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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended
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Mar. 31, 2023
Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition Revenue from Contracts with Customers The Utility recognizes revenues when electricity and natural gas services are delivered. The Utility records unbilled revenues for the estimated amount of energy delivered to customers but not yet billed at the end of the period. Unbilled revenues are included in accounts receivable on the Condensed Consolidated Balance Sheets. Rates charged to customers are based on CPUC and FERC authorized revenue requirements. Revenues can vary significantly from period to period because of seasonality, weather, and customer usage patterns. Regulatory Balancing Account Revenue The CPUC authorizes most of the Utility’s revenues in the Utility’s GRCs, which occur every four years. CPUC and FERC rates decouple authorized revenue from the volume of electricity and natural gas sales, so the Utility receives revenue equal to the amounts authorized by the relevant regulatory agencies. As a result, the volume of electricity and natural gas sold does not have a direct impact on PG&E Corporation’s and the Utility’s financial results. The Utility recognizes revenues that have been authorized for rate recovery, are objectively determinable and probable of recovery, and are expected to be collected within 24 months. Generally, electric and natural gas operating revenue is recognized ratably over the year. The Utility records a balancing account asset or liability for differences between customer billings and authorized revenue requirements that are probable of recovery or refund. The Utility also collects additional revenue requirements to recover costs that the CPUC has authorized the Utility to pass on to customers, including costs to purchase electricity and natural gas, and to fund public purpose, demand response, and customer energy efficiency programs. In general, the revenue recognition criteria for pass-through costs billed to customers are met at the time the costs are incurred. The Utility records a regulatory balancing account asset or liability for differences between incurred costs and customer billings or authorized revenue meant to recover those costs, to the extent that these differences are probable of recovery or refund. As a result, these differences have no impact on net income. The following table presents the Utility’s revenues disaggregated by type of customer:
| Three Months Ended March 31,
(in millions) | 2023 |  | 2022
Electric |  |  |
Revenue from contracts with customers |  |  |
Residential | $ | 1,289 |  |  | $ | 1,494 |
Commercial | 1,144 |  |  | 1,173 |
Industrial | 353 |  |  | 350 |
Agricultural | 155 |  |  | 216 |
Public street and highway lighting | 19 |  |  | 18 |
Other, net (1) | 43 |  |  | (14) |
Total revenue from contracts with customers - electric | 3,003 |  |  | 3,237 |
Regulatory balancing accounts (2) | 1,116 |  |  | 921 |
Total electric operating revenue | $ | 4,119 |  |  | $ | 4,158 |
Natural gas |  |  |
Revenue from contracts with customers |  |  |
Residential | $ | 1,883 |  |  | $ | 1,464 |
Commercial | 513 |  |  | 344 |
Transportation service only | 444 |  |  | 399 |
Other, net (1) | (153) |  |  | (180) |
Total revenue from contracts with customers - gas | 2,687 |  |  | 2,027 |
Regulatory balancing accounts (2) | (597) |  |  | (387) |
Total natural gas operating revenue | 2,090 |  |  | 1,640 |
Total operating revenues | $ | 6,209 |  |  | $ | 5,798 |
(1) This activity is primarily related to the change in unbilled revenue and amounts subject to refund, partially offset by other miscellaneous revenue items. (2) These amounts represent revenues authorized to be billed or refunded to customers. Financial Assets Measured at Amortized Cost – Credit Losses PG&E Corporation and the Utility use the current expected credit loss model to estimate the expected lifetime credit loss on financial assets measured at amortized cost. PG&E Corporation and the Utility evaluate credit risk in their portfolio of financial assets quarterly. As of March 31, 2023, PG&E Corporation and the Utility identified the following significant categories of financial assets. Trade Receivables Trade receivables are represented by customer accounts. PG&E Corporation and the Utility record an allowance for doubtful accounts to recognize an estimate of expected lifetime credit losses. The allowance is determined on a collective basis based on the historical amounts written-off and an assessment of customer collectability. Furthermore, economic conditions are evaluated as part of the estimate of expected lifetime credit losses. During the three months ended March 31, 2023, expected credit losses of $139 million were recorded in Operating and maintenance expense on the Condensed Consolidated Statements of Income for credit losses associated with trade and other receivables. The portion of expected credit losses that are deemed probable of recovery are deferred to the RUBA, CPPMA, and a FERC regulatory asset. As of March 31, 2023, the RUBA current balancing accounts receivable balance was $104 million, and CPPMA and FERC long-term regulatory asset balances were $4 million and $25 million, respectively. Other Receivables and Available-For-Sale Debt Securities Insurance receivables are related to the liability insurance policies PG&E Corporation and the Utility carry. Insurance receivable risk is related to each insurance carrier’s risk of defaulting on their individual policies. Wildfire Fund receivables are the funds available from the statewide fund established under AB 1054 for payment of eligible claims related to the 2021 Dixie fire that exceed $1.0 billion and available insurance coverage. For more information, see Note 10 below. Wildfire Fund receivables risk is related to the Wildfire Fund’s durability, which is a measurement of its claim-paying capacity. Lastly, PG&E Corporation and the Utility are required to determine if the fair value is below the amortized cost basis for their available-for-sale debt securities (i.e., impairment). If such an impairment exists and does not otherwise result in a write-down, then PG&E Corporation and the Utility must determine whether a portion of the impairment is a result of expected credit loss. As of March 31, 2023, expected credit losses for insurance receivables, Wildfire Fund receivables, and available-for-sale debt securities were immaterial. Government Assistance PG&E Corporation and the Utility received various government assistance programs during the three months ended March 31, 2023. PG&E Corporation’s and the Utility’s accounting policy is to apply a grant accounting model by analogy to International Accounting Standards 20, Accounting for Government Grants and Disclosure of Government Assistance. Assembly Bill 180 On June 30, 2022, AB 180 became law. AB 180 authorized the DWR to use up to $75 million to support contracts with the owners of electric generating facilities pending retirement, such as Diablo Canyon, to fund, reimburse or compensate the owner for any costs, expenses or financial commitments incurred to retain the future availability of such generating facilities pending further legislation. The resulting agreement between DWR and the Utility was effective beginning October 1, 2022, and will continue until full disbursement of funds or termination per the agreement. In the event of a termination, the Utility will take reasonable steps to end activities associated with this agreement and will return to DWR any unused funds. The Utility plans to record the income related to government grants as a deduction to Operating and maintenance expense as eligible costs are incurred. DWR Loan Agreement On October 18, 2022, the DWR and the Utility executed a $1.4 billion loan agreement to support the extension of Diablo Canyon, up to approximately $1.1 billion of which could be repaid by funds received from the DOE (see “U.S. DOE’s Civil Nuclear Credit Program” below). Under the loan agreement, the DWR will pay the Utility a monthly performance-based disbursement equal to $7 for each MWh generated by Diablo Canyon, effective September 2, 2022. The Utility may use the proceeds of the performance-based disbursements for any business purpose, but may not pay as shareholder profits or dividends or as otherwise prohibited by SB 846. The Utility began earning performance-based disbursements beginning on September 2, 2022 and will no longer earn them on the previously-approved retirement dates for Diablo Canyon Unit 1 and Unit 2 (2024 and 2025, respectively). The performance-based disbursements are contingent upon the Utility’s ongoing pursuit of extension of the operating period and continued safe and reliable Diablo Canyon operations. The aggregate amount of performance-based disbursements under this agreement will not exceed $300 million. The Utility initially accounts for all disbursements from the DWR loan agreement pursuant to ASC 470, Debt. When there is reasonable assurance that the Utility will have loan disbursements forgiven by the DWR, such as when the Utility earns a performance-based disbursement, the Utility will recognize those forgiven loans as income related to government grants. The Utility plans to record the income related to government grants as a deduction to Operating and maintenance expense in the same period(s) that eligible costs are incurred. As of March 31, 2023, the Condensed Consolidated Financial Statements reflected $279 million in Long-term debt, and a deduction of $33 million to Operating and maintenance expense for income related to government grants for performance-based disbursements. U.S. DOE’s Civil Nuclear Credit Program On November 17, 2022, the Utility was conditionally awarded a total of approximately $1.1 billion from the DOE related to Diablo Canyon (See “DWR Loan Agreement” above). Final award amounts will be determined following completion of each year of the award period, and amounts awarded over a four-year award period ending in 2026 will be based on actual costs. The Utility will repay its loans outstanding under the DWR Loan Agreement with funding received from the DOE’s Civil Nuclear Credit Program. When there is reasonable assurance that the Utility will receive funding and comply with the conditions of the DOE’s Civil Nuclear Credit Program, the Utility will recognize such funding as income related to government grants. The Utility plans to record the income related to government grants as a deduction to Operating and maintenance expense on the Condensed Consolidated Statements of Income as eligible costs are incurred. Variable Interest Entities A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, or whose equity investors lack any characteristics of a controlling financial interest. An enterprise that has a controlling financial interest in a VIE is a primary beneficiary and is required to consolidate the VIE. Consolidated VIEs Receivables Securitization Program The SPV was created in connection with the Receivables Securitization Program and is a bankruptcy remote, limited liability company wholly owned by the Utility, and its assets are not available to creditors of PG&E Corporation or the Utility. Pursuant to the Receivables Securitization Program, the Utility sells certain of its receivables and certain related rights to payment and obligations of the Utility with respect to such receivables, and certain other related rights to the SPV, which, in turn, obtains loans secured by the receivables from financial institutions (the “Lenders”). The pledged receivables and the corresponding debt are included in Accounts receivable, Accrued unbilled revenue, Other noncurrent assets, and Long-term debt on the Condensed Consolidated Balance Sheets. The SPV is considered a VIE because its equity capitalization is insufficient to support its activities. The most significant activities that impact the economic performance of the SPV are decisions made to manage receivables. The Utility is considered the primary beneficiary and consolidates the SPV as it makes these decisions. No additional financial support was provided to the SPV during the three months ended March 31, 2023 or is expected to be provided in the future that was not previously contractually required. As of March 31, 2023 and December 31, 2022, the SPV had net accounts receivable of $3.2 billion and $3.6 billion, respectively, and outstanding borrowings of $1.2 billion under the Receivables Securitization Program. For more information, see Note 4 below. AB 1054 Securitization PG&E Recovery Funding LLC is a bankruptcy remote, limited liability company wholly owned by the Utility, and its assets are not available to creditors of PG&E Corporation or the Utility. Pursuant to the financing orders for the first and second AB 1054 securitization transactions, the Utility sold its right to receive revenues from the non-bypassable wildfire hardening fixed recovery charges (“Recovery Property”) to PG&E Recovery Funding LLC, which, in turn, issued two separate series of recovery bonds secured by separate Recovery Property. PG&E Recovery Funding LLC is considered a VIE because its equity capitalization is insufficient to support its operations. The most significant activities that impact the economic performance of PG&E Recovery Funding LLC are decisions made by the servicer of the Recovery Property. The Utility is considered the primary beneficiary and consolidates PG&E Recovery Funding LLC as it acts in this role as servicer. No additional financial support was provided to PG&E Recovery Funding LLC during the three months ended March 31, 2023 or is expected to be provided in the future that was not previously contractually required. As of March 31, 2023 and December 31, 2022, PG&E Recovery Funding LLC had outstanding borrowings of $1.8 billion included in Long-term debt and Long-term debt, classified as current on the Condensed Consolidated Balance Sheets. SB 901 Securitization PG&E Wildfire Recovery Funding LLC is a bankruptcy remote, limited liability company wholly owned by the Utility, and its assets are not available to creditors of PG&E Corporation or the Utility. Pursuant to the financing order for the first and second SB 901 securitization transactions, the Utility sold its right to receive revenues from the non-bypassable fixed recovery charges (“SB 901 Recovery Property”) to PG&E Wildfire Recovery Funding LLC, which, in turn, issued two separate series of recovery bonds secured by separate SB 901 Recovery Property. PG&E Wildfire Recovery Funding LLC is considered a VIE because its equity capitalization is insufficient to support its operations. The most significant activities that impact the economic performance of PG&E Wildfire Recovery Funding LLC are decisions made by the servicer of the SB 901 Recovery Property. The Utility is considered the primary beneficiary and consolidates PG&E Wildfire Recovery Funding LLC as it acts in this role as servicer. No additional financial support was provided to PG&E Wildfire Recovery Funding LLC during the three months ended March 31, 2023 or is expected to be provided in the future that was not previously contractually required. As of March 31, 2023 and December 31, 2022, PG&E Wildfire Recovery Funding LLC had outstanding borrowings of $7.5 billion included in Long-term debt and Long-term debt, classified as current on the Condensed Consolidated Balance Sheets. For more information, see Note 5 below. Non-Consolidated VIEs Power Purchase Agreement s Some of the counterparties to the Utility’s power purchase agreements are considered VIEs. Each of these VIEs was designed to own a power plant that would generate electricity for sale to the Utility. To determine whether the Utility was the primary beneficiary of any of these VIEs as of March 31, 2023, it assessed whether it absorbs any of the VIE’s expected losses or receives any portion of the VIE’s expected residual returns under the terms of the power purchase agreement, analyzed the variability in the VIE’s gross margin, and considered whether it had any decision-making rights associated with the activities that are most significant to the VIE’s performance, such as dispatch rights or operating and maintenance activities. The Utility’s financial obligation is limited to the amount the Utility pays for delivered electricity and capacity. The Utility did not have any decision-making rights associated with any of the activities that are most significant to the economic performance of any of these VIEs. Since the Utility was not the primary beneficiary of any of these VIEs as of March 31, 2023, it did not consolidate any of them. The Lakeside Building BA2 300 Lakeside LLC, a wholly owned subsidiary of TMG Bay Area Investments II, LLC, and the Utility are parties to an office lease agreement for approximately 910,000 rentable square feet of space within the Lakeside Building which serves as the Utility’s principal administrative headquarters. BA2 300 Lakeside LLC is considered a VIE because the group that holds the equity investment at risk lacks the right to receive the expected residual returns of the entity due to a fixed-price purchase option covering more than 50% of the fair value of the assets held by the entity. The most significant activities that impact the economic performance of BA2 300 Lakeside LLC are decisions related to significant maintenance and remarketing of the property. The Utility is not considered the primary beneficiary and does not consolidate BA2 300 Lakeside LLC as it does not have any decision-making rights associated with these activities. The Utility’s financial obligation is limited to issued letters of credit as well as the amounts it pays for base rent and certain costs, per the office lease agreement. Contributions to the Wildfire Fund Established Pursuant to AB 1054 PG&E Corporation and the Utility account for contributions to the Wildfire Fund by capitalizing an asset, amortizing to periods ratably based on an estimated period of coverage, and incrementally adjusting for accelerated amortization as the level of coverage declines, as further described below. However, AB 1054 did not specify a period of coverage for the Wildfire Fund; therefore, this accounting treatment is subject to significant accounting judgments and estimates. Since the inception of the Wildfire Fund, PG&E Corporation and the Utility have estimated a period of coverage of 15 years. In estimating the period of coverage, PG&E Corporation and the Utility used a dataset of historical, publicly available fire-loss data caused by electrical equipment to create Monte Carlo simulations of expected loss. The number of years of historic fire-loss data and the effectiveness of mitigation efforts by the California electric utility companies are significant assumptions used to estimate the period of coverage. Other assumptions include the estimated costs to settle wildfire claims for participating electric utilities including the Utility, the CPUC’s determinations of whether costs were just and reasonable in cases of electric utility-caused wildfires and amounts required to be reimbursed to the Wildfire Fund, the impacts of climate change, the amount of future insurance coverage held by the electric utilities, the FERC-allocable portion of loss recovery, and the future transmission and distribution equity rate base growth of participating electric utilities. These assumptions create a high degree of uncertainty for the estimated useful life of the Wildfire Fund. PG&E Corporation and the Utility evaluate and, where appropriate, update all assumptions quarterly. Changes in any of the assumptions could materially impact the estimated period of coverage. PG&E Corporation and the Utility assess the Wildfire Fund asset for acceleration of the amortization of the asset in the event that it is probable that a participating utility’s electrical equipment will be found to be the substantial cause of a catastrophic wildfire. As of March 31, 2023, PG&E Corporation and the Utility recorded $193 million in Other current liabilities, $937 million in Other non-current liabilities, $460 million in Current assets - Wildfire Fund asset, and $4.7 billion in Non-current assets - Wildfire Fund asset in the Condensed Consolidated Balance Sheets. During the three months ended March 31, 2023 and 2022, the Utility recorded amortization and accretion expense of $117 million and $118 million, respectively. The amortization of the asset, accretion of the liability, and applicable acceleration of the amortization of the asset is reflected in Wildfire Fund expense in the Condensed Consolidated Statements of Income. As of March 31, 2023, PG&E Corporation and the Utility had recorded $175 million in Other noncurrent assets for Wildfire Fund receivables related to the 2021 Dixie fire. For more information, see “Wildfire Fund under AB 1054” in Note 10 below. Pension and Other Post-Retirement Benefits PG&E Corporation and the Utility sponsor a non-contributory defined benefit pension plan and cash balance plan. Both plans are included in “Pension Benefits” below. Post-retirement medical and life insurance plans are included in “Other Benefits” below. The net periodic benefit costs reflected in PG&E Corporation’s Condensed Consolidated Financial Statements for the three months ended March 31, 2023 and 2022 were as follows:
| Pension Benefits |  | Other Benefits
| Three Months Ended March 31,
(in millions) | 2023 |  | 2022 |  | 2023 |  | 2022
Service cost for benefits earned (1) | $ | 95 |  |  | $ | 144 |  |  | $ | 10 |  |  | $ | 15 |
Interest cost | 228 |  |  | 173 |  |  | 18 |  |  | 13 |
Expected return on plan assets | (245) |  |  | (297) |  |  | (33) |  |  | (32) |
Amortization of prior service cost | (1) |  |  | (1) |  |  | 1 |  |  | 2 |
Amortization of net actuarial (gain) loss | — |  |  | — |  |  | (5) |  |  | (10) |
Net periodic benefit cost | 77 |  |  | 19 |  |  | (9) |  |  | (12) |
Regulatory account transfer (2) | 6 |  |  | 64 |  |  | — |  |  | — |
Total | $ | 83 |  |  | $ | 83 |  |  | $ | (9) |  |  | $ | (12) |
(1) A portion of service costs is capitalized pursuant to GAAP. (2) The Utility recorded these amounts to a regulatory account since they are probable of recovery from, or refund to, customers in future rates. Non-service costs are reflected in Other income, net on the Condensed Consolidated Statements of Income. Service costs are reflected in Operating and maintenance on the Condensed Consolidated Statements of Income. There was no material difference between PG&E Corporation and the Utility for the information disclosed above. Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss) The changes, net of income tax, in PG&E Corporation’s accumulated other comprehensive income (loss) consisted of the following:
| Pension Benefits |  | Other Benefits |  | Customer Credit Trust |  | Total
(in millions, net of income tax) | Three Months Ended March 31, 2023
Beginning balance | $ | (12) |  |  | $ | 18 |  |  | $ | (6) |  |  | $ | — |
Other comprehensive income before reclassification |  |  |  |  |  |  |
Gain on investments (net of taxes of $0, $0 and $2, respectively) | — |  |  | — |  |  | 5 |  |  | 5 |
Amounts reclassified from other comprehensive income: (1) |  |  |  |  |  |  |
Amortization of prior service cost (net of taxes of $0, $0 and $0, respectively) | (1) |  |  | 1 |  |  | — |  |  | — |
Amortization of net actuarial gain (net of taxes of $0, $1 and $0, respectively) | — |  |  | (4) |  |  | — |  |  | (4) |
Regulatory account transfer (net of taxes of $0, $1 and $0, respectively) | 1 |  |  | 3 |  |  | — |  |  | 4 |
Net current period other comprehensive gain | — |  |  | — |  |  | 5 |  |  | 5 |
Ending balance | $ | (12) |  |  | $ | 18 |  |  | $ | (1) |  |  | $ | 5 |
(1) These components are included in the computation of net periodic pension and other post-retirement benefit costs. See the “Pension and Other Post-Retirement Benefits” table above for additional details.
| Pension Benefits |  | Other Benefits |  | Total
(in millions, net of income tax) | Three Months Ended March 31, 2022
Beginning balance | $ | (33) |  |  | $ | 18 |  |  | $ | (15) |
Amounts reclassified from other comprehensive income: (1) |  |  |  |  |
Amortization of prior service cost (net of taxes of $0 and $1, respectively) | (1) |  |  | 1 |  |  | — |
Amortization of net actuarial gain (net of taxes of $0 and $3, respectively) | — |  |  | (7) |  |  | (7) |
Regulatory account transfer (net of taxes of $0 and $2, respectively) | 1 |  |  | 6 |  |  | 7 |
Net current period other comprehensive gain (loss) | — |  |  | — |  |  | — |
Ending balance | $ | (33) |  |  | $ | 18 |  |  | $ | (15) |
(1) These components are included in the computation of net periodic pension and other post-retirement benefit costs. See the “Pension and Other Post-Retirement Benefits” table above for additional details. There was no material difference between PG&E Corporation and the Utility for the information disclosed above.

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