(I) 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 unaudited consolidated balance sheets as of June 30, 2017 and December 31, 2016.


		2017		2016
		(dollars in thousands)

Regulatory Assets:
Premium and loss on reacquired debt(a)	$	53,280	$	55,084
Amortization on capital leases(b)		33,061		32,274
Outage costs(c)		41,396		39,986
Interest rate swap termination fees(d)		2,678		3,570
Asset retirement obligations—Ashpond and other(l)		50,923		33,747
Depreciation expense(e)		43,379		44,091
Deferred charges related to Vogtle Units No. 3 and No. 4 training costs(f)		46,143		43,444
Interest rate options cost(g)		109,737		107,394
Deferral of effects on net margin—Smith Energy Facility(h)		169,426		172,399
Other regulatory assets(m)		15,241		13,398

Total Regulatory Assets	$	565,264	$	545,387
Regulatory Liabilities:
Accumulated retirement costs for other obligations(i)	$	11,749	$	9,829
Deferral of effects on net margin—Hawk Road Energy Facility(h)		19,858		20,163
Major maintenance reserve(j)		36,722		28,379
Amortization on capital leases(b)		21,505		23,084
Deferred debt service adder(k)		90,896		86,082
Asset retirement obligations(l)		31,251		11,766
Other regulatory liabilities(m)		5,411		18,445

Total Regulatory Liabilities	$	217,392	$	197,748

Net Regulatory Assets	$	347,872	$	347,639

(a)Represents premiums paid, together with unamortized transaction costs related to reacquired debt that are being amortized over the lives of the refunding debt, which range up to 27 years.

(b)Represents the difference between expense recognized for rate-making purposes and financial statement purposes related to capital lease payments and the aggregate of the amortization of the asset and interest on the obligation.

(c)Consists of both coal-fired maintenance and nuclear refueling outage costs. Coal-fired outage costs are amortized on a straight-line basis to expense over a 24-month period. Nuclear refueling outage costs are amortized on a straight-line basis to expense over the 18 to 24-month operating cycles of each unit.

(d)Represents losses on settled interest rate swap arrangements that are being amortized through the end of 2018.

(e)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.

(f)Deferred charges related to 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 and amortized to expense over the life of the units.

(g)Deferral of costs associated with interest rate options purchased to hedge interest rates on certain borrowings related to Vogtle Units No.3 and No.4 construction that will be amortized over the life of the associated debt.

(h)Effects on net margin for Smith and Hawk Road Energy Facilities are being amortized over the remaining life of each respective plant.

(i)Represents the accrual of retirement costs associated with long-lived assets for which there are no legal obligations to retire the assets.

(j)Represents collections for future major maintenance costs; revenues are recognized as major maintenance costs are incurred.

(k)Represents collections to fund certain debt payments to be made through the end of 2025 which will be in excess of amounts collected through depreciation expense; the deferred credits will be amortized over the remaining useful life of the plants.

(l)Represents difference in timing of recognition of the costs of decommissioning for financial statement purposes and for ratemaking purposes.

(m)The amortization period for other regulatory assets range up to 33 years and the amortization period of other regulatory liabilities range up to 10 years.