
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 September 30,2016 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, California94177 ______________________________________
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 October 24,2016:
PG&E Corporation:				505,666,694
Pacific Gas and Electric Company:				264,374,809

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

FOR THE QUARTERLY PERIOD ENDEDSEPTEMBER 30,2016

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

LEGISLATIVE AND REGULATORY INITIATIVES

ENVIRONMENTAL MATTERS

CONTRACTUAL COMMITMENTS

RISK MANAGEMENT ACTIVITIES

CRITICAL ACCOUNTING POLICIES

ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

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 and Pacific Gas and Electric Company's combined Annual Report on Form 10-K for the year ended December 31, 2015
2016 Q1 Form 10-Q	PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended March 31, 2016
2016 Q2 Form 10-Q	PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2016
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
Central Coast Water Board	Central Coast Regional Water Quality Control Board
CPUC	California Public Utilities Commission
CRRs	congestion revenue rights
DER	distributed energy resources
Diablo Canyon	Diablo Canyon nuclear power plant
DOI	U.S. Department of the Interior
DTSC	California Department of Toxic Substances Control
EMANI	European Mutual Association for Nuclear Insurance
Energy Division	CPUC’s Energy Division
EPS	earnings per common share
EV	electric vehicle
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
GAAP	U.S. Generally Accepted Accounting Principles
GHG	greenhouse gas
GRC	general rate case
GT&S	gas transmission and storage
GWH	gigawatt-hours
IOU(s)	investor-owned utility(ies)
MOD POD	modified presiding officer's decision
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
POD	presiding officer's decision
PSEP	pipeline safety enhancement plan
PV	photovoltaic
Regional Board	California Regional Water Control Board, Lahontan Region
RPS	Renewable Portfolio Standards
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				Nine Months Ended
	September 30,				September 30,
(in millions, except per share amounts)	2016		2015		2016		2015
Operating Revenues
Electric	$	3,994	$	3,868	$	10,590	$	10,344
Natural gas		816		682		2,363		2,322
Total operating revenues		4,810		4,550		12,953		12,666
Operating Expenses
Cost of electricity		1,613		1,681		3,719		3,958
Cost of natural gas		80		50		377		442
Operating and maintenance		1,783		1,621		5,631		5,028
Depreciation, amortization, and decommissioning		694		653		2,090		1,935
Total operating expenses		4,170		4,005		11,817		11,363
Operating Income		640		545		1,136		1,303
Interest income		8		2		17		6
Interest expense		(211)		(194)		(621)		(575)
Other income, net		24		24		74		100
Income Before Income Taxes		461		377		606		834
Income tax provision (benefit)		70		67		(105)		84
Net Income		391		310		711		750
Preferred stock dividend requirement of subsidiary		3		3		10		10
Income Available for Common Shareholders	$	388	$	307	$	701	$	740
Weighted Average Common Shares Outstanding, Basic		501		486		497		481
Weighted Average Common Shares Outstanding, Diluted		503		489		500		484
Net Earnings Per Common Share, Basic	$	0.77	$	0.63	$	1.41	$	1.54
Net Earnings Per Common Share, Diluted	$	0.77	$	0.63	$	1.40	$	1.53
Dividends Declared Per Common Share	$	0.49	$	0.46	$	1.44	$	1.37

See accompanying Notes to the Condensed Consolidated Financial Statements.

PG&E CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	(Unaudited)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2016		2015		2016		2015
Net Income	$	391	$	310	$	711	$	750
Other Comprehensive Income
Pension and other postretirement benefit plans obligations
(net of taxes of $0, $0, $0 and $0, at respective dates)		-		-		-		-
Net change in investments
(net of taxes of $0, $0, $0 and $12, at respective dates)		-		-		-		(17)
Total other comprehensive income (loss)		-		-		-		(17)
Comprehensive Income		391		310		711		733
Preferred stock dividend requirement of subsidiary		3		3		10		10
Comprehensive Income Attributable to
Common Shareholders	$	388	$	307	$	701	$	723

See accompanying Notes to the Condensed Consolidated Financial Statements.

PG&E CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	Balance At
	September 30,		December 31,
(in millions)	2016		2015
ASSETS
Current Assets
Cash and cash equivalents	$	71	$	123
Restricted cash		168		234
Accounts receivable:
Customers (net of allowance for doubtful accounts of $53 and $54
at respective dates)		1,233		1,106
Accrued unbilled revenue		956		855
Regulatory balancing accounts		1,475		1,760
Other		475		286
Regulatory assets		370		517
Inventories:
Gas stored underground and fuel oil		134		126
Materials and supplies		343		313
Income taxes receivable		218		155
Other		306		338
Total current assets		5,749		5,813
Property, Plant, and Equipment
Electric		51,532		48,532
Gas		17,384		16,749
Construction work in progress		2,117		2,059
Other		2		2
Total property, plant, and equipment		71,035		67,342
Accumulated depreciation		(21,605)		(20,619)
Net property, plant, and equipment		49,430		46,723
Other Noncurrent Assets
Regulatory assets		7,534		7,029
Nuclear decommissioning trusts		2,597		2,470
Income taxes receivable		70		135
Other		1,185		1,064
Total other noncurrent assets		11,386		10,698
TOTAL ASSETS	$	66,565	$	63,234

See accompanying Notes to the Condensed Consolidated Financial Statements.

PG&E CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	Balance At
	September 30,		December 31,
(in millions, except share amounts)	2016		2015
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings	$	1,145	$	1,019
Long-term debt, classified as current		160		160
Accounts payable:
Trade creditors		1,370		1,414
Regulatory balancing accounts		764		715
Other		496		398
Disputed claims and customer refunds		233		454
Interest payable		144		206
Other		1,958		1,997
Total current liabilities		6,270		6,363
Noncurrent Liabilities
Long-term debt		16,528		15,925
Regulatory liabilities		6,613		6,321
Pension and other postretirement benefits		2,632		2,622
Asset retirement obligations		4,672		3,643
Deferred income taxes		9,850		9,206
Other		2,394		2,326
Total noncurrent liabilities		42,689		40,043
Commitments and Contingencies (Note 9)
Equity
Shareholders' Equity
Common stock, no par value, authorized 800,000,000 shares;
505,183,752 and 492,025,443 shares outstanding at respective dates		12,083		11,282
Reinvested earnings		5,278		5,301
Accumulated other comprehensive loss		(7)		(7)
Total shareholders' equity		17,354		16,576
Noncontrolling Interest - Preferred Stock of Subsidiary		252		252
Total equity		17,606		16,828
TOTAL LIABILITIES AND EQUITY	$	66,565	$	63,234

See accompanying Notes to the Condensed Consolidated Financial Statements.

PG&E CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	(Unaudited)
	Nine Months Ended September 30,
(in millions)	2016		2015
Cash Flows from Operating Activities
Net income	$	711	$	750
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, amortization, and decommissioning		2,090		1,935
Allowance for equity funds used during construction		(84)		(80)
Deferred income taxes and tax credits, net		644		260
Disallowed capital expenditures		517		270
Other		293		247
Effect of changes in operating assets and liabilities:
Accounts receivable		(546)		(322)
Inventories		(38)		5
Accounts payable		189		95
Income taxes receivable/payable		(63)		42
Other current assets and liabilities		254		(87)
Regulatory assets, liabilities, and balancing accounts, net		(634)		78
Other noncurrent assets and liabilities		(85)		(251)
Net cash provided by operating activities		3,248		2,942
Cash Flows from Investing Activities
Capital expenditures		(4,128)		(3,662)
Decrease in restricted cash		66		11
Proceeds from sales and maturities of nuclear decommissioning
trust investments		1,019		1,023
Purchases of nuclear decommissioning trust investments		(1,050)		(1,124)
Other		10		18
Net cash used in investing activities		(4,083)		(3,734)
Cash Flows from Financing Activities
Net issuances (repayments) of commercial paper, net of discount of $5
and $2 at respective dates		(128)		545
Short-term debt financing		250		-
Short-term debt matured		-		(300)
Proceeds from issuance of long-term debt, net of discount and
issuance costs of $6 and $14 at respective dates		594		486
Common stock issued		727		689
Common stock dividends paid		(678)		(638)
Other		18		13
Net cash provided by financing activities		783		795
Net change in cash and cash equivalents		(52)		3
Cash and cash equivalents at January 1		123		151
Cash and cash equivalents at September 30	$	71	$	154

Supplemental disclosures of cash flow information
Cash received (paid) for:
Interest, net of amounts capitalized	$	(611)	$	(569)
Income taxes, net		154		-
Supplemental disclosures of noncash investing and financing activities
Common stock dividends declared but not yet paid	$	248	$	223
Capital expenditures financed through accounts payable		325		245
Noncash common stock issuances		15		15

See accompanying Notes to the Condensed Consolidated Financial Statements.

PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	(Unaudited)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2016		2015		2016		2015
Operating Revenues
Electric	$	3,993	$	3,868	$	10,590	$	10,344
Natural gas		816		682		2,363		2,322
Total operating revenues		4,809		4,550		12,953		12,666
Operating Expenses
Cost of electricity		1,613		1,681		3,719		3,958
Cost of natural gas		80		50		377		442
Operating and maintenance		1,782		1,622		5,630		5,028
Depreciation, amortization, and decommissioning		694		653		2,090		1,935
Total operating expenses		4,169		4,006		11,816		11,363
Operating Income		640		544		1,137		1,303
Interest income		8		2		16		6
Interest expense		(209)		(191)		(614)		(567)
Other income, net		23		22		68		68
Income Before Income Taxes		462		377		607		810
Income tax provision (benefit)		73		72		(99)		95
Net Income		389		305		706		715
Preferred stock dividend requirement		3		3		10		10
Income Available for Common Stock	$	386	$	302	$	696	$	705

See accompanying Notes to the Condensed Consolidated Financial Statements.

PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	(Unaudited)
	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in millions)	2016		2015			2016	2015
Net Income	$	389	$	305	$	706	$	715
Other Comprehensive Income
Pension and other postretirement benefit plans obligations
(net of taxes of $0, $0, $0 and $0, at respective dates )		-		-		1		-
Total other comprehensive income (loss)		-		-		1		-
Comprehensive Income	$	389	$	305	$	707	$	715

See accompanying Notes to the Condensed Consolidated Financial Statements.

PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	Balance At
	September 30,		December 31,
(in millions)	2016		2015
ASSETS
Current Assets
Cash and cash equivalents	$	68	$	59
Restricted cash		168		234
Accounts receivable:
Customers (net of allowance for doubtful accounts of $53 and $54
at respective dates)		1,233		1,106
Accrued unbilled revenue		956		855
Regulatory balancing accounts		1,475		1,760
Other		473		284
Regulatory assets		370		517
Inventories:
Gas stored underground and fuel oil		134		126
Materials and supplies		343		313
Income taxes receivable		194		130
Other		306		338
Total current assets		5,720		5,722
Property, Plant, and Equipment
Electric		51,532		48,532
Gas		17,384		16,749
Construction work in progress		2,117		2,059
Total property, plant, and equipment		71,033		67,340
Accumulated depreciation		(21,603)		(20,617)
Net property, plant, and equipment		49,430		46,723
Other Noncurrent Assets
Regulatory assets		7,534		7,029
Nuclear decommissioning trusts		2,597		2,470
Income taxes receivable		70		135
Other		1,066		958
Total other noncurrent assets		11,267		10,592
TOTAL ASSETS	$	66,417	$	63,037

See accompanying Notes to the Condensed Consolidated Financial Statements.

PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	Balance At
	September 30,		December 31,
(in millions, except share amounts)	2016		2015
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings	$	981	$	1,019
Long-term debt, classified as current		160		160
Accounts payable:
Trade creditors		1,370		1,414
Regulatory balancing accounts		764		715
Other		765		418
Disputed claims and customer refunds		233		454
Interest payable		144		203
Other		1,681		1,750
Total current liabilities		6,098		6,133
Noncurrent Liabilities
Long-term debt		16,179		15,577
Regulatory liabilities		6,613		6,321
Pension and other postretirement benefits		2,540		2,534
Asset retirement obligations		4,672		3,643
Deferred income taxes		10,135		9,487
Other		2,350		2,282
Total noncurrent liabilities		42,489		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		7,955		7,215
Reinvested earnings		8,291		8,262
Accumulated other comprehensive income		4		3
Total shareholders' equity		17,830		17,060
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	66,417	$	63,037

See accompanying Notes to the Condensed Consolidated Financial Statements.

PACIFIC GAS AND ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	(Unaudited)
	Nine Months Ended September 30,
(in millions)	2016		2015
Cash Flows from Operating Activities
Net income	$	706	$	715
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, amortization, and decommissioning		2,090		1,935
Allowance for equity funds used during construction		(84)		(80)
Deferred income taxes and tax credits, net		648		245
Disallowed capital expenditures		517		270
Other		234		200
Effect of changes in operating assets and liabilities:
Accounts receivable		(546)		(321)
Inventories		(38)		5
Accounts payable		194		148
Income taxes receivable/payable		(64)		14
Other current assets and liabilities		258		(45)
Regulatory assets, liabilities, and balancing accounts, net		(634)		78
Other noncurrent assets and liabilities		(75)		(232)
Net cash provided by operating activities		3,206		2,932
Cash Flows from Investing Activities
Capital expenditures		(4,128)		(3,662)
Decrease in restricted cash		66		11
Proceeds from sales and maturities of nuclear decommissioning
trust investments		1,019		1,023
Purchases of nuclear decommissioning trust investments		(1,050)		(1,124)
Other		10		18
Net cash used in investing activities		(4,083)		(3,734)
Cash Flows from Financing Activities
Net issuances (repayments) of commercial paper, net of discount of $5
and $2 at respective dates		(293)		545
Short-term debt financing		250		-
Short-term debt matured		-		(300)
Proceeds from issuance of long-term debt, net of discount and
issuance costs of $6 and $14 at respective dates		594		486
Preferred stock dividends paid		(10)		(10)
Common stock dividends paid		(423)		(537)
Equity contribution from PG&E Corporation		740		605
Other		28		20
Net cash provided by financing activities		886		809
Net change in cash and cash equivalents		9		7
Cash and cash equivalents at January 1		59		55
Cash and cash equivalents at September 30	$	68	$	62

Supplemental disclosures of cash flow information
Cash received (paid) for:
Interest, net of amounts capitalized	$	(602)	$	(561)
Income taxes, net		151		-
Supplemental disclosures of noncash investing and financing activities
Common stock dividends declared but not yet paid	$	244	$	-
Capital expenditures financed through accounts payable		325		245

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 serving 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. A change in management’s estimates or assumptions could result in an adjustment that would have a material impact on PG&E Corporation’s and the Utility’s financial condition and results of operations during the period in which such change occurred.

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 has a controlling interest or was the primary beneficiary of any of these VIEs at September 30, 2016, the Utility 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 September 30, 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. In the first quarter of 2016, the Utility submitted its updated decommissioning cost estimate with the CPUC, which reflects an increase of approximately $1.4 billion in the estimated undiscounted cost to decommission the Utility’s nuclear power plants. The change in total estimated cost resulted in an $818 million adjustment to the ARO recognized on the Condensed Consolidated Balance Sheets. The adjustment relates to spent fuel storage, staffing, and out-of-state waste disposal costs. 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.

On June 20, 2016, the Utility entered into a joint proposalwith certain parties to retire Diablo Canyon nuclear power plant at the expiration of its current operating licenses in 2024 (Unit 1) and 2025 (Unit 2), subject to certain approvals, resulting in an additional $115 million increase to the ARO recognized on the Condensed Consolidated Balance Sheets in the second quarter of 2016.

The estimated total nuclear decommissioning cost of $4.8 billion 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 $3.5 billion at September 30,2016 and $2.5 billion at December 31, 2015. 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 and nine months ended September 30, 2016 and 2015 were as follows:

	Pension Benefits				Other Benefits
	Three Months Ended September 30,
(in millions)	2016		2015		2016		2015
Service cost for benefits earned	$	113	$	123	$	13	$	14
Interest cost		179		168		19		18
Expected return on plan assets		(207)		(219)		(26)		(28)
Amortization of prior service cost		2		4		3		4
Amortization of net actuarial loss		6		1		1		1
Net periodic benefit cost		93		77		10		9
Regulatory account transfer (1)		(8)		8		-		-
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.

	Pension Benefits				Other Benefits
	Nine Months Ended September 30,
(in millions)	2016		2015		2016		2015
Service cost for benefits earned	$	339	$	360	$	39	$	41
Interest cost		537		505		57		54
Expected return on plan assets		(621)		(655)		(80)		(84)
Amortization of prior service cost		6		11		11		14
Amortization of net actuarial loss		18		7		3		3
Net periodic benefit cost		279		228		30		28
Regulatory account transfer (1)		(25)		26		-		-
Total	$	254	$	254	$	30	$	28

(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 (Loss)

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 September 30, 2016
Beginning balance	$	(23)	$	16	$	(7)
Amounts reclassified from other comprehensive income: (1)
Amortization of prior service cost
(net of taxes of $0 and $2, respectively)		2		1		3
Amortization of net actuarial loss
(net of taxes of $3 and $0, respectively)		3		1		4
Regulatory account transfer
(net of taxes of $3 and $2, respectively)		(5)		(2)		(7)
Net current period other comprehensive gain (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
	Benefits		Benefits		Total
(in millions, net of income tax)	Three Months Ended September 30, 2015
Beginning balance	$	(21)	$	15	$	(6)
Amounts reclassified from other comprehensive income: (1)
Amortization of prior service cost
(net of taxes of $1 and $2, respectively)		3		2		5
Amortization of net actuarial loss
(net of taxes of $0, and $0, respectively)		1		1		2
Regulatory account transfer
(net of taxes of $3 and $3, respectively)		(4)		(3)		(7)
Net current period other comprehensive gain (loss)		-		-		-
Ending balance	$	(21)	$	15	$	(6)

	Pension		Other
	Benefits		Benefits		Total
(in millions, net of income tax)	Nine Months Ended September 30, 2016
Beginning balance	$	(23)	$	16	$	(7)
Amounts reclassified from other comprehensive income: (1)
Amortization of prior service cost
(net of taxes of $2 and $5, respectively)		4		6		10
Amortization of net actuarial loss
(net of taxes of $7 and $1, respectively)		11		2		13
Regulatory account transfer
(net of taxes of $9 and $6, respectively)		(15)		(8)		(23)
Net current period other comprehensive gain (loss)		-		-		-
Ending balance	$	(23)	$	16	$	(7)

	Pension		Other		Other
	Benefits		Benefits		Investments		Total
(in millions, net of income tax)	Nine Months Ended September 30, 2015
Beginning balance	$	(21)	$	15	$	17	$	11
Amounts reclassified from other comprehensive income:
Amortization of prior service cost
(net of taxes of $4, $6, and $0, respectively) (1)		7		8		-		15
Amortization of net actuarial loss
(net of taxes of $3, $1, and $0, respectively) (1)		4		2		-		6
Regulatory account transfer
(net of taxes of $7, $7, and $0, respectively) (1)		(11)		(10)		-		(21)
Change in investments
(net of taxes of $0, $0, and $12, respectively)		-		-		(17)		(17)
Net current period other comprehensive gain (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 will early adopt this guidance in the fourth quarter of 2016 and do not expect this ASU to have a material impact on their Condensed 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 Condensed 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 Condensed 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 Condensed 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
	September 30,		December 31,
(in millions)	2016		2015
Pension benefits	$	2,416	$	2,414
Deferred income taxes		3,649		3,054
Utility retained generation		376		411
Environmental compliance costs		760		748
Price risk management		96		138
Unamortized loss, net of gain, on reacquired debt		81		94
Other		156		170
Total long-term regulatory assets	$	7,534	$	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
	September 30,		December 31,
(in millions)	2016		2015
Cost of removal obligations	$	4,939	$	4,605
Recoveries in excess of asset retirement obligations		656		631
Public purpose programs		539		600
Other		479		485
Total long-term regulatory liabilities	$	6,613	$	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
	September 30,		December 31,
(in millions)	2016		2015
Electric distribution	$	43	$	380
Utility generation		-		122
Gas distribution		583		493
Energy procurement		174		262
Public purpose programs		122		155
Other		553		348
Total regulatory balancing accounts receivable	$	1,475	$	1,760

	Payable
	Balance at
	September 30,		December 31,
(in millions)	2016		2015
Utility generation	$	47	$	-
Energy procurement		109		112
Public purpose programs		289		244
Other		319		359
Total regulatory balancing accounts payable	$	764	$	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 September 30, 2016:

					Letters of
	Termination	Facility			Credit		Commercial		Facility
(in millions)	Date	Limit			Outstanding		Paper		Availability
PG&E Corporation	April 2021	$	300	(1)	$	-	$	165	$	135
Utility	April 2021		3,000	(2)		31		731		2,238
Total revolving credit facilities		$	3,300		$	31	$	896	$	2,373

(1)Includes a $50 million lender commitment to the letter of credit sublimit 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 sublimit and a $75 million commitment for swingline loans.

In June 2016, PG&E Corporation and the Utility each extended the termination dates of their existing revolving credit facilities by one year from April 27, 2020 to April 27, 2021.

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

AtSeptember 30, 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 0.89% to 0.92%. At September 30, 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 0.77% to 0.85%. 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 nine months ended September 30, 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		711		707
Equity contributions		-		740
Common stock issued		742		-
Share-based compensation		59		-
Common stock dividends declared		(724)		(667)
Preferred stock dividend requirement		-