This excerpt taken from the PCG 8-K filed Oct 28, 2005.
Depreciation The Utilitys composite depreciation rate was 3.42% in 2004, 2003 and 2002.
The useful lives of the Utilitys property, plant and equipment are authorized by the CPUC and the FERC and depreciation expense is included within the recoverable costs of service included in rates charged to customers. Depreciation expense includes a component for the original cost of assets and a component for estimated future removal costs, net of any salvage value at retirement. The Utility has a separate rate component for the accrual of its recorded obligation for nuclear decommissioning, which is included in depreciation, amortization and decommissioning expense in the accompanying Consolidated Statements of Operations.
PG&E Corporation and the Utility charge the original cost of retired plant and removal costs less salvage value to accumulated depreciation upon retirement of plant in service for the Utilitys lines of business that apply SFAS No. 71, which include electricity and natural gas distribution, electricity generation and transmission, and natural gas transportation and storage. PG&E Corporation and the Utility expense repair and maintenance costs as incurred.