Regulatory Assets and Liabilities (Notes)

12 Months Ended

Dec. 31, 2023

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Assets and Liabilities

Regulatory Assets and Liabilities

The regulatory assets and regulatory liabilities resulting from our application of the provisions of Topic 980 included on the accompanying Balance Sheet are as follows:

	December 31,
	2023		2022
	(Thousands)
Current regulatory assets:
Fuel recovery	$	19	$	11,871
Levelized depreciation	2,035		1,694
Total current regulatory assets	2,054		13,565
Long-term regulatory assets:
Levelized depreciation	9,519		11,601
Grossed-up deferred taxes on equity funds used during construction	3,969		4,350
Washington State Carbon and Greenhouse Gas Tax	22,308		—
Total long-term regulatory assets	35,796		15,951
Total regulatory assets	$	37,850	$	29,516
Current regulatory liabilities:
Customer tax refund	$	—	$	125,506
Deferred federal taxes - liability	18,643		18,643
Deferred state taxes - liability	1,094		1,094
Fuel recovery	1,637		—
Total current regulatory liabilities	21,374		145,243
Long-term regulatory liabilities:
Deferred federal taxes - liability	169,240		187,883
Postretirement benefits	42,415		42,207
Asset retirement obligations, net	30,685		30,590
Deferred state taxes - liability	9,932		11,026
Total long-term regulatory liabilities	252,272		271,706
Total regulatory liabilities	$	273,646	$	416,949

The significant regulatory assets and liabilities include:

Fuel Recovery: This amount represents 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 assets and liabilities are expected to be recovered or refunded, respectively, by changing the fuel reimbursement rate 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).

ARO, 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.

Washington State Carbon and Greenhouse Tax: This amount represents the cost of emission allowances and the associated accumulated interest as a result of the passage of the state of Washington Climate Commitment Act that took effect January 1, 2023. Our Settlement allows us to recover the costs of purchasing allowances under the program in our next rate case.