Regulatory Assets And Liabilities

12 Months Ended

Dec. 31, 2013

Regulatory Assets and Liabilities

PSE&G prepares its financial statements in accordance with GAAP accounting for regulated utilities as described in Note 1. Organization, Basis of Presentation and Summary of Significant Accounting Policies. PSE&G has deferred certain costs based on rate orders issued by the BPU or the FERC or based on PSE&G’s experience with prior rate cases. Most of PSE&G’s Regulatory Assets and Liabilities as of December 31, 2013 are supported by written orders, either explicitly or implicitly through the BPU’s treatment of various cost items. These costs will be recovered and amortized over various future periods.

Regulatory Assets are subject to prudence reviews and can be disallowed in the future by regulatory authorities. PSE&G believes that all of its Regulatory Assets are probable of recovery. To the extent that collection of any Regulatory Assets or payments of Regulatory Liabilities is no longer probable, the amounts would be charged or credited to income.

PSE&G had the following Regulatory Assets and Liabilities:




	As of December 31,
	2013		2012		Recovery/Refund Period
	Millions
Regulatory Assets
Current
Non-Utility Generation Charge (NGC)	$	6	$	—	Annual filing for recovery (1) (2)
Societal Benefits Charges (SBC)	16		74		Annual filing for recovery (1) (2)
Solar and Energy Efficiency Recovery Charges (formerly RRC and currently Green Program Recovery Charges (GPRC))	41		33		Annual filing for recovery (1) (2)
Solar Pilot Recovery Charge (SPRC)	12		14		Annual filing for recovery (1) (2)
Capital Stimulus Undercollection	3		34		Annual filing for recovery (1) (2)
Weather Normalization Clause (WNC)	20		30		Annual filing for recovery (2)
New Jersey Clean Energy Program	142		154		Annual filing for recovery (1) (2)
Other	3		10		Various
Total Current Regulatory Assets	$	243	$	349
Noncurrent
Stranded Costs To Be Recovered	$	701	$	1,112	Through December 2016 (1) (2)
Manufactured Gas Plant (MGP) Remediation Costs	445		588		Various (2)
Pension and Other Postretirement Benefit Costs	637		1,550		Various
Deferred Income Taxes	444		405		Various
Remediation Adjustment Charge (RAC) (Other SBC)	144		88		Through 2019 (1) (2)
Mark-to-Market (MTM) Contracts	—		107		See MTM Contracts below
Unamortized Loss on Reacquired Debt and Debt Expense	81		89		Over remaining debt life (1)
Conditional Asset Retirement Obligation	123		110		Various
Gas Margin Adjustment Clause	—		7		Through July 2015 (2)
GPRC	151		142		Various (2)
WNC	—		27		Annual filing for recovery (2)
Storm Damage Deferral	245		244		To be determined
Other	117		74		Various
Total Noncurrent Regulatory Assets	$	3,088	$	4,543
Total Regulatory Assets	$	3,331	$	4,892




	As of December 31,
	2013		2012		Recovery/Refund Period
	Millions
Regulatory Liabilities
Current
Deferred Income Taxes	$	31	$	32	Various
Overrecovered Gas and Electric Costs—Basic Gas Supply Service (BGSS) and Basic Generation Service (BGS)	9		21		Annual filing for recovery (1) (2)
FERC Formula Rate True-up	—		5		Annual filing for recovery (1) (2)
NGC	—		9		Annual filing for recovery (1) (2)
Other	3		—		Various
Total Current Regulatory Liabilities	$	43	$	67
Noncurrent
Electric Cost of Removal	$	137	$	166	Reduced as cost is incurred
MTM Contracts	74		40		Various
Other	33		13		Various
Total Noncurrent Regulatory Liabilities	$	244	$	219
Total Regulatory Liabilities	$	287	$	286


(1)	Recovered/Refunded with interest.


(2)	Recoverable/Refundable per specific rate order.

All Regulatory Assets and Liabilities are excluded from PSE&G’s rate base unless otherwise noted. The Regulatory Assets and Liabilities in the table above are defined as follows:


•	NGC: Represents the difference between the cost of non-utility generation and the amounts realized from selling that energy at market rates through PJM and ratepayer collections.


•	SBC: The SBC, as authorized by the BPU and the New Jersey Electric Discount and Energy Competition Act, includes costs related to PSE&G's electric and gas business as follows: (1) the USF; (2) Energy Efficiency and Renewable Energy Programs; (3) Electric bad debt expense; and (4) the RAC for incurred MGP remediation expenditures. All components accrue interest on both over and underrecoveries.


•	GPRC: These costs are amounts associated with various renewable energy and energy efficiency programs. Components of the GPRC include: Carbon Abatement, Energy Efficiency Economic Stimulus Program, Energy Efficiency Economic Extension Program, the Demand Response Program, Solar Generation Investment Program (Solar 4 All), Solar 4 All Extension, Solar Loan II Program and Solar Loan III Program.

•

SPRC: This charge is designed to recover the revenue requirements associated with the PSE&G Solar Pilot Program (Solar Loan I) per a BPU Order, less the net proceeds from the sale of associated Solar Renewable Energy Certificates (SRECs) or cash received in lieu of SRECs. The net recovery is subject to deferred accounting. Interest at the two-year constant maturity treasury rate plus 60 basis points will be accrued monthly on any under- or over-recovered balances.


•	Capital Stimulus Undercollection: PSE&G has received approval from the BPU for programs that provide for accelerated investment in utility infrastructure. The goal of these accelerated capital investments is to improve the reliability of PSE&G's infrastructure and New Jersey's economy through job creation.


•	WNC Deferral: This represents the over- or under- collection of gas margin refundable or recoverable under the BPU's weather normalization clause. The WNC requires PSE&G to calculate, at the end of each October-to-May period, the level by which margin revenues differed from what would have resulted if normal weather had occurred.


•	New Jersey Clean Energy Program: The BPU approved future funding requirements for Energy Efficiency and Renewable Energy Programs through the first half of 2013. Once the rates are measured, they are recovered through the SBC.

•

Stranded Costs To Be Recovered: This reflects deferred costs, which are being recovered through the securitization transition charges authorized by the BPU in irrevocable financing orders and being collected by PSE&G, as servicer on behalf of Transition Funding and Transition Funding II, respectively. Collected funds are remitted to Transition Funding and Transition Funding II and are used for interest and principal payments on the transition bonds and related costs and taxes.

Transition Funding and Transition Funding II are wholly owned, bankruptcy-remote subsidiaries of PSE&G that purchased certain transition property from PSE&G and issued transition bonds secured by such property. The transition property consists principally of the rights to receive electricity consumption-based per kilowatt-hour (kWh) charges from PSE&G's electric distribution customers, which represent irrevocable rights to receive amounts sufficient to recover certain of PSE&G's transition costs related to deregulation, as approved by the BPU.


•	MGP Remediation Costs: Represents the low end of the range for the remaining environmental investigation and remediation program cleanup costs for manufactured gas plants that are probable of recovery in future rates. Once these costs are incurred, they are recovered through the RAC in the SBC.

•

Pension and Other Postretirement Benefit Costs: Pursuant to the adoption of accounting guidance for employers' defined benefit pension and OPEB plans, PSE&G recorded the unrecognized costs for defined benefit pension and other OPEB plans on the balance sheet as a Regulatory Asset. These costs represent actuarial gains or losses, prior service costs and transition obligations as a result of adoption, which have not been expensed. These costs are amortized and recovered in future rates.


•	Deferred Income Taxes: These amounts represent the portion of deferred income taxes that will be recovered or refunded through future rates, based upon established regulatory practices.


•	RAC (Other SBC): Costs incurred to clean up manufactured gas plants which are recovered over seven years.

•

MTM Contracts: The estimated fair value of gas hedge contracts, gas cogeneration supply contracts and long-term standard offer capacity agreements (SOCAs) as provided in New Jersey's Long-Term Capacity Agreement Pilot Program (LCAPP). The regulatory asset/liability is offset by a derivative asset/liability and, with respect to the gas hedge contracts only, an intercompany receivable/payable on the Consolidated Balance Sheets. As a result of a federal court ruling that held the LCAPP to be unconstitutional, the SOCAs were terminated and the related derivative liability and regulatory asset reversed in the fourth quarter of 2013.


•	Unamortized Loss on Reacquired Debt and Debt Expense: Represents losses on reacquired long-term debt and expenses associated with issuances of new debt, which are recovered through rates over the remaining life of the debt.


•	Conditional Asset Retirement Obligation: These costs represent the differences between rate regulated cost of removal accounting and asset retirement accounting under GAAP. These costs will be recovered in future rates.


•	Gas Margin Adjustment Clause: PSE&G defers the margin differential received from Transportation Gas Service Non-Firm Customers versus bill credits provided to BGSS-Firm customers.


•	Storm Damage Deferral: Costs incurred in the cleanup of major storms in 2012, 2011 and 2010, including Hurricane Irene and Superstorm Sandy under a BPU Order received in December 2012 authorizing the deferral of incremental and otherwise unreimbursed costs.


•	Overrecovered Gas and Electric Costs: These costs represent the net overrecovered amounts associated with BGSS and BGS, as approved by the BPU. For BGS, interest is accrued on both overrecovered and underrecovered balances. For BGSS, interest is accrued only on overrecovered balances from residential customers.


•	FERC Formula Rate True-up: Overcollection or undercollection of transmission earnings calculated using a FERC approved formula.


•	Electric Cost of Removal: PSE&G accrues and collects for cost of removal in rates. The liability for non-legally required cost of removal is classified as a Regulatory Liability. This liability is reduced as removal costs are incurred. Accumulated cost of removal is a reduction to the rate base.

Significant 2013 regulatory orders received from and currently pending rate filings with the FERC and the BPU are as follows:

•

Transmission Formula Rates—PSE&G’s 2013 Annual Formula Rate Update with the FERC provided for approximately $174 million in increased annual transmission revenues effective January 1, 2013. In October 2013, PSE&G filed its 2014 Annual Formula Rate Update with the FERC, which provided for approximately $176 million in increased annual transmission revenues effective January 1, 2014. PSE&G subsequently reached an agreement with certain customers providing for a downward adjustment of postretirement benefits other than pension included in its Formula Rate, and in December 2013 submitted to the FERC a Modified Annual Update for 2014 and a request that the FERC authorize the agreed-upon revenue decrease. Under this modified proposal, annual transmission revenues would increase by $171 million rather than $176 million, effective January 1, 2014. In mid-January 2014, the FERC issued an order authorizing the proposed tariff.

•

BGSS—In October 2013, PSE&G filed a self-implementing two-month BGSS residential customer bill credit with the BPU. This bill credit was 35 cents per therm for the months of November and December 2013 and provided approximately $115 million in total credits to residential customers over the two months, reducing the BGSS deferred balance. The BGSS rate reverted back to the current rate on January 1, 2014. In January 2014, PSE&G filed a self-implementing one-month BGSS residential customer bill credit with the BPU. This bill credit is 25 cents per therm for the month of February 2014 and is expected to provide approximately $50 million in total credits to residential customers over the month, reducing the BGSS deferred balance. In February 2014, PSE&G filed an additional self-implementing one-month BGSS residential customer bill credit with the BPU which will continue the 25 cents per therm credit through the month of March 2014. This additional credit is expected to provide approximately $43 million in total credits to residential customers, reducing the deferred BGSS balance. On April 1, 2014, the BGSS rate will revert back to the current rate.


•	RAC—On February 19, 2014, the BPU approved PSE&G's filing with respect to its RAC 20 petition allowing recovery of net MGP expenditures through July 31, 2012.


•	GPRC—In May 2013, PSE&G received BPU approval for recovery of GPRC program costs incurred through November 30, 2012. In July 2013, PSE&G filed a petition with the BPU to recover GPRC program costs incurred after November 2012. On February 19, 2014, the BPU approved that request which allowed recovery of GPRC program costs incurred through September 30, 2013.

•

WNC—In April 2013, the BPU approved PSE&G's filing with respect to deficiency revenues from the 2011-2012 Winter Period. As a result, final rates were approved to recover $41 million from customers during the 2012-2013 Winter Period, with a carryover deficiency of $24 million to the 2013-2014 Winter Period. In September 2013, the BPU provisionally approved PSE&G's filing with respect to deficiency revenues from the 2012-2013 Winter Period, inclusive of the $24 million carryover deficiency from the 2011-2012 Winter Period. As a result, a total of $26 million of deficiency revenues will be recovered from customers during the 2013-2014 Winter Period (October 1 through May 31).

•

Universal Service Fund (USF)/Lifeline—The USF is an energy assistance program mandated by the BPU and funded through the SBC clause mechanism to provide payment assistance to low income customers. The Lifeline program is a separate mandated energy assistance program to provide payment assistance to elderly and disabled customers. In September 2013, the BPU approved rates set to recover costs incurred under the Program. PSE&G earns no margin on the collection of the USF and Lifeline programs resulting in no impact on Net Income.


•	Capital Stimulus Infrastructure Programs (CIP II)—In November 2013, PSE&G filed a petition with the BPU to recover program costs incurred for its CIP II investments through September 30, 2013. The discovery phase of this proceeding is underway.


•	SBC—In November 2013, PSE&G filed a petition with the BPU to recover NGC and SBC costs incurred through September 30, 2013 under its Energy Efficiency & Renewable Energy Programs, Social Programs and NGC. The discovery phase of this proceeding is underway.

PSE&G [Member]

Regulatory Assets And Liabilities

Regulatory Assets and Liabilities

PSE&G had the following Regulatory Assets and Liabilities:




	As of December 31,
	2013		2012		Recovery/Refund Period
	Millions
Regulatory Assets
Current
Non-Utility Generation Charge (NGC)	$	6	$	—	Annual filing for recovery (1) (2)
Societal Benefits Charges (SBC)	16		74		Annual filing for recovery (1) (2)
Solar and Energy Efficiency Recovery Charges (formerly RRC and currently Green Program Recovery Charges (GPRC))	41		33		Annual filing for recovery (1) (2)
Solar Pilot Recovery Charge (SPRC)	12		14		Annual filing for recovery (1) (2)
Capital Stimulus Undercollection	3		34		Annual filing for recovery (1) (2)
Weather Normalization Clause (WNC)	20		30		Annual filing for recovery (2)
New Jersey Clean Energy Program	142		154		Annual filing for recovery (1) (2)
Other	3		10		Various
Total Current Regulatory Assets	$	243	$	349
Noncurrent
Stranded Costs To Be Recovered	$	701	$	1,112	Through December 2016 (1) (2)
Manufactured Gas Plant (MGP) Remediation Costs	445		588		Various (2)
Pension and Other Postretirement Benefit Costs	637		1,550		Various
Deferred Income Taxes	444		405		Various
Remediation Adjustment Charge (RAC) (Other SBC)	144		88		Through 2019 (1) (2)
Mark-to-Market (MTM) Contracts	—		107		See MTM Contracts below
Unamortized Loss on Reacquired Debt and Debt Expense	81		89		Over remaining debt life (1)
Conditional Asset Retirement Obligation	123		110		Various
Gas Margin Adjustment Clause	—		7		Through July 2015 (2)
GPRC	151		142		Various (2)
WNC	—		27		Annual filing for recovery (2)
Storm Damage Deferral	245		244		To be determined
Other	117		74		Various
Total Noncurrent Regulatory Assets	$	3,088	$	4,543
Total Regulatory Assets	$	3,331	$	4,892




	As of December 31,
	2013		2012		Recovery/Refund Period
	Millions
Regulatory Liabilities
Current
Deferred Income Taxes	$	31	$	32	Various
Overrecovered Gas and Electric Costs—Basic Gas Supply Service (BGSS) and Basic Generation Service (BGS)	9		21		Annual filing for recovery (1) (2)
FERC Formula Rate True-up	—		5		Annual filing for recovery (1) (2)
NGC	—		9		Annual filing for recovery (1) (2)
Other	3		—		Various
Total Current Regulatory Liabilities	$	43	$	67
Noncurrent
Electric Cost of Removal	$	137	$	166	Reduced as cost is incurred
MTM Contracts	74		40		Various
Other	33		13		Various
Total Noncurrent Regulatory Liabilities	$	244	$	219
Total Regulatory Liabilities	$	287	$	286


(1)	Recovered/Refunded with interest.


(2)	Recoverable/Refundable per specific rate order.

All Regulatory Assets and Liabilities are excluded from PSE&G’s rate base unless otherwise noted. The Regulatory Assets and Liabilities in the table above are defined as follows:


•	NGC: Represents the difference between the cost of non-utility generation and the amounts realized from selling that energy at market rates through PJM and ratepayer collections.


•	SBC: The SBC, as authorized by the BPU and the New Jersey Electric Discount and Energy Competition Act, includes costs related to PSE&G's electric and gas business as follows: (1) the USF; (2) Energy Efficiency and Renewable Energy Programs; (3) Electric bad debt expense; and (4) the RAC for incurred MGP remediation expenditures. All components accrue interest on both over and underrecoveries.


•	GPRC: These costs are amounts associated with various renewable energy and energy efficiency programs. Components of the GPRC include: Carbon Abatement, Energy Efficiency Economic Stimulus Program, Energy Efficiency Economic Extension Program, the Demand Response Program, Solar Generation Investment Program (Solar 4 All), Solar 4 All Extension, Solar Loan II Program and Solar Loan III Program.

•


•	Capital Stimulus Undercollection: PSE&G has received approval from the BPU for programs that provide for accelerated investment in utility infrastructure. The goal of these accelerated capital investments is to improve the reliability of PSE&G's infrastructure and New Jersey's economy through job creation.


•	WNC Deferral: This represents the over- or under- collection of gas margin refundable or recoverable under the BPU's weather normalization clause. The WNC requires PSE&G to calculate, at the end of each October-to-May period, the level by which margin revenues differed from what would have resulted if normal weather had occurred.


•	New Jersey Clean Energy Program: The BPU approved future funding requirements for Energy Efficiency and Renewable Energy Programs through the first half of 2013. Once the rates are measured, they are recovered through the SBC.

•


•	MGP Remediation Costs: Represents the low end of the range for the remaining environmental investigation and remediation program cleanup costs for manufactured gas plants that are probable of recovery in future rates. Once these costs are incurred, they are recovered through the RAC in the SBC.

•


•	Deferred Income Taxes: These amounts represent the portion of deferred income taxes that will be recovered or refunded through future rates, based upon established regulatory practices.


•	RAC (Other SBC): Costs incurred to clean up manufactured gas plants which are recovered over seven years.

•


•	Unamortized Loss on Reacquired Debt and Debt Expense: Represents losses on reacquired long-term debt and expenses associated with issuances of new debt, which are recovered through rates over the remaining life of the debt.


•	Conditional Asset Retirement Obligation: These costs represent the differences between rate regulated cost of removal accounting and asset retirement accounting under GAAP. These costs will be recovered in future rates.


•	Gas Margin Adjustment Clause: PSE&G defers the margin differential received from Transportation Gas Service Non-Firm Customers versus bill credits provided to BGSS-Firm customers.


•	Storm Damage Deferral: Costs incurred in the cleanup of major storms in 2012, 2011 and 2010, including Hurricane Irene and Superstorm Sandy under a BPU Order received in December 2012 authorizing the deferral of incremental and otherwise unreimbursed costs.


•	Overrecovered Gas and Electric Costs: These costs represent the net overrecovered amounts associated with BGSS and BGS, as approved by the BPU. For BGS, interest is accrued on both overrecovered and underrecovered balances. For BGSS, interest is accrued only on overrecovered balances from residential customers.


•	FERC Formula Rate True-up: Overcollection or undercollection of transmission earnings calculated using a FERC approved formula.


•	Electric Cost of Removal: PSE&G accrues and collects for cost of removal in rates. The liability for non-legally required cost of removal is classified as a Regulatory Liability. This liability is reduced as removal costs are incurred. Accumulated cost of removal is a reduction to the rate base.

Significant 2013 regulatory orders received from and currently pending rate filings with the FERC and the BPU are as follows:

•


•	RAC—On February 19, 2014, the BPU approved PSE&G's filing with respect to its RAC 20 petition allowing recovery of net MGP expenditures through July 31, 2012.


•	GPRC—In May 2013, PSE&G received BPU approval for recovery of GPRC program costs incurred through November 30, 2012. In July 2013, PSE&G filed a petition with the BPU to recover GPRC program costs incurred after November 2012. On February 19, 2014, the BPU approved that request which allowed recovery of GPRC program costs incurred through September 30, 2013.

•


•	Capital Stimulus Infrastructure Programs (CIP II)—In November 2013, PSE&G filed a petition with the BPU to recover program costs incurred for its CIP II investments through September 30, 2013. The discovery phase of this proceeding is underway.


•	SBC—In November 2013, PSE&G filed a petition with the BPU to recover NGC and SBC costs incurred through September 30, 2013 under its Energy Efficiency & Renewable Energy Programs, Social Programs and NGC. The discovery phase of this proceeding is underway.