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, 2015 and 2014 are:



(Thousands of Dollars)	See Note(s)	Remaining Amortization Period	Dec. 31, 2015				Dec. 31, 2014
Regulatory Assets			Current		Noncurrent		Current		Noncurrent
Pension and retiree medical obligations ^(a)	8	Various	$	29,260	$	497,973	$	32,195	$	500,889
Recoverable deferred taxes on AFUDC recorded in plant	1	Plant lives	—		144,953		—		141,214
Depreciation differences	1	One to sixteen years	14,221		99,835		10,700		104,743
Net AROs^(b)	1, 12	Plant lives	—		62,948		—		46,213
Purchased power contract costs	12	Term of related contract	1,319		29,143		858		29,596
Property tax		One to six years	21,558		14,428		28,024		31,429
Contract valuation adjustments ^(c)	10	Term of related contract	9,376		9,526		8,901		12,999
Losses on reacquired debt	4	Term of related debt	1,421		6,957		1,426		8,378
Conservation programs ^(d)	1, 11	One to five years	8,466		6,947		10,198		10,906
Gas pipeline inspection costs	12	Less than one year	3,611		—		5,416		3,611
Recoverable purchased natural gas and electric energy costs	1	Less than one year	408		—		18,410		—
Other		Various	2,432		33,565		3,992		13,995
Total regulatory assets			$	92,072	$	906,275	$	120,120	$	903,973


^(a)	Includes $4.4 million and $4.5 million of regulatory assets related to the nonqualified pension plan, of which $0.4 million is included in the current asset at Dec. 31, 2015 and 2014, respectively.


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


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


^(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, 2015 and 2014 are:



(Thousands of Dollars)	See Note(s)	Remaining Amortization Period	Dec. 31, 2015				Dec. 31, 2014
Regulatory Liabilities			Current		Noncurrent		Current		Noncurrent
Plant removal costs	1, 12	Plant lives	$	—	$	364,291	$	—	$	366,359
Renewable resources and environmental initiatives	11, 12	Various	3,311		40,988		3,308		10,376
Investment tax credit deferrals	1, 7	Various	—		20,515		—		22,225
Deferred income tax adjustment	1	Various	—		16,891		—		18,672
PSCo earnings test	11	One to two years	42,868		9,472		57,127		42,819
Gas pipeline inspection costs	12	One to two years	1,140		4,273		13,970		642
Deferred electric, gas and steam production costs	1	Less than one year	66,696		—		24,035		—
Conservation programs ^(a)	1, 11	Less than one year	33,460		—		32,226		—
Low income discount program		Less than one year	1,393		—		1,680		—
Gain from asset sales		One to three years	—		—		316		4
Other		Various	3,955		14,991		1,797		3,324
Total regulatory liabilities ^(b)			$	152,823	$	471,421	$	134,459	$	464,421


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


^(b)	Revenue subject to refund of $9.1 million and $4.4 million for 2015 and 2014, respectively, is included in other current liabilities.

At Dec. 31, 2015 and 2014, approximately $54 million and $104 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.