Regulatory Assets and Liabilities

PSCo’s consolidated financial statements are prepared in accordance with the applicable accounting guidance, as discussed in Note 1. Under this guidance, regulatory assets and liabilities are created for amounts that regulators may allow to be collected, or may require to be paid back to customers in future electric and natural gas rates. Any portion of the business that is not rate regulated cannot establish regulatory assets and liabilities. If changes in the utility industry or the business of PSCo no longer allow for the application of regulatory accounting guidance under GAAP, PSCo would be required to recognize the write-off of regulatory assets and liabilities in net income or OCI.

The components of regulatory assets shown on the consolidated balance sheets of PSCo at Dec. 31, 2014 and 2013 were:



(Thousands of Dollars)	See Note(s)	Remaining Amortization Period	Dec. 31, 2014				Dec. 31, 2013
Regulatory Assets			Current		Noncurrent		Current		Noncurrent
Pension and retiree medical obligations ^(a)	8	Various	$	32,195	$	500,889	$	45,504	$	447,752
Recoverable deferred taxes on AFUDC recorded in plant	1	Plant lives	—		141,214		—		116,477
Contract valuation adjustments ^(b)	10	Term of related contract	8,901		12,999		3,620		16,474
Depreciation differences	1	One to seventeen years	10,700		104,743		10,917		95,844
Net AROs^(c)	1, 12	Plant lives	—		46,213		—		39,986
Conservation programs ^(d)	1, 11	One to five years	10,198		10,906		13,883		19,430
Gas pipeline inspection costs	12	One to four years	5,416		3,611		5,416		14,978
Renewable resources and environmental initiatives	12	One to two years	—		—		22,325		—
Purchased power contract costs	12	Term of related contract	858		29,596		—		30,069
Losses on reacquired debt	4	Term of related debt	1,426		8,378		1,572		9,804
Recoverable purchased natural gas and electric energy costs	1	Less than one year	18,410		—		18,022		—
Property tax		One to three years	28,024		31,429		18,427		30,626
Other		Various	3,992		13,995		10,477		4,597
Total regulatory assets			$	120,120	$	903,973	$	150,163	$	826,037


^(a)	Includes $4.5 million and $4.1 million of regulatory assets related to the nonqualified pension plan, of which $0.4 million is included in the current asset at Dec. 31, 2014 and 2013, respectively.


^(b)	Includes the fair value of certain long-term PPAs used to meet energy capacity requirements and valuation adjustments on natural gas commodity purchases.


^(c)	Includes amounts recorded for future recovery of AROs.


^(d)	Includes costs for conservation programs, as well as incentives allowed in certain jurisdictions.

The components of regulatory liabilities shown on the consolidated balance sheets of PSCo at Dec. 31, 2014 and 2013 were:



(Thousands of Dollars)	See Note(s)	Remaining Amortization Period	Dec. 31, 2014				Dec. 31, 2013
Regulatory Liabilities			Current		Noncurrent		Current		Noncurrent
Plant removal costs	1, 12	Plant lives	$	—	$	366,359	$	—	$	359,387
Deferred electric, gas and steam production costs	1	Less than one year	24,035		—		33,247		—
Investment tax credit deferrals	1, 7	Various	—		22,225		—		24,038
Deferred income tax adjustment	1	Various	—		18,672		—		18,770
Conservation programs ^(a)	1, 11	Less than one year	32,226		—		12,188		—
Renewable resources and environmental initiatives	11, 12	Various	3,308		10,376		—		1,412
Low income discount program		Less than one year	1,680		—		4,084		—
Gain from asset sales		One to three years	316		4		1,687		368
PSCo earnings test	11	One to two years	57,127		42,819		22,892		19,203
Gas pipeline inspection costs	12	One to four years	13,970		642		—		—
Other		Various	1,797		3,324		5,401		1,512
Total regulatory liabilities			$	134,459	$	464,421	$	79,499	$	424,690


^(a)	Includes costs for conservation programs, as well as incentives allowed in certain jurisdictions.

At Dec. 31, 2014 and 2013, approximately $104 million and $136 million of PSCo’s regulatory assets represented past expenditures not currently earning a return, respectively. This amount primarily includes certain expenditures associated with renewable resources and environmental initiatives.