
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C., 20549 FORM 10-Q
(Mark One)
[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31,2016 OR

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to __________

Commission File Number _______________		Exact Name of Registrant as Specified in its Charter _______________		State or Other Jurisdiction of Incorporation ______________		IRS Employer Identification Number ___________

1-12609		PG&E Corporation		California		94-3234914
1-2348		Pacific Gas and Electric Company		California		94-0742640

PG&E Corporation 77 Beale Street P.O. Box 770000 San Francisco, California 94177 ________________________________________				Pacific Gas and Electric Company 77 Beale Street P.O. Box 770000 San Francisco, California 94177 ______________________________________
Address of principal executive offices, including zip code

PG&E Corporation (415) 973-1000 ________________________________________				Pacific Gas and Electric Company (415) 973-7000 ______________________________________
Registrant's telephone number, including area code

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
PG&E Corporation:				[X] Yes [ ] No
Pacific Gas and Electric Company:				[X] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
PG&E Corporation:			[X] Large accelerated filer		[ ] Accelerated filer
			[ ] Non-accelerated filer		[ ] Smaller reporting company
Pacific Gas and Electric Company:			[ ] Large accelerated filer		[ ] Accelerated filer
			[X] Non-accelerated filer		[ ] Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
PG&E Corporation:				[ ] Yes [X] No
Pacific Gas and Electric Company:				[ ] Yes [X] No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Common stock outstanding as of April 19,2016:
PG&E Corporation:				496,042,305
Pacific Gas and Electric Company:				264,374,809

PG&E CORPORATION AND
PACIFIC GAS AND ELECTRIC COMPANY
FORM 10-Q

FOR THE QUARTERLY PERIOD ENDEDMARCH 31,2016

TABLE OF CONTENTS

GLOSSARY

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PG&E CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

NOTE 3: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS

NOTE 4: DEBT

NOTE 5: EQUITY

NOTE 6: EARNINGS PER SHARE

NOTE 7: DERIVATIVES

NOTE 8: FAIR VALUE MEASUREMENTS

NOTE 9: CONTINGENCIES AND COMMITMENTS

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

OVERVIEW

RESULTS OF OPERATIONS

LIQUIDITY AND FINANCIAL RESOURCES

ENFORCEMENT AND LITIGATION MATTERS

REGULATORY MATTERS

OTHER MATTERS

LEGISLATIVE AND REGULATORY INITIATIVES

ENVIRONMENTAL MATTERS

CONTRACTUAL COMMITMENTS

RISK MANAGEMENT ACTIVITIES

CRITICAL ACCOUNTING POLICIES

ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 4. CONTROLS AND PROCEDURES

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS

SIGNATURES

GLOSSARY

The following terms and abbreviations appearing in the text of this report have the meanings indicated below.

2015 Form 10-K	PG&E Corporation's and Pacific Gas and Electric Company's combined Annual Report on Form 10-K for the year ended December 31, 2015
AFUDC	allowance for funds used during construction
ALJ	Administrative Law Judge
ARO(s)	asset retirement obligation(s)
ASU	Accounting Standards Update issued by the FASB (see below)
Cal Fire	California Department of Forestry and Fire Protection
CAISO	California Independent System Operator Corporation
CPUC	California Public Utilities Commission
CRRs	congestion revenue rights
DOI	U.S. Department of the Interior
DTSC	California Department of Toxic Substances Control
EMANI	European Mutual Association for Nuclear Insurance
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
GRC	general rate case
GT&S	gas transmission and storage
IOU(s)	investor-owned utility(ies)
IRS	Internal Revenue Service
NAV	net asset value
NDCTP	Nuclear Decommissioning Cost Triennial Proceedings
NEIL	Nuclear Electric Insurance Limited
NEM	Net Energy Metering
NRC	Nuclear Regulatory Commission
NTSB	National Transportation Safety Board
OII	order instituting investigation
ORA	Office of Ratepayer Advocates
PSEP	pipeline safety enhancement plan
Regional Board	California Regional Water Control Board, Lahontan Region
SEC	U.S. Securities and Exchange Commission
SED	Safety and Enforcement Division of the CPUC, formerly known as the Consumer Protection and Safety Division or the CPSD
TO	transmission owner
TURN	The Utility Reform Network
Utility	Pacific Gas and Electric Company
VIE(s)	variable interest entity(ies)

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PG&E CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	(Unaudited)
	Three Months Ended
	March 31,
(in millions, except per share amounts)	2016		2015
Operating Revenues
Electric	$	3,131	$	3,013
Natural gas		843		886
Total operating revenues		3,974		3,899
Operating Expenses
Cost of electricity		950		1,000
Cost of natural gas		222		274
Operating and maintenance		2,010		1,923
Depreciation, amortization, and decommissioning		697		631
Total operating expenses		3,879		3,828
Operating Income		95		71
Interest income		4		1
Interest expense		(203)		(189)
Other income, net		27		58
Loss Before Income Taxes		(77)		(59)
Income tax benefit		(187)		(93)
Net Income		110		34
Preferred stock dividend requirement of subsidiary		3		3
Income Available for Common Shareholders	$	107	$	31
Weighted Average Common Shares Outstanding, Basic		493		477
Weighted Average Common Shares Outstanding, Diluted		495		481
Net Earnings Per Common Share, Basic	$	0.22	$	0.06
Net Earnings Per Common Share, Diluted	$	0.22	$	0.06
Dividends Declared Per Common Share	$	0.46	$	0.46

See accompanying Notes to the Condensed Consolidated Financial Statements.

PG&E CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	(Unaudited)
	Three Months Ended March 31,
(in millions)	2016		2015
Net Income	$	110		34
Other Comprehensive Income
Pension and other postretirement benefit plans obligations
(net of taxes of $0 and $0, at respective dates)		-		-
Net change in investments
(net of taxes of $0 and $12, at respective dates)		-		(17)
Total other comprehensive income (loss)		-		(17)
Comprehensive Income		110		17
Preferred stock dividend requirement of subsidiary		3		3
Comprehensive Income Attributable to Common Shareholders	$	107		14

See accompanying Notes to the Condensed Consolidated Financial Statements.

PG&E CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	Balance At
	March 31,		December 31,
(in millions)	2016		2015
ASSETS
Current Assets
Cash and cash equivalents	$	142	$	123
Restricted cash		234		234
Accounts receivable:
Customers (net of allowance for doubtful accounts of $55 and $54
at respective dates)		1,010		1,106
Accrued unbilled revenue		685		855
Regulatory balancing accounts		1,721		1,760
Other		328		286
Regulatory assets		504		517
Inventories:
Gas stored underground and fuel oil		109		126
Materials and supplies		344		313
Income taxes receivable		230		155
Other		327		338
Total current assets		5,634		5,813
Property, Plant, and Equipment
Electric		49,974		48,532
Gas		16,982		16,749
Construction work in progress		2,148		2,059
Other		2		2
Total property, plant, and equipment		69,106		67,342
Accumulated depreciation		(21,062)		(20,619)
Net property, plant, and equipment		48,044		46,723
Other Noncurrent Assets
Regulatory assets		7,130		7,029
Nuclear decommissioning trusts		2,516		2,470
Income taxes receivable		153		135
Other		1,173		1,064
Total other noncurrent assets		10,972		10,698
TOTAL ASSETS	$	64,650	$	63,234

See accompanying Notes to the Condensed Consolidated Financial Statements.

PG&E CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	Balance At
	March 31,		December 31,
(in millions, except share amounts)	2016		2015
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings	$	693	$	1,019
Long-term debt, classified as current		160		160
Accounts payable:
Trade creditors		1,062		1,414
Regulatory balancing accounts		704		715
Other		598		398
Disputed claims and customer refunds		457		454
Interest payable		145		206
Other		2,155		1,997
Total current liabilities		5,974		6,363
Noncurrent Liabilities
Long-term debt		16,522		15,925
Regulatory liabilities		6,486		6,321
Pension and other postretirement benefits		2,629		2,622
Asset retirement obligations		4,480		3,643
Deferred income taxes		9,323		9,206
Other		2,372		2,326
Total noncurrent liabilities		41,812		40,043
Commitments and Contingencies (Note 9)
Equity
Shareholders' Equity
Common stock, no par value, authorized 800,000,000 shares;
495,606,702 and 492,025,443 shares outstanding at respective dates		11,440		11,282
Reinvested earnings		5,179		5,301
Accumulated other comprehensive loss		(7)		(7)
Total shareholders' equity		16,612		16,576
Noncontrolling Interest - Preferred Stock of Subsidiary		252		252
Total equity		16,864		16,828
TOTAL LIABILITIES AND EQUITY	$	64,650	$	63,234

See accompanying Notes to the Condensed Consolidated Financial Statements.

PG&E CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	(Unaudited)
	Three Months Ended March 31,
(in millions)	2016		2015
Cash Flows from Operating Activities
Net income	$	110	$	34
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, amortization, and decommissioning		697		631
Allowance for equity funds used during construction		(27)		(28)
Deferred income taxes and tax credits, net		117		113
Disallowed capital expenditures		87		53
Other		73		52
Effect of changes in operating assets and liabilities:
Accounts receivable		210		236
Inventories		(14)		58
Accounts payable		(65)		(46)
Income taxes receivable/payable		(75)		3
Other current assets and liabilities		146		(114)
Regulatory assets, liabilities, and balancing accounts, net		(87)		195
Other noncurrent assets and liabilities		(117)		(107)
Net cash provided by operating activities		1,055		1,080
Cash Flows from Investing Activities
Capital expenditures		(1,229)		(1,191)
Proceeds from sales and maturities of nuclear decommissioning
trust investments		439		417
Purchases of nuclear decommissioning trust investments		(463)		(505)
Other		3		7
Net cash used in investing activities		(1,250)		(1,272)
Cash Flows from Financing Activities
Net issuances (repayments) of commercial paper, net of discount of $1 in 2016		(577)		223
Short-term debt financing		250		-
Proceeds from issuance of long-term debt, net of discount and
issuance costs of $6 in 2016		594		-
Common stock issued		146		151
Common stock dividends paid		(219)		(211)
Other		20		23
Net cash provided by financing activities		214		186
Net change in cash and cash equivalents		19		(6)
Cash and cash equivalents at January 1		123		151
Cash and cash equivalents at March 31	$	142	$	145

Supplemental disclosures of cash flow information
Cash received (paid) for:
Interest, net of amounts capitalized	$	(242)	$	(216)
Supplemental disclosures of noncash investing and financing activities
Common stock dividends declared but not yet paid	$	226	$	218
Capital expenditures financed through accounts payable		373		217
Noncash common stock issuances		6		5

See accompanying Notes to the Condensed Consolidated Financial Statements.

PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	(Unaudited)
	Three Months Ended
	March 31,
(in millions)	2016		2015
Operating Revenues
Electric	$	3,132	$	3,014
Natural gas		843		886
Total operating revenues		3,975		3,900
Operating Expenses
Cost of electricity		950		1,000
Cost of natural gas		222		274
Operating and maintenance		2,011		1,923
Depreciation, amortization, and decommissioning		696		631
Total operating expenses		3,879		3,828
Operating Income		96		72
Interest income		4		1
Interest expense		(201)		(187)
Other income, net		24		26
Loss Before Income Taxes		(77)		(88)
Income tax benefit		(185)		(92)
Net Income		108		4
Preferred stock dividend requirement		3		3
Income Available for Common Stock	$	105	$	1

See accompanying Notes to the Condensed Consolidated Financial Statements.

PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	(Unaudited)
	Three Months Ended March 31,
(in millions)	2016		2015
Net Income	$	108		4
Other Comprehensive Income
Pension and other postretirement benefit plans obligations
(net of taxes of $0 and $0, at respective dates )		-		-
Total other comprehensive income (loss)		-		-
Comprehensive Income	$	108		4

See accompanying Notes to the Condensed Consolidated Financial Statements.

PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	Balance At
	March 31,		December 31,
(in millions)	2016		2015
ASSETS
Current Assets
Cash and cash equivalents	$	44	$	59
Restricted cash		234		234
Accounts receivable:
Customers (net of allowance for doubtful accounts of $55 and $54
at respective dates)		1,010		1,106
Accrued unbilled revenue		685		855
Regulatory balancing accounts		1,721		1,760
Other		353		284
Regulatory assets		504		517
Inventories:
Gas stored underground and fuel oil		109		126
Materials and supplies		344		313
Income taxes receivable		204		130
Other		327		338
Total current assets		5,535		5,722
Property, Plant, and Equipment
Electric		49,974		48,532
Gas		16,982		16,749
Construction work in progress		2,148		2,059
Total property, plant, and equipment		69,104		67,340
Accumulated depreciation		(21,060)		(20,617)
Net property, plant, and equipment		48,044		46,723
Other Noncurrent Assets
Regulatory assets		7,130		7,029
Nuclear decommissioning trusts		2,516		2,470
Income taxes receivable		153		135
Other		1,061		958
Total other noncurrent assets		10,860		10,592
TOTAL ASSETS	$	64,439	$	63,037

See accompanying Notes to the Condensed Consolidated Financial Statements.

PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	Balance At
	March 31,		December 31,
(in millions, except share amounts)	2016		2015
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings	$	693	$	1,019
Long-term debt, classified as current		160		160
Accounts payable:
Trade creditors		1,062		1,414
Regulatory balancing accounts		704		715
Other		646		418
Disputed claims and customer refunds		457		454
Interest payable		144		203
Other		1,906		1,750
Total current liabilities		5,772		6,133
Noncurrent Liabilities
Long-term debt		16,174		15,577
Regulatory liabilities		6,486		6,321
Pension and other postretirement benefits		2,540		2,534
Asset retirement obligations		4,480		3,643
Deferred income taxes		9,605		9,487
Other		2,331		2,282
Total noncurrent liabilities		41,616		39,844
Commitments and Contingencies (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		7,280		7,215
Reinvested earnings		8,188		8,262
Accumulated other comprehensive income		3		3
Total shareholders' equity		17,051		17,060
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	64,439	$	63,037

See accompanying Notes to the Condensed Consolidated Financial Statements.

PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	(Unaudited)
	Three Months Ended March 31,
(in millions)	2016		2015
Cash Flows from Operating Activities
Net income	$	108	$	4
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, amortization, and decommissioning		696		631
Allowance for equity funds used during construction		(27)		(28)
Deferred income taxes and tax credits, net		118		112
Disallowed capital expenditures		87		53
Other		68		45
Effect of changes in operating assets and liabilities:
Accounts receivable		183		215
Inventories		(14)		58
Accounts payable		(37)		26
Income taxes receivable/payable		(74)		2
Other current assets and liabilities		151		(123)
Regulatory assets, liabilities, and balancing accounts, net		(87)		195
Other noncurrent assets and liabilities		(109)		(89)
Net cash provided by operating activities		1,063		1,101
Cash Flows from Investing Activities
Capital expenditures		(1,229)		(1,191)
Proceeds from sales and maturities of nuclear decommissioning
trust investments		439		417
Purchases of nuclear decommissioning trust investments		(463)		(505)
Other		3		7
Net cash used in investing activities		(1,250)		(1,272)
Cash Flows from Financing Activities
Net issuances (repayments) of commercial paper, net of discount of $1 in 2016		(577)		223
Short-term debt financing		250		-
Proceeds from issuance of long-term debt, net of discount and
issuance costs of $6 in 2016		594		-
Preferred stock dividends paid		(3)		(3)
Common stock dividends paid		(179)		(179)
Equity contribution from PG&E Corporation		65		100
Other		22		25
Net cash provided by financing activities		172		166
Net change in cash and cash equivalents		(15)		(5)
Cash and cash equivalents at January 1		59		55
Cash and cash equivalents at March 31	$	44	$	50

Supplemental disclosures of cash flow information
Cash received (paid) for:
Interest, net of amounts capitalized	$	(237)	$	(211)
Supplemental disclosures of noncash investing and financing activities
Capital expenditures financed through accounts payable	$	373	$	217

See accompanying Notes to the Condensed Consolidated Financial Statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

PG&E Corporation is a holding company whose primary operating subsidiary is Pacific Gas and Electric Company, a public utility operating in northern and central California. The Utility generates revenues mainly through the sale and delivery of electricity and natural gas to customers. The Utility is primarily regulated by the CPUC and the FERC. In addition, the NRC oversees the licensing, construction, operation, and decommissioning of the Utility’s nuclear generation facilities.

This quarterly report on Form 10-Q is a combined report of PG&E Corporation and the Utility. PG&E Corporation’s Condensed Consolidated Financial Statements include the accounts of PG&E Corporation, the Utility, and other wholly owned and controlled subsidiaries. The Utility’s Condensed Consolidated Financial Statements include the accounts of the Utility and its wholly owned and controlled subsidiaries. All intercompany transactions have been eliminated in consolidation. The Notes to the Condensed Consolidated Financial Statements apply to both PG&E Corporation and the Utility. PG&E Corporation and the Utility operate in one segment, as the companies assess financial performance and allocate resources on a consolidated basis.

The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with GAAP and in accordance with the interim period reporting requirements of Form 10-Q and reflect all adjustments (consisting only of normal recurring adjustments) that management believes are necessary for the fair presentation of PG&E Corporation and the Utility’s financial condition, results of operations, and cash flows for the periods presented. The information at December 31, 2015 in the Condensed Consolidated Balance Sheets included in this quarterly report was derived from the audited Consolidated Balance Sheets in the 2015 Form 10-K. This quarterly report should be read in conjunction with the 2015 Form 10-K.

The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Some of the more significant estimates and assumptions relate to the Utility’s regulatory assets and liabilities, legal and regulatory contingencies, environmental remediation liabilities, asset retirement obligations, and pension and other postretirement benefit plans obligations. Management believes that its estimates and assumptions reflected in the Condensed Consolidated Financial Statements are appropriate and reasonable. Actual results could differ materially from those estimates.

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used by PG&E Corporation and the Utility are discussed in Note 2 of the Notes to the Consolidated Financial Statements in the 2015 Form 10-K.

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.

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 at March 31,2016, 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 and 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 at March 31,2016, it did not consolidate any of them.

Asset Retirement Obligations

Detailed studies of the cost to decommission the Utility’s nuclear generation facilities are conducted every three yearsin conjunction with the Nuclear Decommissioning Cost Triennial Proceedings. On March 1, 2016, the Utility submitted its updated decommissioning cost estimate with the CPUC. The estimated undiscounted cost to decommission the Utility’s nuclear power plants increased by approximately $1.4 billion, for a total estimated cost of $4.8 billion, due to increased estimated costs related to spent fuel storage, staffing, and out-of-state waste disposal. Actual decommissioning costs may vary from these estimates as a result of changes in assumptions such as decommissioning dates; regulatory requirements; technology; and costs of labor, materials, and equipment. The Utility recovers its revenue requirements for decommissioning costs from customers through a non-bypassable charge that the Utility expects will continue until those costs are fully recovered. The Utility requested that the CPUC authorize the collection of increased annual revenue requirements beginning on January 1, 2017 based on these updated cost estimates.

The estimated nuclear decommissioning cost is discounted for GAAP purposes and recognized as an ARO on the Condensed Consolidated Balance Sheets. The total nuclear decommissioning obligation accrued in accordance with GAAP was $3.3 billion at March 31, 2016, which includes an $818 million adjustment to reflect the increased cost estimates described above, and $2.5 billion at December 31, 2015. These estimates are based on the 2016 decommissioning cost studies, prepared in accordance with the CPUC requirements. Changes in these estimates could materially affect the amount of the recorded ARO for these assets.

Pension and Other Postretirement 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, 2016 and 2015 were as follows:

	Pension Benefits				Other Benefits
	Three Months Ended March 31,
(in millions)	2016		2015		2016		2015
Service cost for benefits earned	$	113	$	119	$	13	$	13
Interest cost		179		168		19		18
Expected return on plan assets		(207)		(218)		(27)		(28)
Amortization of prior service cost		2		4		4		5
Amortization of net actuarial loss		6		3		1		1
Net periodic benefit cost		93		76		10		9
Regulatory account transfer (1)		(8)		9		-		-
Total	$	85	$	85	$	10	$	9

(1) The Utility recorded these amounts to a regulatory account since they are probable of recovery from, or refund to, customers in future rates.

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

The changes, net of income tax, in PG&E Corporation’s accumulated other comprehensive income (loss) are summarized below:

	Pension		Other
	Benefits		Benefits		Total
(in millions, net of income tax)	Three Months Ended March 31, 2016
Beginning balance	$	(23)	$	16	$	(7)
Amounts reclassified from other comprehensive income: (1)
Amortization of prior service cost
(net of taxes of $1 and $2, respectively)		1		2		3
Amortization of net actuarial loss
(net of taxes of $2 and $0, respectively)		4		1		5
Regulatory account transfer
(net of taxes of $3 and $2, respectively)		(5)		(3)		(8)
Net current period other comprehensive loss		-		-		-
Ending balance	$	(23)	$	16	$	(7)

(1) These components are included in the computation of net periodic pension and other postretirement benefit costs. (See the “Pension and Other Postretirement Benefits” table above for additional details.)

	Pension		Other		Other
	Benefits		Benefits		Investments		Total
(in millions, net of income tax)	Three Months Ended March 31, 2015
Beginning balance	$	(21)		15		17		11
Amounts reclassified from other comprehensive income:
Amortization of prior service cost
(net of taxes of $2, $2, and $0, respectively) (1)		2		3		-		5
Amortization of net actuarial loss
(net of taxes of $1, $0, and $0, respectively) (1)		2		-		-		2
Regulatory account transfer
(net of taxes of $3, $2, and $0, respectively) (1)		(4)		(3)		-		(7)
Change in investments
(net of taxes of $0, $0, and $12, respectively)		-		-		(17)		(17)
Net current period other comprehensive loss		-		-		(17)		(17)
Ending balance	$	(21)	$	15	$	-	$	(6)

There was no material difference between PG&E Corporation and the Utility for the information disclosed above, with the exception of other investments which are held by PG&E Corporation.

Recently Adopted Accounting Guidance

Fair Value Measurement

In May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which standardizes reporting practices related to the fair value hierarchy for all investments for which fair value is measured using the net asset value per share. PG&E Corporation and the Utility adopted this guidance effectiveJanuary 1, 2016 and applied the requirements retrospectively for all periods presented. The adoption of this standard did not impact their Condensed Consolidated Financial Statements. All prior periods presented in these Condensed Consolidated financial statements reflect the retrospective adoption of this guidance (See Note 8 below.)

Accounting for Fees Paid in a Cloud Computing Arrangement

In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which adds guidance to help entities evaluate the accounting treatment for cloud computing arrangements. PG&E Corporation and the Utility adopted this guidance effective January 1, 2016. The adoption of this guidance did not have a material impact on their Condensed Consolidated Financial Statements.

Presentation of Debt Issuance Costs

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which amends the existing guidance relating to the presentation of debt issuance costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. PG&E Corporation and the Utility adopted this guidance effective January 1, 2016 and applied the requirements retrospectively for all periods presented. The adoption of this guidance did not have a material impact on their Condensed Consolidated Financial Statements. PG&E Corporation and the Utility reclassified $105 million and $103 million, respectively, of debt issuance costs as of December 31, 2015 with no impact to net income or total shareholders’ equity previously reported. All prior periods presented in these Condensed Consolidated financial statements reflect the retrospective adoption of this guidance.

Accounting Standards Issued But Not Yet Adopted

Share-based Payment Accounting

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718), which amends the existing guidance relating to the accounting for share-based payment awards issued to employees, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The ASU will be effective for PG&E Corporation and the Utility on January 1, 2017. PG&E Corporation and the Utility are currently evaluating the impact the guidance will have on their consolidated financial statements and related disclosures.

Recognition of Lease Assets and Liabilities

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which amends the existing guidance relating to the recognition of lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU will be effective for PG&E Corporation and the Utility on January 1, 2019 with retrospective application. PG&E Corporation and the Utility are currently evaluating the impact the guidance will have on their consolidated financial statements and related disclosures.

Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which amends the existing guidance relating to the recognition and measurement of financial instruments. The ASU will be effective for PG&E Corporation and the Utility on January 1, 2018. PG&E Corporation and the Utility are currently evaluating the impact the guidance will have on their consolidated financial statements and related disclosures.

Revenue Recognition Standard

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which amends the existing revenue recognition guidance. In August 2015, the FASB deferred the effective date of this amendment for public companies by one year to January 1, 2018, with early adoption permitted as of the original effective date of January 1, 2017. (See ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date.) PG&E Corporation and the Utility are currently evaluating the impact the guidance will have on their consolidated financial statements and related disclosures.

NOTE 3: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS

Regulatory Assets

Long-term regulatory assets are composed of the following:

	Balance at
	March 31,		December 31,
(in millions)	2016		2015
Pension benefits	$	2,414	$	2,414
Deferred income taxes		3,265		3,054
Utility retained generation		399		411
Environmental Compliance Costs		683		748
Price risk management		134		138
Unamortized loss, net of gain, on reacquired debt		90		94
Other		145		170
Total long-term regulatory assets	$	7,130	$	7,029

For more information, see Note 3 of the Notes to the Consolidated Financial Statements in Item 8 of the 2015 Form 10-K.

Regulatory Liabilities

Long-term regulatory liabilities are composed of the following:

	Balance at
	March 31,		December 31,
(in millions)	2016		2015
Cost of removal obligations	$	4,717	$	4,605
Recoveries in excess of asset retirement obligations		645		631
Public purpose programs		620		600
Other		504		485
Total long-term regulatory liabilities	$	6,486	$	6,321

For more information, see Note 3 of the Notes to the Consolidated Financial Statements in Item 8 of the 2015 Form 10-K.

Regulatory Balancing Accounts

The Utility tracks (1) differences between the Utility’s authorized revenue requirement and customer billings, and (2) differences between incurred costs and customer billings. To the extent these differences are probable of recovery or refund over the next 12 months, the Utility records a current regulatory balancing account receivable or payable. Regulatory balancing accounts that the Utility expects to collect or refund over a period exceeding 12 months are recorded as other noncurrent assets – regulatory assets or noncurrent liabilities – regulatory liabilities, respectively, in the Condensed Consolidated Balance Sheets. These differences do not have an impact on net income. Balancing accounts will fluctuate during the year based on seasonal electric and gas usage and the timing of when costs are incurred and customer revenues are collected.

Current regulatory balancing accounts receivable and payable are comprised of the following:

	Receivable
	Balance at
	March 31,		December 31,
(in millions)	2016		2015
Electric distribution	$	515	$	380
Utility generation		225		122
Gas distribution		280		493
Energy procurement		87		262
Public purpose programs		149		155
Other		465		348
Total regulatory balancing accounts receivable	$	1,721	$	1,760

	Payable
	Balance at
	March 31,		December 31,
(in millions)	2016		2015
Energy procurement	$	184	$	112
Public purpose programs		212		244
Other		308		359
Total regulatory balancing accounts payable	$	704	$	715

The electric distribution, utility generation, and gas distribution balancing accounts track the collection of revenue requirements approved in the GRC. Energy procurement balancing accounts track recovery of costs related to the procurement of electricity, including any environmental compliance-related activities. Public purpose programs balancing accounts are primarily used to record and recover authorized revenue requirements for commission-mandated programs such as energy efficiency and low income energy efficiency.

NOTE 4: DEBT

Revolving Credit Facilities and Commercial Paper Program

The following table summarizes PG&E Corporation’s and the Utility’s outstanding borrowings under their revolving credit facilities and commercial paper programs at March 31,2016:

					Letters of
	Termination	Facility			Credit		Commercial		Facility
(in millions)	Date	Limit			Outstanding		Paper		Availability
PG&E Corporation	April 2020	$	300	(1)	$	-	$	-	$	300
Utility	April 2020		3,000	(2)		33		443		2,524
Total revolving credit facilities		$	3,300		$	33	$	443	$	2,824

(1)Includes a $50 million lender commitment to the letter of credit sublimits and a $100 million commitment for “swingline” loans defined as loans that are made available on a same-day basis and are repayable in full within 7 days.

(2) Includes a $500 million lender commitment to the letter of credit sublimits and a $75 million commitment for swingline loans.

Other Short-term Borrowings

In March 2016, the Utility entered into a $250 million floating rate unsecured term loan that matures on February 2, 2017. The proceeds were used for general corporate purposes, including the repayment of a portion of the Utility’s outstanding commercial paper.

Senior Notes Issuances

In March 2016, the Utility issued $600 million principal amount of 2.95% Senior Notes due March 1, 2026. The proceeds were used for general corporate purposes, including the repayment of a portion of the Utility’s outstanding commercial paper.

Variable Rate Interest

At March 31,2016, the interest rates on the $614 million principal amount of pollution control bonds Series 1996 C, E, F, and 1997 B and the related loan agreements ranged from 0.37% to 0.45%. At March 31, 2016, the interest rates on the $309 million principal amount of pollution control bonds Series 2009 A-D and the related loan agreements ranged from 0.34% to 0.38%. Pollution control bonds Series 2009 C and D will mature on December 1, 2016.

NOTE 5: EQUITY

PG&E Corporation’s and the Utility’s changes in equity for the three months ended March 31,2016were as follows:

	PG&E Corporation		Utility
	Total		Total
(in millions)	Equity		Shareholders' Equity
Balance at December 31, 2015	$	16,828	$	17,060
Comprehensive income		110		108
Equity contributions		-		65
Common stock issued		152		-
Share-based compensation		6		-
Common stock dividends declared		(229)		(179)
Preferred stock dividend requirement		-		(3)
Preferred stock dividend requirement of subsidiary		(3)		-
Balance at March 31, 2016	$	16,864	$	17,051

During the three months ended March 31, 2016, PG&E Corporation sold 1.3 million shares under the February 2015 equity distribution agreement for cash proceeds of $74 million, net of commissions paid of $1 million. As of March 31, 2016, the remaining gross sales available under this agreement were $350 million.

PG&E Corporation also issued common stock under the PG&E Corporation 401(k) plan, the Dividend Reinvestment and Stock Purchase Plan, and share-based compensation plans. During the threemonths ended March 31,2016, 2.3 million shares were issued for cash proceeds of $72 million under these plans.

NOTE 6: EARNINGS PER SHARE

PG&E Corporation’s basic EPS is calculated by dividing the income available for common shareholders by the weighted average number of common shares outstanding. PG&E Corporation applies the treasury stock method of reflecting the dilutive effect of outstanding share-based compensation in the calculation of diluted EPS. The following is a reconciliation of PG&E Corporation’s income available for common shareholders and weighted average common shares outstanding for calculating diluted EPS:

	Three Months Ended March 31,
(in millions, except per share amounts)	2016		2015
Income available for common shareholders	$	107	$	31
Weighted average common shares outstanding, basic		493		477
Add incremental shares from assumed conversions:
Employee share-based compensation		2		4
Weighted average common shares outstanding, diluted		495		481
Total earnings per common share, diluted	$	0.22	$	0.06

For each of the periods presented above, the calculation of outstanding common shares on a diluted basis excluded an insignificant amount of options and securities that were antidilutive.

NOTE 7: DERIVATIVES

Use of Derivative Instruments

The Utility is exposed to commodity price risk as a result of its electricity and natural gas procurement activities. Procurement costs are recovered through customer rates. The Utility uses both derivative and non-derivative contracts to manage volatility in customer rates due to fluctuating commodity prices. Derivatives include physical and financial derivative contracts, such as power purchase agreements, forwards, futures, swaps, options, and CRRs that are traded either on an exchange or over-the-counter.

Derivatives are recorded at fair value and are presented in the Utility’sCondensed Consolidated Balance Sheets on a net basis in accordance with master netting arrangements for each counterparty. The fair value of derivative instruments is further offset by cash collateral paid or received where the right of offset and the intention to offset exist.

These instruments are not held for speculative purposes and are subject to certain regulatory requirements. The Utility expects to fully recover in rates all costs related to derivatives as long as the current ratemaking mechanism remains in place and the Utility’s price risk management activities are carried out in accordance with CPUC directives. Therefore, all unrealized gains and losses associated with the change in fair value of these derivatives are deferred and recorded within the Utility’s regulatory assets and liabilities on the Condensed Consolidated Balance Sheets. Net realized gains or losses on commodity derivatives are recorded in the cost of electricity or the cost of natural gas with corresponding increases or decreases to regulatory balancing accounts for recovery from or refund to customers.

The Utility elects the normal purchase and sale exception for eligible derivatives. Eligible derivatives are those that require physical delivery in quantities that are expected to be used by the Utility over a reasonable period in the normal course of business, and do not contain pricing provisions unrelated to the commodity delivered. These items are not reflected in the Condensed Consolidated Balance Sheets at fair value. Eligible derivatives are accounted for under the accrual method of accounting.

Volume of Derivative Activity

The volumes of the Utility’s outstanding derivatives were as follows:

		Contract Volume at
		March 31,	December 31,
Underlying Product	Instruments	2016	2015
Natural Gas (1) (MMBtus (2))	Forwards and Swaps	341,884,852	333,091,813
	Options	92,426,200	111,550,004
Electricity (Megawatt-hours)	Forwards and Swaps	3,580,205	3,663,512
	Congestion Revenue Rights (3)	198,499,963	216,383,389

(1)Amounts shown are for the combined positions of the electric fuels and core gas supply portfolios.

(2) Million British Thermal Units.

(3) CRRs are financial instruments that enable the holders to manage variability in electric energy congestion charges due to transmission grid limitations.

Presentation of Derivative Instruments in the Financial Statements

At March 31,2016, the Utility’s outstanding derivative balances were as follows:

	Commodity Risk
	Gross Derivative						Total Derivative
(in millions)	Balance		Netting		Cash Collateral		Balance
Current assets – other	$	91	$	(5)	$	12	$	98
Other noncurrent assets – other		173		(5)		-		168
Current liabilities – other		(105)		5		46		(54)
Noncurrent liabilities – other		(139)		5		16		(118)
Net commodity risk	$	20	$	-	$	74	$	94

At December 31, 2015, the Utility’s outstanding derivative balances were as follows:

	Commodity Risk
	Gross Derivative						Total Derivative
(in millions)	Balance		Netting		Cash Collateral		Balance
Current assets – other	$	97		(4)		25	$	118
Other noncurrent assets – other		172		(2)		-		170
Current liabilities – other		(102)		4		44		(54)
Noncurrent liabilities – other		(140)		2		21		(117)
Net commodity risk	$	27	$	-	$	90	$	117

Gains and losses associated with price risk management activities were recorded as follows:

	Commodity Risk
	Three Months Ended March 31,
(in millions)	2016		2015
Net unrealized gain (loss) - regulatory assets and liabilities (1)	$	(7)	$	(52)
Realized loss - cost of electricity (2)		(29)		(7)
Realized loss - cost of natural gas (2)		(1)		(1)
Total commodity risk	$	(37)	$	(60)

(1)Unrealized gains and losses on commodity risk-related derivative instruments are recorded to regulatory liabilities or assets, respectively, rather than being recorded to the Condensed Consolidated Statements of Income. These amounts exclude the impact of cash collateral postings.

(2) These amounts are fully passed through to customers in rates. Accordingly, net income was not impacted by realized amounts on these instruments.

Cash inflows and outflows associated with derivatives are included in operating cash flows on the Utility’s Condensed Consolidated Statements of Cash Flows.

The majority of the Utility’s derivatives contain collateral posting provisions tied to the Utility’s credit rating from each of the major credit rating agencies. At March 31,2016, the Utility’s credit rating was investment grade. If the Utility’s credit rating were to fall below investment grade, the Utility would be required to post additional cash immediately to fully collateralize some of its net liability derivative positions.

The additional cash collateral that the Utility would be required to post if the credit risk-related contingency features were triggered was as follows:

	Balance at
	March 31,		December 31,
(in millions)	2016		2015
Derivatives in a liability position with credit risk-related
contingencies that are not fully collateralized	$	(9)	$	(2)
Collateral posting in the normal course of business related to
these derivatives		7		-
Net position of derivative contracts/additional collateral
posting requirements (1)	$	(2)	$	(2)

(1) This calculation excludes the impact of closed but unpaid positions, as their settlement is not impacted by any of the Utility’s credit risk-related contingencies.

NOTE 8: FAIR VALUE MEASUREMENTS

PG&E Corporation and the Utility measure their cash equivalents, trust assets, price risk management instruments, and other investments at fair value. A three-tier fair value hierarchy is established that prioritizes the inputs to valuation methodologies used to measure fair value:

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.

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Assets and liabilities measured at fair value on a recurring basis for PG&E Corporation and the Utility are summarized below. Assets held in rabbi trusts are held by PG&E Corporation and not the Utility.

	Fair Value Measurements
	At March 31, 2016
(in millions)	Level 1		Level 2		Level 3		Netting (1)		Total
Assets:
Short-term investments	$	97	$	-	$	-	$	-	$	97
Nuclear decommissioning trusts
Short-term investments		25		-		-		-		25
Global equity securities		1,619		-		-		-		1,619
Fixed-income securities		682		508		-		-		1,190
Assets measured at NAV		-		-		-		-		13
Total nuclear decommissioning trusts (2)		2,326		508		-		-		2,847
Price risk management instruments
(Note 7)
Electricity		1		12		246		3		262
Gas		2		3		-		(1)		4
Total price risk management instruments		3		15		246		2		266
Rabbi trusts
Fixed-income securities		-		58		-		-		58
Life insurance contracts		-		72		-		-		72
Total rabbi trusts		-		130		-		-		130
Long-term disability trust
Short-term investments		8		-		-		-		8
Assets measured at NAV		-		-		-		-		147
Total long-term disability trust		8		-		-		-		155
Total assets	$	2,434	$	653	$	246	$