REGULATORY ASSETS AND LIABILITIES

Regulatory assets and liabilities include the following:



At December 31,	2011		2010
(millions)
Dominion
Regulatory assets:
Deferred cost of fuel used in electric generation⁽¹⁾	$	249	$	174
Deferred rate adjustment clause costs⁽²⁾	113		109
Unrecovered gas costs⁽³⁾	48		39
Derivatives⁽⁴⁾	45		—
Virginia sales taxes⁽⁵⁾	32		35
Plant retirement⁽⁶⁾	27		—
PIPP⁽⁷⁾	—		44
Other	27		6
Regulatory assets-current	541		407
Unrecognized pension and other postretirement benefit costs⁽⁸⁾	887		987
Deferred cost of fuel used in electric generation⁽¹⁾	122		153
Income taxes recoverable through future rates⁽⁹⁾	121		90
Deferred rate adjustment clause costs⁽²⁾	72		69
Derivatives⁽⁴⁾	49		—
Other postretirement benefit costs⁽¹⁰⁾	26		29
Plant retirement⁽⁶⁾	25		31
Other	80		87
Regulatory assets-non-current	1,382		1,446
Total regulatory assets	$	1,923	$	1,853
Regulatory liabilities:
Provision for rate proceedings⁽¹¹⁾	$	150	$	79
PIPP⁽⁷⁾	58		—
Other	35		56
Regulatory liabilities-current	243		135
Provision for future cost of removal and AROs⁽¹²⁾	901		830
Decommissioning trust⁽¹³⁾	399		391
Derivatives⁽⁴⁾	—		68
Other	24		103
Regulatory liabilities-non-current	1,324		1,392
Total regulatory liabilities	$	1,567	$	1,527
Virginia Power
Regulatory assets:
Deferred cost of fuel used in electric generation⁽¹⁾	$	249	$	174
Deferred rate adjustment clause costs⁽²⁾	113		109
Derivatives⁽⁴⁾	45		—
Virginia sales taxes⁽⁵⁾	32		35
Plant retirement⁽⁶⁾	27		—
Other	13		—
Regulatory assets-current	479		318
Deferred cost of fuel used in electric generation⁽¹⁾	122		153
Income taxes recoverable through future rates⁽⁹⁾	100		76
Deferred rate adjustment clause costs⁽²⁾	70		66
Derivatives⁽⁴⁾	49		—
Plant retirement⁽⁶⁾	25		31
Other	33		44
Regulatory assets-non-current	399		370
Total regulatory assets	$	878	$	688
Regulatory liabilities:
Provision for rate proceedings⁽¹¹⁾	$	150	$	79
Other	28		30
Regulatory liabilities-current	178		109
Provision for future cost of removal⁽¹²⁾	687		622
Decommissioning trust⁽¹³⁾	399		391
Derivatives⁽⁴⁾	—		68
Other	9		93
Regulatory liabilities-non-current	1,095		1,174
Total regulatory liabilities	$	1,273	$	1,283


(1)	Primarily reflects deferred fuel expenses for the Virginia jurisdiction of Virginia Power's generation operations. See Note 14 for more information.


(2)	Reflects deferrals under the electric transmission FERC formula rate and the deferral of costs associated with certain riders. See Note 14 for more information.


(3)	Reflects unrecovered gas costs at Dominion's regulated gas operations, which are recovered through quarterly or annual filings with the applicable regulatory authority.


(4)	As discussed under Derivative Instruments in Note 2, for jurisdictions subject to cost-based rate regulation, changes in the fair value of derivative instruments result in the recognition of regulatory assets or regulatory liabilities as they are expected to be recovered from or refunded to customers.


(5)	Amounts to be recovered through an annual surcharge to reimburse Virginia Power for incremental sales taxes being incurred due to the repeal of the public service company sales tax exemption in Virginia.


(6)	Reflects costs anticipated to be recovered in base rates for certain coal units expected to be retired.


(7)	Under PIPP, eligible customers can receive energy assistance based on their ability to pay. The difference between the customer's total bill and the PIPP plan amount is deferred and collected or returned annually under the PIPP rider according to East Ohio tariff provisions. See Note 14 for more information regarding PIPP.


(8)	Represents unrecognized pension and other postretirement benefit costs expected to be recovered through future rates by certain of Dominion's rate-regulated subsidiaries.


(9)	Amounts to be recovered through future rates to pay income taxes that become payable when rate revenue is provided to recover AFUDC-equity and depreciation of property, plant and equipment for which deferred income taxes were not recognized for ratemaking purposes, including amounts attributable to tax rate changes.


(10)	Primarily reflects costs recognized in excess of amounts included in regulated rates charged by Dominion's regulated gas operations before rates were updated to reflect a change in accounting method for other postretirement benefit costs.


(11)	Reflects a reserve associated with the settlement of Virginia Power's 2009 base rate case proceedings and associated with the Biennial Review Order. See Note 14 for more information.


(12)	Rates charged to customers by the Companies' regulated businesses include a provision for the cost of future activities to remove assets that are expected to be incurred at the time of retirement.


(13)	Primarily reflects a regulatory liability representing amounts collected from Virginia jurisdictional customers and placed in external trusts (including income, losses and changes in fair value thereon) for the future decommissioning of Virginia Power's utility nuclear generation stations, in excess of the related ARO.

At December 31, 2011, approximately $198 million of Dominion's and $127 million of Virginia Power's regulatory assets represented past expenditures on which they do not currently earn a return. Dominion's expenditures primarily include deferred cost of fuel used in electric generation. The above expenditures are expected to be recovered within the next two years.