REGULATORY ASSETS AND LIABILITIES

The majority of PGE’s regulatory assets and liabilities are reflected in customer prices and are amortized over the period in which they are reflected in customer prices. Items not currently reflected in prices are pending before the regulatory body as discussed below.

Regulatory assets and liabilities consist of the following (dollars in millions):



		Weighted Average Remaining Life ⁽¹⁾	As of December 31,
			2011				2010
			Current		Noncurrent		Current		Noncurrent
Regulatory assets:
	Price risk management ⁽²⁾	2 years	$	194	$	172	$	175	$	185
	Pension and other postretirement plans ⁽²⁾	⁽³⁾	—		295		—		213
	Deferred income taxes ⁽²⁾	⁽⁴⁾	—		87		—		95
	Deferred broker settlements ⁽²⁾	1 year	11		—		24		—
	Renewable energy deferral	1 year	1		—		22		—
	Debt reacquisition costs ⁽²⁾	7 years	—		28		—		23
	Other ⁽⁵⁾	Various	10		12		—		28
	Total regulatory assets		$	216	$	594	$	221	$	544
Regulatory liabilities:
	Asset retirement removal costs ⁽⁶⁾	⁽⁴⁾	$	—	$	637	$	—	$	588
	Asset retirement obligations ⁽⁶⁾	⁽⁴⁾	—		36		—		33
	Power cost adjustment mechanism	⁽⁷⁾	—		10		—		—
	Trojan ISFSI pollution control tax credits	⁽⁷⁾	—		7		18		4
	Other	Various	6		30		7		32
	Total regulatory liabilities		$	6	$	720	$	25	$	657


(1)	As of December 31, 2011.


(2)	Does not include a return on investment.


(3)	Recovery expected over the average service life of employees. For additional information, see Note 2, Summary of Significant Accounting Policies.


(4)	Recovery expected over the estimated lives of the assets.


(5)	Of the total other unamortized regulatory asset balances, a return is recorded on $21 million and $26 million as of December 31, 2011 and 2010, respectively.


(6)	Included in rate base for ratemaking purposes.


(7)	Refund period not yet determined.

As of December 31, 2011, PGE had regulatory assets of $22 million earning a return on investment at the following rates: (i) $7 million at PGE’s authorized cost of capital, currently 8.033%; (ii) $7 million at the approved rate for deferred accounts under amortization, ranging from 2.01% to 4.27%, depending on the year of approval; and (iii) $8 million earning a return by inclusion in rate base.

Price risk management represents the difference between the net unrealized losses recognized on derivative instruments related to price risk management activities and their realization and subsequent recovery in customer prices. During the fourth quarter of 2011, PGE received an order from the OPUC on its Annual Update Tariff for 2012 net variable power costs (NVPC). Pursuant to the order, the OPUC reduced the Company’s 2012 NVPC forecast by approximately $3 million, which is reflected as a reduction to the regulatory asset for price risk management as of December 31, 2011. For further information regarding assets and liabilities from price risk management activities, see Note 5, Price Risk Management.

Pension and other postretirement plans represents unrecognized components of the benefit plans’ funded status, which are recoverable in customer prices when recognized in net periodic benefit cost. For further information, see Note 10, Employee Benefits.

Deferred income taxes represents income tax benefits resulting from property-related timing differences that previously flowed to customers and will be included in customer prices when the temporary differences reverse. For further information, see Note 11, Income Taxes.

Deferred broker settlements consist of transactions that have been financially settled by clearing brokers prior to the contract delivery date. These gains and losses are deferred for future recovery in customer prices during the corresponding contract settlement month.

Renewable energy deferral reflects the net revenue requirement related to new renewable resources and associated transmission that are not yet included in customer prices, with the majority related to Biglow Canyon Wind Farm. Recovery of net revenue requirements associated with new renewable resources, which are required by the 2007 Oregon Renewable Energy Act, is allowed under a renewable adjustment clause mechanism authorized by the OPUC.

Asset retirement removal costs represent the costs that do not qualify as AROs and are a component of depreciation expense allowed in customer prices. Such costs are recorded as a regulatory liability as they are collected in prices, and are reduced by actual removal costs incurred.

Asset retirement obligations represent the difference in the timing of recognition of (i) the amounts recognized for depreciation expense of the asset retirement costs and accretion of the ARO, and (ii) the amount recovered in customer prices.