Regulatory Assets and Liabilities

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. PSCo would be required to recognize the write-off of regulatory assets and liabilities in net income or other comprehensive income if changes in the utility industry no longer allow for the application of regulatory accounting guidance under GAAP.

Components of regulatory assets:



(Millions of Dollars)	See Note(s)	Remaining Amortization Period	Dec. 31, 2018				Dec. 31, 2017
Regulatory Assets			Current		Noncurrent		Current		Noncurrent
Pension and retiree medical obligations	10	Various	$	26.1	$	559.0	$	28.0	$	565.3
Depreciation differences		One to thirteen years	17.5		107.0		19.8		69.4
Recoverable deferred taxes on AFUDC recorded in plant		Plant lives	—		101.9		—		87.0
Net AROs^(a)	1, 11	Plant lives	—		98.9		—		80.5
Excess deferred taxes - TCJA	8	Various	—		62.0		—		53.9
Purchased power contract costs		Term of related contract	1.7		26.3		1.3		28.0
Property tax		Various	5.6		9.8		—		16.1
Conservation programs ^(b)	1	One to two years	7.3		6.5		7.0		5.5
Losses on reacquired debt		Term of related debt	1.2		3.7		1.2		4.9
Gas pipeline inspection costs		One to two years	0.7		3.1		1.8		7.8
Contract valuation adjustments ^(c)	1, 9	Term of related contract	2.6		—		6.0		2.6
Recoverable purchased natural gas and electric energy costs		Less than one year	51.2		—		7.6		—
Other		Various	6.7		32.5		4.6		29.3
Total regulatory assets			$	120.6	$	1,010.7	$	77.3	$	950.3


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


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


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

Components of regulatory liabilities:



(Millions of Dollars)	See Note(s)	Remaining Amortization Period	Dec. 31, 2018				Dec. 31, 2017
Regulatory Liabilities			Current		Noncurrent		Current		Noncurrent
Deferred income tax adjustments and TCJA refunds ^(a)	8	Various	$	0.8	$	1,441.6	$	—	$	1,469.3
Plant removal costs	1, 11	Plant lives	—		344.4		—		346.2
Effects of regulation on employee benefit costs ^(b)		Various	—		126.9		—		35.7
Renewable resources and environmental initiatives		Various	—		54.0		—		56.2
ITC deferrals ^(c)	1	Various	—		27.5		—		9.1
Deferred electric, natural gas and steam production costs		Less than one year	7.2		—		29.0		—
Conservation programs ^(d)	1	Less than one year	29.8		—		21.2		—
Other		Various	29.5		27.1		15.9		17.0
Total regulatory liabilities ^(e)			$	67.3	$	2,021.5	$	66.1	$	1,933.5


^(a)	Includes the revaluation of recoverable/regulated plant ADIT and revaluation impact of non-plant ADIT due to the TCJA.


^(b)	Includes regulatory amortization and certain TCJA benefits approved by the CPUC to offset the prepaid pension asset at Dec. 31, 2018.


^(c)	Includes impact of lower federal tax rate due to the TCJA.


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


^(e)	Revenue subject to refund of $16.2 million and $0.0 million for 2018 and 2017, respectively, is included in other current liabilities.

At Dec. 31, 2018 and 2017, approximately $50 million and $44 million, respectively, of PSCo’s regulatory assets represented past expenditures not earning a return. Amounts primarily related to property taxes, renewable resources and environmental initiatives.