Regulatory Assets and Liabilities

9 Months Ended

Sep. 30, 2020

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Assets and Liabilities. We apply the accounting guidance for regulated operations. Regulatory assets represent certain costs that are probable of recovery through future rates. We expect to recover such costs from our members in future revenues through rates under the wholesale power contracts we have with each of our members. The wholesale power contracts extend 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 September 30, 2020 and December 31, 2019.


	2020		2019
	(dollars in thousands)
Regulatory Assets:
Premium and loss on reacquired debt(a)	$	36,529	$	40,067
Amortization of financing leases(b)	35,354		35,433
Outage costs(c)	42,440		34,367
Asset retirement obligations—Ashpond and other(k)	247,125		245,932
Depreciation expense(d)	38,752		39,820
Deferred charges related to Vogtle Units No. 3 and No. 4 training costs(e)	54,599		53,466
Interest rate options cost(f)	125,629		121,938
Deferral of effects on net margin—Smith Energy Facility(g)	150,106		154,564
Other regulatory assets(m)	8,555		37,925
Total Regulatory Assets	$	739,089	$	763,512
Regulatory Liabilities:
Accumulated retirement costs for other obligations(h)	$	18,993	$	12,692
Deferral of effects on net margin—Hawk Road Energy Facility(g)	18,023		18,485
Major maintenance reserve(i)	53,057		50,144
Amortization of financing leases(b)	12,081		14,256
Deferred debt service adder(j)	121,443		114,453
Asset retirement obligations—Nuclear(k)	66,458		61,516
Revenue deferral plan(l)	187,600		90,066
Other regulatory liabilities(m)	2,791		2,629
Total Regulatory Liabilities	$	480,446	$	364,241
Net Regulatory Assets	$	258,643	$	399,271

(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 24 years.

(b)Represents the difference between expense recognized for rate-making purposes versus financial statement purposes related to finance 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 60 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 Units No. 1 and No. 2, we deferred the difference between the units' 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 consist of training related costs, including interest and 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 used 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 when Vogtle Unit No. 3 is placed in-service, which is expected November 2021.

(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 the difference in the timing of recognition of decommissioning costs for financial statement purposes versus ratemaking purposes, as well as the deferral of unrealized gains and losses of funds set aside for decommissioning.

(l)Deferred revenues under a rate management program that allows for additional collections over a five-year period which began in 2018. These amounts will be amortized to income and applied to member billings over the subsequent five-year period.

(m)The amortization periods for other regulatory assets range up to 30 years and the amortization periods of other regulatory liabilities range up to 7 years.