Regulatory Assets and Liabilities

3 Months Ended

Mar. 31, 2012

(J): Regulatory Assets and Liabilities. We apply the accounting guidance for regulated operations. Regulatory assets represent certain costs that are probable of recovery from our members in future revenues through rates under the wholesale power contracts with our members extending through December 31, 2050. Regulatory liabilities represent certain items of income that we are retaining and that will be applied in the future to reduce revenues required to be recovered from our members.

The following regulatory assets and (liabilities) are reflected on the accompanying condensed balance sheet as of March 31, 2012 and December 31, 2011.

The following regulatory assets and liabilities are reflected on the accompanying condensed balance sheets as of March 31, 2012 and December 31, 2011.


		2012		2011
		(dollars in thousands)

Regulatory Assets:
Premium and loss on reacquired debt	$	95,483	$	98,538	^(a)
Amortization on capital leases		41,431		46,627	^(b)
Outage costs		45,656		42,866	^(c)
Interest rate swap termination fees		20,318		21,316	^(d)
Asset retirement obligations		10,357		29,341	^(e)
Depreciation expense		50,853		51,209	^(f)
Deferred charges related to Vogtle Units No. 3 and No. 4 training costs		19,487		17,602	^(g)
Interest rate options cost		33,589		30,735	^(h)
Deferral of effects on net margin—Murray Energy facility		10,792		3,536	^(k)
Other regulatory assets		10,420		9,777	⁽ⁱ⁾

Total Regulatory Assets	$	338,386	$	351,547
Regulatory Liabilities:
Accumulated retirement costs for other obligations	$	32,795	$	32,687	^(e)
Net benefit of Rocky Mountain transactions		46,984		47,783	^(j)
Deferral of effects on net margin—Hawk Road Energy facility		10,992		15,811	^(k)
Major maintenance sinking fund		29,115		28,524	^(l)
Deferred debt service adder		40,062		37,586	^(m)
Other regulatory liabilities		1,530		1,609	⁽ⁱ⁾

Total Regulatory Liabilities	$	161,478	$	164,000
Net regulatory assets	$	176,908	$	187,547

^(a): Represents premiums paid, together with unamortized transaction costs related to reacquired debt amortized over the period of the refunding debt, which range up to 31 years.
^(b): Recovery over the remaining life of the leases through 2021.
^(c): Consists of both coal-fired and nuclear refueling outage costs. These outage costs are amortized on a straight-line basis to expense over an 18 to 24-month period.
^(d): Represents amount paid on settled interest rate swaps arrangements that are being amortized over the remaining life of the refunded variable rate bonds or 2016 and 2019, respectively.
^(e): Accounting and reporting performed in accordance with authoritative guidance related to asset retirement obligations. We record an offsetting regulatory asset or liability to reflect the difference in timing of recognition of the costs of decommissioning for financial statement purposes and for ratemaking purposes.
^(f): Prior to Nuclear Regulatory Commission (NRC) approval of a 20 year license extension for Plant Vogtle, we deferred the difference between Plant Vogtle depreciation expense based on the then 40-year operating license and depreciation expense assuming an expected 20-year license extension. Amortization commenced upon NRC approval of the license extension in 2009 and is being amortized over the remaining life of the plant.
^(g): Vogtle Units No. 3 and No. 4 training and interest related carrying costs of such training. Amortization will commence effective with the commercial operation date of each unit which is expected to be 2016 and 2017, respectively, and amortized over the life of the units.
^(h): Deferral of net loss (gains) associated with the change in fair value of the interest rate options to hedge interest rates on a portion of expected borrowings related to Vogtle Units No. 3 and No. 4 construction. Amortization will commence effective with the expected principal repayment of the Department of Energy (DOE)-guaranteed loan in 2017 and amortized over the expected remaining life of DOE-guaranteed loan.
⁽ⁱ⁾: The amortization period for other regulatory assets range up to 37 years and the amortization period of other regulatory liabilities range up to 7 years.

^(j): Net benefit associated with Rocky Mountain lease transactions is amortized to income over the 30-year lease-back period.
^(k): Effects on net margin for Hawk Road and Murray will be deferred until the end of 2015 and amortized over the remaining life of each plant.
^(l): Represents collections for future major maintenance costs that will offset by deferred revenues when incurred.
^(m): Collections to fund debt payments in excess of depreciation expense through the end of 2025; deferred revenues will be amortized over the remaining useful life of the plants.