Regulatory Matters

12 Months Ended

Sep. 30, 2021

Regulatory Assets and Liabilities, Other Disclosures [Abstract]

Regulatory Assets and Liabilities

The Company has recorded the following regulatory assets and liabilities:


	At September 30
	2021		2020
	(Thousands)
Regulatory Assets(1):
Pension Costs(2) (Note K)	$	21,655	$	107,010
Post-Retirement Benefit Costs(2) (Note K)	10,075		18,863
Recoverable Future Taxes (Note G)	121,992		118,310
Environmental Site Remediation Costs(2) (Note L)	7,256		10,479
Asset Retirement Obligations(2) (Note E)	16,799		16,245
Unamortized Debt Expense (Note A)	10,589		12,297
Other(3)	33,566		20,118
Total Regulatory Assets	221,932		303,322
Less: Amounts Included in Other Current Assets	(29,206)		(16,609)
Total Long-Term Regulatory Assets	$	192,726	$	286,713


	At September 30
	2021		2020
	(Thousands)
Regulatory Liabilities:
Cost of Removal Regulatory Liability	$	245,636	$	230,079
Taxes Refundable to Customers (Note G)	354,089		357,508
Post-Retirement Benefit Costs(4) (Note K)	213,112		146,474
Amounts Payable to Customers (See Regulatory Mechanisms in Note A)	21		10,788
Other(5)	48,391		59,989
Total Regulatory Liabilities	861,249		804,838
Less: Amounts included in Current and Accrued Liabilities	(60,881)		(55,678)
Total Long-Term Regulatory Liabilities	$	800,368	$	749,160

(1)The Company recovers the cost of its regulatory assets but generally does not earn a return on them. There are a few exceptions to this rule. For example, the Company does earn a return on Unrecovered Purchased Gas Costs and, in the New York jurisdiction of its Utility segment, earns a return, within certain parameters, on the excess of cumulative funding to the pension plan over the cumulative amount collected in rates.

(2)Included in Other Regulatory Assets on the Consolidated Balance Sheets.

(3)$29,206 and $16,609 are included in Other Current Assets on the Consolidated Balance Sheets at September 30, 2021 and 2020, respectively, since such amounts are expected to be recovered from ratepayers in the next 12 months. $4,360 and $3,509 are included in Other Regulatory Assets on the Consolidated Balance Sheets at September 30, 2021 and 2020, respectively.

(4)$30,000 is included in Other Accruals and Current Liabilities on the Consolidated Balance Sheet at September 30, 2021, since that amount is expected to be passed back to ratepayers in the next 12 months. $183,112 is included in Other Regulatory Liabilities on the Consolidated Balance Sheet at September 30, 2021.

(5)$30,860 and $44,890 are included in Other Accruals and Current Liabilities on the Consolidated Balance Sheets at September 30, 2021 and 2020, respectively, since such amounts are expected to be passed back to ratepayers in the next 12 months. $17,531 and $15,099 are included in Other Regulatory Liabilities on the Consolidated Balance Sheets at September 30, 2021 and 2020, respectively.

If for any reason the Company ceases to meet the criteria for application of regulatory accounting treatment for all or part of its operations, the regulatory assets and liabilities related to those portions ceasing to meet such criteria would be eliminated from the Consolidated Balance Sheets and included in income of the period in which the discontinuance of regulatory accounting treatment occurs.

Cost of Removal Regulatory Liability

In the Company’s Utility and Pipeline and Storage segments, costs of removing assets (i.e. asset retirement costs) are collected from customers through depreciation expense. These amounts are not a legal retirement obligation as discussed in Note E — Asset Retirement Obligations. Rather, they are classified as a regulatory liability in recognition of the fact that the Company has collected dollars from customers that will be used in the future to fund asset retirement costs.

New York Jurisdiction

Distribution Corporation's current delivery rates in its New York jurisdiction were approved by the NYPSC in an order issued on April 20, 2017 with rates becoming effective May 1, 2017. The order provided for a return on equity of 8.7%. The order also directed the implementation of an earnings sharing mechanism to be in place beginning on April 1, 2018.

Pennsylvania Jurisdiction

Distribution Corporation’s current delivery rates in its Pennsylvania jurisdiction were approved by the PaPUC on November 30, 2006 as part of a settlement agreement that became effective January 1, 2007. The rate settlement does not specify any requirement to file a future rate case.

On July 22, 2021, Distribution Corporation filed a supplement to its current Pennsylvania tariff proposing to reduce base rates effective October 1, 2021 by $7.7 million in order to stop collecting other post-employment benefit (“OPEB”) expenses from customers at this time, to begin to refund to customers overcollected OPEB expenses in the amount of $50.0 million, and to make certain other adjustments to further reduce Distribution Corporation’s regulatory liability associated with OPEB expenses. The PaPUC issued an order approving this tariff supplement on September 15, 2021 and new rates went into effect on October 1, 2021. On September 21, 2021, a complaint was filed in this proceeding. While new rates, including associated refunds, went into effect on October 1, 2021, certain other adjustments called for by the tariff supplement that allow Distribution Corporation to reduce its regulatory liability and its OPEB expenses will not be recorded in the Company’s consolidated financial statements until the complaint is resolved. The PaPUC has assigned the matter to the Office of Administrative Law Judge. The refunds specified in the tariff supplement will be funded entirely by grantor trust assets held by the Company, most of which are included in a fixed income mutual fund that is a component of Other Investments on the Company’s Consolidated Balance Sheet. With the elimination of OPEB expenses in base rates, Distribution Corporation will no longer fund the grantor trust or its VEBA trusts in its Pennsylvania jurisdiction.

FERC Jurisdiction

Supply Corporation’s rate settlement, approved June 1, 2020, provides that no party may make a rate filing for new rates to be effective before February 1, 2024, except that Supply Corporation may file an NGA general Section 4 rate case to change rates if the corporate federal income tax rate is increased. If no case has been filed, Supply Corporation must file for rates to be effective February 1, 2025. Supply Corporation has no rate case currently on file.

Empire’s 2019 rate settlement provides that Empire must make a rate case filing no later than May 1, 2025.