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Balance Sheet Components (Notes) | 9 Months Ended
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Sep. 30, 2015
Balance Sheet Components [Abstract] |
BALANCE SHEET COMPONENTS | BALANCE SHEET COMPONENTS Inventories PGE’s inventories, which are recorded at average cost, consist primarily of materials and supplies for use in operations, maintenance, and capital activities as well as fuel for use in generating plants. Fuel inventories include natural gas, coal, and oil. Periodically, the Company assesses the realizability of inventory for purposes of determining that inventory is recorded at the lower of average cost or market. During the nine months ended September 30, 2015, the Company’s inventory balance increased largely as a result of contractual deliveries of coal exceeding usage due to plant maintenance and economic dispatch decisions. Other Current Assets Other current assets consist of the following (in millions):
| September 30, 2015 |  | December 31, 2014
Prepaid expenses | $ | 24 |  |  | $ | 39 |
Current deferred income tax asset | 39 |  |  | 33 |
Margin deposits | 20 |  |  | 11 |
Accrued sales tax refund related to Tucannon River Wind Farm | — |  |  | 23 |
Assets from price risk management activities | 7 |  |  | 6 |
Other | 2 |  |  | 3 |
Other current assets | $ | 92 |  |  | $ | 115 |
Electric Utility Plant, Net Electric utility plant, net consists of the following (in millions):
| September 30, 2015 |  | December 31, 2014
Electric utility plant | $ | 8,458 |  |  | $ | 8,161 |
Construction work-in-progress | 508 |  |  | 417 |
Total cost | 8,966 |  |  | 8,578 |
Less: accumulated depreciation and amortization | (3,046 | ) |  | (2,899 | )
Electric utility plant, net | $ | 5,920 |  |  | $ | 5,679 |
Accumulated depreciation and amortization in the table above includes accumulated amortization related to intangible assets of $219 million and $191 million as of September 30, 2015 and December 31, 2014, respectively. Amortization expense related to intangible assets was $10 million and $6 million for the three months ended September 30, 2015 and 2014, respectively, and $28 million and $18 million for the nine months ended September 30, 2015 and 2014, respectively. The Company’s intangible assets primarily consist of computer software development and hydro licensing costs. Regulatory Assets and Liabilities Regulatory assets and liabilities consist of the following (in millions):
| September 30, 2015 |  | December 31, 2014
| Current |  | Noncurrent |  | Current |  | Noncurrent
Regulatory assets: |  |  |  |  |  |  |
Price risk management | $ | 108 |  |  | $ | 184 |  |  | $ | 100 |  |  | $ | 121 |
Pension and other postretirement plans | — |  |  | 232 |  |  | — |  |  | 247 |
Deferred income taxes | — |  |  | 87 |  |  | — |  |  | 86 |
Debt issuance costs | — |  |  | 17 |  |  | — |  |  | 15 |
Deferred capital projects | 5 |  |  | — |  |  | 19 |  |  | — |
Other | 9 |  |  | 27 |  |  | 14 |  |  | 25 |
Total regulatory assets | $ | 122 |  |  | $ | 547 |  |  | $ | 133 |  |  | $ | 494 |
Regulatory liabilities: |  |  |  |  |  |  |
Asset retirement removal costs | $ | — |  |  | $ | 833 |  |  | $ | — |  |  | $ | 804 |
Trojan decommissioning activities | 19 |  |  | 21 |  |  | 23 |  |  | 34 |
Asset retirement obligations | — |  |  | 44 |  |  | — |  |  | 39 |
Other | 26 |  |  | 41 |  |  | 37 |  |  | 29 |
Total regulatory liabilities | $ | 45 |  | * | $ | 939 |  |  | $ | 60 |  | * | $ | 906 |
* | Included in Accrued expenses and other current liabilities in the condensed consolidated balance sheets.
Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in millions):
| September 30, 2015 |  | December 31, 2014
Regulatory liabilities—current | $ | 45 |  |  | $ | 60 |
Accrued employee compensation and benefits | 44 |  |  | 51 |
Accrued interest payable | 40 |  |  | 26 |
Accrued dividends payable | 28 |  |  | 23 |
Accrued taxes payable | 40 |  |  | 22 |
Other | 57 |  |  | 54 |
Total accrued expenses and other current liabilities | $ | 254 |  |  | $ | 236 |
Asset Retirement Obligations Asset retirement obligations (AROs) consist of the following (in millions):
| September 30, 2015 |  | December 31, 2014
Trojan decommissioning activities | $ | 43 |  |  | $ | 41 |
Utility plant | 83 |  |  | 64 |
Non-utility property | 11 |  |  | 11 |
Asset retirement obligations | $ | 137 |  |  | $ | 116 |
Utility plant represents AROs that have been recognized for the Company’s thermal and wind generation sites and distribution and transmission assets where disposal is governed by environmental regulation. The United States Environmental Protection Agency (EPA) published a final rule, effective October 19, 2015, that regulates Coal Combustion Residuals (CCRs) under the Resource Conservation and Recovery Act, Subtitle D. The rule imposes extensive new requirements, including location restrictions, design and operating standards, groundwater monitoring and corrective action requirements, and closure and post-closure care requirements on CCR impoundments and landfills that are located on active power plants and not closed. The rule’s requirements for covered CCR impoundments and landfills include commencement or completion of closure activities generally between three and ten years from certain triggering events. The Boardman coal-fired generating plant (Boardman) produces dry CCRs as a by-product. Disposal of the dry CCRs has historically occurred at an on-site landfill that is permitted and regulated by the State of Oregon under requirements similar to the new EPA rule. PGE is evaluating its disposal strategy, however the Company believes the new EPA rule will not have a material effect on operations at Boardman. Colstrip utilizes wet scrubbers and a number of settlement ponds that will require upgrading or closure to meet the new regulatory requirements. The operator of Colstrip has provided an initial cost estimate related to the impacts of the new EPA rule. As a result, during the second quarter of 2015, the Company recorded an increase to the existing Colstrip AROs in the amount of $15 million, with a corresponding increase in the cost basis of the plant, included in Electric utility plant, net on the consolidated balance sheet. PGE plans to seek recovery in customer prices of the incremental costs associated with the new EPA rule. Credit Facilities During the first quarter of 2015, PGE determined that a $500 million aggregate revolving credit facility capacity would be sufficient to meet its liquidity needs and accordingly reduced its aggregate revolving credit capacity from $700 million to $500 million. As of September 30, 2015, PGE has a $500 million revolving credit facility, which is scheduled to expire in November 2019. Pursuant to the terms of the agreement, the revolving credit facility may be used for general corporate purposes and as backup for commercial paper borrowings, and also permits the issuance of standby letters of credit. PGE may borrow for one, two, three, or six months at a fixed interest rate established at the time of the borrowing, or at a variable interest rate for any period up to the then remaining term of the credit facility. The revolving credit facility contains provisions for two one-year extensions subject to approval by the banks, requires annual fees based on PGE’s unsecured credit ratings, and contains customary covenants and default provisions, including a requirement that limits consolidated indebtedness, as defined in the agreement, to 65% of total capitalization. As of September 30, 2015, PGE was in compliance with this covenant with a 49.7% debt-to-total capital ratio. The Company has a commercial paper program under which it may issue commercial paper for terms of up to 270 days, limited to the unused amount of credit under the revolving credit facility. PGE classifies any borrowings under the revolving credit facility and outstanding commercial paper as Short-term debt on the condensed consolidated balance sheets. Under the credit facility, as of September 30, 2015, PGE had no borrowings or commercial paper outstanding, $3 million of letters of credit issued, and an aggregate available capacity under the credit facility of $497 million. In addition, PGE has four letter of credit facilities providing $135 million capacity under which the Company can request letters of credit for original terms not to exceed one year. The issuance of such letters of credit is subject to the approval of the issuing institution. Under these four facilities, $93 million of letters of credit were outstanding, as of September 30, 2015. Pursuant to an order issued by the Federal Energy Regulatory Commission (FERC), the Company is authorized to issue short-term debt in an aggregate amount of up to $900 million through February 6, 2016. The authorization provides that if utility assets financed by unsecured debt are divested, then a proportionate share of the unsecured debt must also be divested. In September 2015, PGE filed an application with the FERC to extend the authorization for two additional years. An order from the FERC is expected by year end. Long-term Debt During the nine months ended September 30, 2015, PGE had the following long-term debt transactions:
• | In July, repaid $55 million of long-term bank loans;
• | In June, repaid $200 million of long-term bank loans;
• | In May, issued $70 million of 3.50% Series First Mortgage Bonds (FMBs) due 2035 and repaid $67 million of 6.80% Series FMBs, due January 2016;
• | In February, repaid $50 million of long-term bank loans; and
• | In January, issued $75 million of 3.55% Series FMBs due 2030 and repaid $70 million of 3.46% Series FMBs.
Defined Benefit Pension Plan Costs Components of net periodic benefit cost under the defined benefit pension plan are as follows (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2015 |  | 2014 |  | 2015 |  | 2014
Service cost | $ | 4 |  |  | $ | 4 |  |  | $ | 13 |  |  | $ | 11 |
Interest cost | 8 |  |  | 8 |  |  | 24 |  |  | 25 |
Expected return on plan assets | (10 | ) |  | (9 | ) |  | (30 | ) |  | (29 | )
Amortization of net actuarial loss | 5 |  |  | 4 |  |  | 15 |  |  | 13 |
Net periodic benefit cost | $ | 7 |  |  | $ | 7 |  |  | $ | 22 |  |  | $ | 20 |

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