | 408 |
The following tables describe net deferred income tax assets and liabilities:
| PG&E Corporation |  | Utility
| Year Ended December 31,
(in millions) | 2022 |  | 2021 |  | 2022 |  | 2021
Deferred income tax assets: |  |  |  |  |  |  |
Tax carryforwards | $ | 7,156 |  |  | $ | 5,628 |  |  | $ | 6,868 |  |  | $ | 5,425 |
Compensation | 157 |  |  | 185 |  |  | 80 |  |  | 108 |
Greenhouse gas allowance | 239 |  |  | 157 |  |  | 239 |  |  | 157 |
Wildfire-related claims (1) | 1,489 |  |  | 1,723 |  |  | 1,489 |  |  | 1,723 |
Operating lease liability | 368 |  |  | 346 |  |  | 368 |  |  | 346 |
Transmission tower wireless licenses | 254 |  |  | 266 |  |  | 254 |  |  | 266 |
Other (2) | 197 |  |  | 121 |  |  | 177 |  |  | 136 |
Total deferred income tax assets | $ | 9,860 |  |  | $ | 8,426 |  |  | $ | 9,475 |  |  | $ | 8,161 |
Deferred income tax liabilities: |  |  |  |  |  |  |
Property related basis differences | 9,374 |  |  | 8,847 |  |  | 9,363 |  |  | 8,835 |
Regulatory balancing accounts | 1,376 |  |  | 1,193 |  |  | 1,376 |  |  | 1,193 |
Debt financing costs | 465 |  |  | 501 |  |  | 465 |  |  | 501 |
Operating lease right of use asset | 368 |  |  | 346 |  |  | 368 |  |  | 346 |
Income tax regulatory asset (3) | 764 |  |  | 517 |  |  | 764 |  |  | 517 |
Other (4) | 245 |  |  | 199 |  |  | 230 |  |  | 178 |
Total deferred income tax liabilities | $ | 12,592 |  |  | $ | 11,603 |  |  | $ | 12,566 |  |  | $ | 11,570 |
Total net deferred income tax liabilities | $ | 2,732 |  |  | $ | 3,177 |  |  | $ | 3,091 |  |  | $ | 3,409 |
(1) Amounts primarily relate to wildfire-related claims, net of estimated insurance recoveries, and legal and other costs related to various wildfires that have occurred in PG&E Corporation’s and the Utility’s service area over the past several years. (2) Amounts include benefits, state taxes, and customer advances for construction. (3) Represents the tax gross up portion of the deferred income tax for the cumulative differences between amounts recognized for ratemaking purposes and amounts recognized for tax, including the impact of changes in net deferred taxes associated with a lower federal income tax rate as a result of the Tax Act. (4) Amount primarily includes an environmental reserve. The following table reconciles income tax expense at the federal statutory rate to the income tax provision:
| PG&E Corporation |  | Utility
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Federal statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | % |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increase (decrease) in income tax rate resulting from: |  |  |  |  |  |  |  |  |  |  |
State income tax (net of federal benefit) (1) | (75.8) |  |  | 31.3 |  |  | (15.3) |  |  | (26.9) |  |  | 24.1 |  |  | 19.1 |
Effect of regulatory treatment of fixed asset differences (2) | (123.8) |  |  | (71.5) |  |  | 39.0 |  |  | (49.2) |  |  | (51.6) |  |  | (44.9) |
Tax credits | (3.2) |  |  | (1.7) |  |  | 1.5 |  |  | (1.3) |  |  | (1.2) |  |  | (1.7) |
Fire Victim Trust (3) | (160.9) |  |  | 127.3 |  |  | (44.9) |  |  | (64.0) |  |  | 91.9 |  |  | 51.7 |
Bankruptcy and emergence | — |  |  | — |  |  | (37.6) |  |  | — |  |  | — |  |  | 2.4 |
Other, net (4) | 12.9 |  |  | 5.3 |  |  | (2.1) |  |  | 2.2 |  |  | 2.6 |  |  | 2.2 |
Effective tax rate | (329.8) | % |  | 111.7 | % |  | (38.4) | % |  | (118.2) | % |  | 86.8 | % |  | 49.8 | %
(1) Includes the effect of state flow-through ratemaking treatment. (2) Includes the effect of federal flow-through ratemaking treatment for certain property-related costs. For these temporary tax differences, PG&E Corporation and the Utility recognize the deferred tax impact in the current period and record offsetting regulatory assets and liabilities. Therefore, PG&E Corporation’s and the Utility’s effective tax rates are impacted as these differences arise and reverse. PG&E Corporation and the Utility recognize such differences as regulatory assets or liabilities as it is probable that these amounts will be recovered from or returned to customers in future rates. In 2022, 2021, and 2020, the amounts also reflect the impact of the amortization of excess deferred tax benefits to be refunded to customers as a result of the Tax Act passed in December 2017. (3) The Utility includes an adjustment for the tax benefit of the sale of shares by the Fire Victim Trust in 2022, a DTA write-off associated with the grantor trust election for the Fire Victim Trust in 2021 and an adjustment for the DTA write-off for difference between the liability recorded related to the Restructuring Support Agreement dated December 6, 2019 with the Official Committee of Tort Claimants and attorneys and other advisors and agents for certain holders of Fire Victim Claims (as defined therein), as amended and the ultimate value of PG&E Corporation stock contributed to the Fire Victim Trust in 2020. PG&E Corporation includes the same adjustment as the Utility in these years as well as a permanent non-deductible equity backstop premium expense in 2020. (4) These amounts primarily represent the impact of tax audit settlements and non-tax deductible penalty costs. Unrecognized Tax Benefits The following table reconciles the changes in unrecognized tax benefits:
| PG&E Corporation |  | Utility
(in millions) | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Balance at beginning of year | $ | 498 |  |  | $ | 437 |  |  | $ | 420 |  |  | $ | 498 |  |  | $ | 437 |  |  | $ | 420 |
Reductions for tax position taken during a prior year | (1) |  |  | (23) |  |  | (43) |  |  | (1) |  |  | (23) |  |  | (43) |
Additions for tax position taken during the current year | 73 |  |  | 85 |  |  | 60 |  |  | 73 |  |  | 85 |  |  | 60 |
Settlements | — |  |  | (1) |  |  | — |  |  | — |  |  | (1) |  |  | — |
Balance at end of year | $ | 570 |  |  | $ | 498 |  |  | $ | 437 |  |  | $ | 570 |  |  | $ | 498 |  |  | $ | 437 |
The component of unrecognized tax benefits that, if recognized, would affect the effective tax rate at December 31, 2022 for PG&E Corporation and the Utility was $31 million. PG&E Corporation’s and the Utility’s unrecognized tax benefits may change significantly within the next 12 months based on tax audit progress. Interest income, interest expense and penalties associated with income taxes are reflected in income tax expense on the Consolidated Statements of Income. For the years ended December 31, 2022, 2021, and 2020, these amounts were immaterial. Tax Settlements PG&E Corporation’s tax returns have been accepted through 2015 for federal income tax purposes, except for a few matters, the most significant of which relate to deductible repair costs for gas transmission and distribution lines of business and tax deductions claimed for regulatory fines and fees assessed as part of the penalty decision issued in 2015 for the San Bruno natural gas explosion in September of 2010. The Internal Revenue Service is auditing tax years 2015 through 2018. PG&E Corporation’s tax returns have been accepted through 2014 for California income tax purposes. Tax years 2015 and thereafter remain subject to examination by the State of California. The State of California is auditing tax years 2015 through 2019. Carryforwards The following table describes PG&E Corporation’s operating loss and tax credit carryforward balances:
(in millions) | December 31, 2022 |  | Expiration Year
Federal: |  |  |
Net operating loss carryforward - Pre-2018 | $ | 3,447 |  |  | 2031 - 2036
Net operating loss carryforward - Post-2017 | 23,170 |  |  | N/A
Tax credit carryforward | 152 |  |  | 2029 - 2041
State: |  |  |
Net operating loss carryforward | $ | 25,169 |  |  | 2039 - 2041
Tax credit carryforward | 126 |  |  | Various
PG&E Corporation does not believe that the Chapter 11 Cases resulted in loss of or limitation on the utilization of any of the tax carryforwards. PG&E Corporation will continue to monitor the status of tax carryforwards. Other Tax Matters In March 2020, Congress passed, and the President signed into law the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. Under the CARES Act, PG&E Corporation and the Utility have deferred the payment of 2020 payroll taxes for the remainder of the year to 2021 and 2022. Half of the payment was paid in 2021, and the other half of the payment was paid in 2022. Under Section 382 of the IRC, if a corporation (or a consolidated group) undergoes an “ownership change,” net operating loss carryforwards and other tax attributes may be subject to certain limitations. In general, an ownership change occurs if the aggregate stock ownership of certain shareholders (generally five percent shareholders, applying certain look-through and aggregation rules) increases by more than 50% over such shareholders’ lowest percentage ownership during the testing period (generally three years). PG&E Corporation’s and the Utility’s Amended Articles limit Transfers (as defined in the Amended Articles) that increase a person’s or entity’s (including certain groups of persons) ownership of PG&E Corporation’s equity securities to 4.75% or more prior to the Restriction Release Date (as defined in the Amended Articles) without approval by the Board of Directors of PG&E Corporation (the “Ownership Restrictions”). Due to the election to treat the Fire Victim Trust as a grantor trust for income tax purposes, the calculation of Percentage Stock Ownership (as defined in the Amended Articles) will effectively be based on a reduced number of shares outstanding, namely the total number of outstanding equity securities less the number of equity securities held by the Fire Victim Trust, the Utility, and ShareCo. As of the date of this report, it is more likely than not that PG&E Corporation has not undergone an ownership change, and consequently, its net operating loss carryforwards and other tax attributes are not limited by Section 382 of the IRC. Furthermore, the activities of the Fire Victim Trust are treated as activities of the Utility for tax purposes. Accordingly, PG&E Corporation will recognize income tax benefits and the corresponding DTA as the Fire Victim Trust sells shares of PG&E Corporation common stock, and the amounts of such benefits and assets will be impacted by the price at which the Fire Victim Trust sells the shares, rather than the price at the time such shares were transferred to the Fire Victim Trust. From inception through December 31, 2022, the Fire Victim Trust exchanged Plan Shares in the aggregate amount of 230,000,000 for an equal number of New Shares in the manner contemplated by the Share Exchange and Tax Matters Agreement; in each case, the Fire Victim Trust thereafter reported that it sold the applicable New Shares. In the year ended December 31, 2022, the Fire Victim Trust’s sale of PG&E Corporation common stock in the aggregate amount of 230,000,000 shares resulted in an aggregate tax benefit of $870 million recorded in PG&E Corporation’s and the Utility’s Consolidated Financial Statements. On January 9, 2023, the Fire Victim Trust exchanged 60,000,000 Plan Shares and thereafter the Fire Victim Trust reported that it sold the applicable New Shares. An aggregate tax benefit of $256 million will be recorded in January 2023. For more information, see Note 7 above.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration