Regulatory Assets and Liabilities (Notes)

12 Months Ended

Dec. 31, 2022

Regulatory Assets and Liabilities Disclosure [Abstract]

Our regulatory assets and liabilities result from our application of the provisions of Topic 980 and are reflected on our Balance Sheet. These balances are presented on our Balance Sheet on a gross basis and are recoverable or refundable over various periods. Below are the details of our regulatory assets and liabilities:


	December 31,
	2022		2021
	(Thousands)
Current regulatory assets:
Fuel recovery	$	11,871	$	107
Levelized depreciation	1,694		1,251

Total current regulatory assets	13,565		1,358
Non-current regulatory assets:
Levelized depreciation	11,601		13,581
Grossed-up deferred taxes on equity funds used during construction	4,350		4,731
Total non-current regulatory assets	15,951		18,312
Total regulatory assets	$	29,516	$	19,670

Current regulatory liabilities:
Customer tax refund	$	125,506	$	—
Deferred federal taxes - liability	18,643		—
Deferred state taxes - liability	1,094		—
Fuel recovery	—		158
Total current regulatory liabilities	145,243		158
Non-current regulatory liabilities:
Deferred federal taxes - liability	187,883		206,527
Postretirement benefits	42,207		40,980
Asset retirement obligations, net	30,590		26,747
Deferred state taxes - liability	11,026		12,120
Customer tax refund	—		102,059
Total non-current regulatory liabilities	271,706		388,433
Total regulatory liabilities	$	416,949	$	388,591

The significant regulatory assets and liabilities include:

Fuel Recovery - These amounts reflect the value of the cumulative volumetric difference between the gas retained from our customers and the gas consumed in operations. These amounts are not included in the rate base, but are expected to be recovered or refunded by changing the fuel reimbursement factor in subsequent annual fuel filings.

Levelized Depreciation - Levelized depreciation allows contract revenue streams to remain constant over the primary contract terms by recognizing lower than book depreciation in the early years and higher than book depreciation in later years. The depreciation component of the levelized incremental rates will equal the accumulated book depreciation by the end of the primary contract terms. The difference between levelized depreciation and straight-line book depreciation is recorded as a FERC approved regulatory asset or liability and is eliminated over the levelization period.

Grossed-Up Deferred Taxes on Equity Funds Used During Construction - The regulatory asset balance was established to offset the deferred tax for the equity component of the allowance for funds used during the construction of long-lived assets. All amounts were generated during the period that we were a taxable entity. Taxes on capitalized funds used during construction and the offsetting deferred income taxes are included in the rate base and are recovered over the depreciable lives of the long-lived assets to which they relate.

Customer Tax Refund - In our 2017 Settlement, which became effective January 1, 2018, we agreed with our customers that if federal income tax rates decreased due to subsequent legislation, such as the Tax Cuts and Jobs Act of 2017 (Tax Reform), we would record a regulatory liability. As a result of Tax Reform and as stipulated in the Docket No. RP22-1155 rate case settlement, the accrued regulatory liability, including interest, was paid to customers in January 2023.

Deferred Federal Taxes - Liability - This regulatory liability balance was established as a result of a decrease to rate base deferred taxes due to a decrease to the effective federal income tax rate. The timing of the refund of the regulatory liability to rate payers is stated in the Docket No. RP22-1155 rate case settlement.

Postretirement Benefits - We seek to recover the actuarially determined cost of postretirement benefits through rates that are set through periodic general rate filings. Any differences between the annual actuarially determined cost and amounts currently being recovered in rates are recorded as regulatory assets or liabilities and collected or refunded through future rate adjustments. These amounts are not included in the rate base, and we are not currently recovering postretirement benefit costs in our rates (see Note 7 – Benefit Plans).

Asset Retirement Obligations, net - This regulatory liability balance reflects the amount that we have recovered in our rates related to our future retirement costs offset by depreciation of the ARO asset and changes in the ARO liability due to the passage of time. AROs are expected to be fully recovered through the net negative salvage component of depreciation included in our rates (see Note 10 – Asset Retirement Obligations).

Deferred State Taxes - Liability - This regulatory liability balance, following the August 10, 2018 merger of Williams with Williams Partners L.P., reflects a decrease to rate base deferred taxes due to a decrease to the estimated effective state income tax rates. The timing of the refund of the regulatory liability to rate payers is stated in the Docket No. RP22-1155 rate case settlement.