(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 we have with each of our members. 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, 2018 and December 31, 2017.


		2018		2017
		(dollars in thousands)

Regulatory Assets:
Premium and loss on reacquired debt(a)	$	49,647	$	52,989
Amortization on capital leases(b)		34,382		33,846
Outage costs(c)		34,715		40,525
Asset retirement obligations—Ashpond and other(k)		85,449		68,289
Depreciation expense(d)		41,955		42,667
Deferred charges related to Vogtle Units No. 3 and No. 4 training costs(e)		50,188		48,702
Interest rate options cost(f)		114,515		112,102
Deferral of effects on net margin—Smith Energy Facility(g)		163,482		166,454
Other regulatory assets(l)		23,278		19,510

Total Regulatory Assets	$	597,611	$	585,084
Regulatory Liabilities:
Accumulated retirement costs for other obligations(h)	$	16,112	$	12,813
Deferral of effects on net margin—Hawk Road Energy Facility(g)		19,247		19,553
Major maintenance reserve(i)		50,084		47,087
Amortization on capital leases(b)		18,605		20,055
Deferred debt service adder(j)		100,447		95,695
Asset retirement obligations—Nuclear(k)		40,334		53,571
Other regulatory liabilities(l)		8,854		2,875

Total Regulatory Liabilities	$	253,683	$	251,649

Net Regulatory Assets	$	343,928	$	333,435

(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 26 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 periods up to 48 months, depending on the operating cycle of each unit. Nuclear refueling outage costs are amortized on a straight-line basis to expense over the 18 or 24-month operating cycles of each unit.

(d) 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.

(e) 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.

(f) Deferral of premiums paid to purchase interest rate options to hedge interest rates on certain borrowings, related carrying costs and other incidentals associated with construction of Vogtle Units No.3 and No.4. Amortization will commence in February 2020 and will be amortized through February 2044, the life of the DOE-guaranteed loan which is financing a portion of the construction project.

(g) Effects on net margin for Smith and Hawk Road Energy Facilities were deferred through the end of 2015 and are being amortized over the remaining life of each respective plant.

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

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

(j) 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.

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

(l) The amortization periods for other regulatory assets range up to 32 years and the amortization periods of other regulatory liabilities range up to 9 years.