Regulatory Matters

Regulatory assets and liabilities in the Condensed Consolidated Balance Sheets as of July 31, 2015 and October 31, 2014 are as follows.



In thousands	July 31, 2015		October 31, 2014
Regulatory Assets:
Current:
Unamortized debt expense	$	1,480	$	1,490
Amounts due from customers	—		16,108
Environmental costs	1,527		1,568
Deferred operations and maintenance expenses	833		916
Deferred pipeline integrity expenses	3,470		3,470
Deferred pension and other retirement benefit costs	2,757		2,769
Robeson liquefied natural gas (LNG) development costs	515		917
Other	1,852		1,850
Total current	12,434		29,088
Noncurrent:
Unamortized debt expense	14,296		15,402
Environmental costs	5,439		6,470
Deferred operations and maintenance expenses	4,214		4,721
Deferred pipeline integrity expenses	27,219		24,694
Deferred pension and other retirement benefit costs	18,550		18,799
Amounts not yet recognized as a component of pension and other retirement benefit costs	89,140		94,265
Regulatory cost of removal asset	18,792		18,275
Robeson LNG development costs	223		509
Other	1,314		1,644
Total noncurrent	179,187		184,779
Total	$	191,621	$	213,867



Regulatory Liabilities:
Current:
Amounts due to customers	$	34,815	$	46,231
Noncurrent:
Regulatory cost of removal obligations	519,028		506,574
Deferred income taxes	68,533		51,930
Amounts not yet recognized as a component of pension and other retirement benefit costs	87		94
Total noncurrent	587,648		558,598
Total	$	622,463	$	604,829

Rate and Regulatory Actions

North Carolina

In December 2014, we filed a petition with the North Carolina Utilities Commission (NCUC) seeking authority to collect through adjusted rates an additional $26.6 million in annual integrity management rider (IMR) margin revenues effective February 2015 based on $241.9 million of capital investments in integrity and safety projects over the twelve-month period ended October 31, 2014. In January 2015, the NCUC issued an order authorizing the requested IMR rate adjustments, subject to further review and determination of the reasonableness and prudence of the capital investments and associated costs reflected in the adjustments in our annual IMR adjustment proceedings or next general rate case, with any adjustments to be implemented through a prospective rate adjustment at or after the time such adjustment is approved by the NCUC. We are currently in discussion with the North Carolina Public Staff to complete their review and to jointly develop a future procedural schedule for the IMR audit/rate approval process.

In August 2015, we filed testimony with the NCUC in support of our gas cost purchasing and accounting practices for the twelve months ended May 31, 2015. A hearing has been scheduled for October 6, 2015.

South Carolina

In June 2015, we filed testimony with the Public Service Commission of South Carolina (PSCSC) in support of our annual review of purchased gas adjustment (PGA) and gas purchasing policies for the twelve months ended March 31, 2015. On June 29, 2015, a settlement agreement with the Office of Regulatory Staff (ORS) was filed. On August 12, 2015, the PSCSC approved the settlement agreement finding that our gas purchasing policies were reasonable and prudent, that we properly adhered to the gas cost recovery provisions of our tariff and relevant PSCSC orders and that we managed our hedging program in a manner consistent with PSCSC orders. We are waiting on the PSCSC's written order at this time.

In June 2015, we filed with the PSCSC a quarterly monitoring report for the twelve months ended March 31, 2015 and a cost and revenue study under the Rate Stabilization Act requesting a change in rates. On September 1, 2015, a settlement agreement with the ORS was filed that stipulated a $1.7 million annual increase in margin based on a return on equity of 10.2%, effective November 1, 2015. We are waiting on a ruling from the PSCSC at this time.

Tennessee

In February 2014, we filed a petition with the Tennessee Regulatory Authority (TRA) to authorize us to amortize and refund $4.7 million to customers for recorded excess deferred taxes. We proposed to refund this amount to customers over three years. We are waiting on a ruling from the TRA at this time.

In August 2014, we filed an annual report with the TRA reflecting the shared gas cost savings from gains and losses derived from gas purchase benchmarking and secondary market transactions for the twelve months ended June 30, 2014 under the Tennessee Incentive Plan (TIP). In March 2015, the TRA Utilities Division Audit Staff (Audit Staff) submitted their report on the TIP with which we concurred. In April 2015, the TRA approved and adopted the Audit Staff's report and issued their written order in May 2015.

In September 2014, we filed a petition with the TRA seeking authority to implement a compressed natural gas (CNG) infrastructure rider to recover the costs of our capital investments in infrastructure and equipment associated with this alternative motor vehicle transportation fuel. We proposed that the tariff rider be effective October 1, 2014 with an initial rate adjustment on November 1, 2014 based on capital expenditures incurred through June 2014 and for rates to be updated annually outside of general rate cases for the return of and on these capital investments. In November 2014, the TRA consolidated this docket with a separate petition we filed seeking modifications to our tariff regarding service to customers using natural gas as a motor fuel. A hearing on this matter was held in January 2015. In February 2015, the TRA (1) denied approval of the proposed tariff rider, (2) ruled that our retail CNG motor fuel service should be unregulated and no longer provided under our regulated tariff, and (3) approved the proposed modification to our tariff providing natural gas for motor fuel purposes at customer premises. The TRA indicated that we may seek recovery of our prior investments in CNG equipment of $4.7 million since our last rate proceeding in utility rate base in our next general rate case proceeding as the investments were made in good faith under the assumption retail CNG motor fuel would be a regulated service. We are waiting on the TRA's written order.

In December 2014, we filed an annual report for the twelve months ended June 30, 2013 with the TRA reflecting the transactions in the deferred gas cost account for the Actual Cost Adjustment mechanism. We are waiting on a ruling from the TRA at this time.

In August 2015, we filed an annual report with the TRA reflecting the shared gas cost savings from gains and losses derived from gas purchase benchmarking and secondary market transactions for the twelve months ended June 30, 2015 under the TIP. We are waiting on a ruling from the TRA at this time.