Regulatory Assets And Liabilities

12 Months Ended

Dec. 31, 2015

Regulatory Assets And Liabilities [Line Items]

PSE&G prepares its financial statements in accordance with GAAP for regulated utilities as described in Note 1. Organization and Basis of Presentation and Summary of Significant Accounting Policies. PSE&G has deferred certain costs based on rate orders issued by the BPU or 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, 2015 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 and other investments and costs incurred under our various infrastructure filings and clause mechanisms are subject to prudence reviews and can be disallowed in the future by regulatory authorities. To the extent that collection of any infrastructure or clause mechanism revenue, 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,
	2015		2014		Recovery/Refund Period
	Millions
Regulatory Assets
Current
New Jersey Clean Energy Program	$	142	$	142	Annual filing for recovery (2)
Stranded Costs (including $249 in 2014 related to VIEs)	—		412		Through December 2015 (2)
Underrecovered Electric Energy Costs—Basic Generation Service	11		—		Annual filing for recovery (1) (2)
Weather Normalization Clause (WNC)	10		—		Annual filing for recovery (2)
Solar and Energy Efficiency Recovery Charges (Green Program Recovery Charges (GPRC))	1		13		Annual filing for recovery (1) (2)
Other	—		5		Various
Total Current Regulatory Assets	$	164	$	572
Noncurrent
Pension and OPEB Costs	$	1,270	$	1,265	Various
Deferred Income Taxes	467		473		Various
Manufactured Gas Plant (MGP) Remediation Costs	431		434		Various (2)
Storm Damage Deferrals	233		245		To be determined
Remediation Adjustment Charge (RAC) (Other SBC)	174		164		Through 2022 (1) (2)
Conditional Asset Retirement Obligation	152		138		Various
Electric Transmission Cost of Removal	133		91		Through depreciation rates
GPRC	104		134		Various (1) (2)
Unamortized Loss on Reacquired Debt and Debt Expense	67		74		Over remaining debt life
Mark-to-Market (MTM) Contracts	63		75		Through 2017
Other	102		99		Various
Total Noncurrent Regulatory Assets	$	3,196	$	3,192
Total Regulatory Assets	$	3,360	$	3,764




	As of December 31,
	2015		2014		Recovery/Refund Period
	Millions
Regulatory Liabilities
Current
Stranded Costs (including $42 in 2015 related to VIEs)	$	64	$	—	Through December 2016 (2)
GPRC	36		6		Annual filing for recovery (1) (2)
Societal Benefit Clause (SBC)	31		13		Various (1) (2)
FERC Formula Rate True-up	19		—		Annual filing for recovery (1) (2)
Gas Margin Adjustment Clause	13		28		Annual filing for recovery (1) (2)
Overrecovered Gas Costs —Basic Gas Supply Service	1		46		Annual filing for recovery (1) (2)
WNC	—		31		Annual filing for recovery (2)
Deferred Income Taxes	—		28		Various
Overrecovered Electric Energy Costs— Basic Generation Service	—		21		Annual filing for recovery (1) (2)
Overrecovered Non-Utility Generation Charge (NGC)	1		13		Annual filing for recovery (1) (2)
Total Current Regulatory Liabilities	$	165	$	186
Noncurrent
Electric Distribution Cost of Removal	$	122	$	133	Through depreciation rates
FERC Formula Rate True-up	49		26		Annual filing for recovery (1) (2)
Stranded Costs (including $39 in 2014 related to VIEs)	—		134		Through December 2016 (2)
Other	4		4		Various
Total Noncurrent Regulatory Liabilities	$	175	$	297
Total Regulatory Liabilities	$	340	$	483


(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:


•	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.


•	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.


•	Electric and Gas Cost of Removal: PSE&G accrues and collects in rates for the cost of removing, dismantling and disposing of its transmission and distribution assets upon retirement. The regulatory asset or liability for non-legally required cost of removal represents the difference between amounts collected in rates and costs actually incurred.


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


•	Gas Margin Adjustment Clause: This mechanism credits Firm delivery customers for net distribution margin revenue collected from Transportation Gas Service Non-Firm (TSG-NF) delivery customers. The balance represents the difference between the net margin collected from the TSG-NF Customers versus bill credits provided to Firm delivery customers.

•

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 (EEE) Extension Program, EEE Extension II 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.


•	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.


•	MTM Contracts: The estimated fair value of gas hedge contracts and gas cogeneration supply contracts. 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.


•	New Jersey Clean Energy Program: The BPU approved future funding requirements for Energy Efficiency and Renewable Energy Programs through the first half of 2016. Once the rates are measured, they are recovered through the SBC.


•	NGC: These costs represent the difference between rate payer collections and the cost of non-utility generation netted against amounts realized from selling that energy at market rates through PJM.

•

Overrecovered Electric Energy Costs: These costs represent the overrecovered amounts associated with Basic Generation Service (BGS), as approved by the BPU. Pursuant to BPU requirements, PSE&G serves as the supplier of last resort for electric customers within its service territory that are not served by another supplier. Pricing for those services are set by the BPU as a pass-through, resulting in no margin for PSE&G's operations. For BGS, interest is accrued on both overrecovered and underrecovered balances.

•

Overrecovered Gas Costs: These costs represent the overrecovered amounts associated with Basic Gas Supply Service (BGSS), as approved by the BPU. Pursuant to BPU requirements, PSE&G serves as the supplier of last resort for gas customers within its service territory that are not served by another supplier. Pricing for those services are set by the BPU as a pass-through, resulting in no margin for PSE&G's operations. For BGSS, interest is accrued only on overrecovered balances.

•

Pension and OPEB 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.


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

•

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 Universal Service Fund (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.


•	Storm Damage Deferrals: Costs incurred in the cleanup of major storms in 2010 through 2015. As of December 31, 2015, this includes the $220 million of storm costs, net of insurance recoveries, primarily as a result of Hurricane Irene and Superstorm Sandy, approved for future recovery under a BPU Order received in September 2014.

•

Stranded Costs: This reflects the overrecovered balance of costs, which were recovered through the securitization transition charges authorized by the BPU in irrevocable financing orders and 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. During 2015, Transition Funding and Transition Funding II paid their final securitization bond payments and as of December 31, 2015, no further debt or related costs remain.

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.

Effective January 1, 2016, PSE&G commenced refunding the overcollections from customers associated with Stranded Costs and expects to fully refund these liabilities in 2016.


•	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.


•	Underrecovered Electric Energy Costs: These costs represent the underrecovered amounts associated with BGS, as approved by the BPU. For BGS, interest is accrued on both overrecovered and underrecovered balances.

•

WNC: 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. Over recoveries are refunded to customers in the next winter season while under recoveries (subject to an earnings cap) are collected from customers in the next winter season.

Significant 2015 regulatory orders received and currently pending rate filings with FERC and the BPU by PSE&G are as follows:

•

Energy Strong Recovery Filing—In February 2015, the BPU approved PSE&G's initial Energy Strong filing to recover in base rates an estimated annual electric revenue increase of $1 million effective March 1, 2015. This increase represents capitalized Energy Strong electric investment costs in service through November 30, 2014. In August 2015, the BPU approved PSE&G's second Energy Strong petition to recover in base rates an estimated annual revenue increases in electric revenues of $6 million and gas revenues of $17 million effective September 1, 2015. These increases represent a return on investment and recovery of Energy Strong capitalized investment costs placed in service from December 1, 2014 through May 31, 2015 for electric and from June 1, 2014 through May 31, 2015 for gas.

In September 2015, PSE&G filed an Energy Strong electric cost recovery petition seeking BPU approval to recover the revenue requirements associated with Energy Strong capitalized investment costs placed in service from June 1, 2015 through November 30, 2015. In February 2016, the BPU approved PSE&G’s request for an annualized increase in electric revenue requirements of $10 million with rates effective March 1, 2016.

•

BGSS—In January 2015 and March 2015, PSE&G filed letters with the BPU to provide self-implementing bill credits for February, March and April 2015. When combined with the January 2015 bill credit filed with the BPU in 2014, a total of $243 million was returned to customers for the period January 1 to April 30, 2015. In April 2015, the BPU issued an Order approving PSE&G’s BGSS rate of 45 cents per therm which had been implemented on October 1, 2014 as final.

In June 2015, PSE&G made its Annual BGSS Filing with the BPU requesting a reduction of $70 million in annual BGSS revenues. In September 2015, the BPU approved a Stipulation in this matter on a provisional basis and the BGSS rate was reduced from approximately 45 cents to 40 cents per therm effective October 1, 2015. In February 2016, the BPU issued an Order approving PSE&G’s BGSS rate of 40 cents per therm as final.

In November, 2015, PSE&G filed with the BPU for a self-implementing three-month bill credit of 25 cents per therm for the months of December 2015 and January and February 2016. The bill credits are estimated to provide approximately $155 million to customers. The specific amount returned will depend on actual usage over that period.


•	WNC—On April 15, 2015, the BPU approved PSE&G's final filing with respect to excess revenues collected during the colder than normal 2013-2014 Winter Period (October 1, 2013 through May 31, 2014). Effective October 1, 2014, PSEG commenced returning $45 million in revenues to its customers during the 2014-2015 Winter Period (October 1, 2014 through May 31, 2015).

In September 2015, the BPU approved PSE&G's filing on a provisional basis with respect to excess revenues collected during the colder than normal 2014-2015 Winter Period. Effective October 1, 2015, PSE&G commenced returning $40 million in revenues to its customers during the 2015-2016 Winter Period (October 1, 2015 through May 31, 2016). In January 2016, the BPU gave final approval to the provisional rates.

•

Solar and Energy Efficiency - GPRC and Solar Pilot Recovery Charges (SPRC)—In April 2015, the BPU approved PSE&G’s petition for an EEE Extension II Program to extend three EEE subprograms (multi-family, direct install and hospital efficiency). The Order allows PSE&G to extend the subprogram offerings under the same clause recovery process as its existing EEE Program and allows for $95 million of additional capital expenditures over the next three years and an allowance for $12 million of additional administrative expenses over the next 15 years. The EEE Extension II Program was added as a ninth component of the GPRC rate effective May 1, 2015.

In July of each year, PSE&G files for annual recovery for its Green Program investments which include a return on its investment and recovery of expenses. In May 2015, the BPU approved PSE&G’s July 2014 filing requesting recovery of costs and investments in the first eight combined components of the electric and gas GPRC for the period October 1, 2014 through September 30, 2015. In July 2015, PSE&G filed its annual GPRC and SPRC cost recovery petitions with the BPU, requesting recovery of costs and investments for the first eight combined components of the electric and gas GPRC, as well as the electric SPRC. The filings proposed rates for the period October 1, 2015 through September 30, 2016 designed to recover approximately $66 million and $10 million in electric and gas revenues, respectively, on an annual basis associated with PSE&G's implementation of these BPU approved programs. In September 2015, the BPU approved the July 2015 filings on a provisional basis, with new rates effective October 1, 2015. In November 2015, PSE&G filed updated costs with the BPU. In January 2016, the BPU gave final approval for rates set to recover adjusted amounts based on this update of approximately $57 million and $8 million in electric and gas revenues, respectively, on an annual basis with rates effective February 1, 2016.

•

Transmission Formula Rate Filings—In June 2015, PSE&G filed its 2014 true-up adjustment pertaining to its formula rates in effect for 2014, which resulted in an adjustment of $19 million less than the 2014 originally filed revenues. The adjustment was primarily due to the impact of bonus depreciation and lower interest rates which PSE&G had recognized in its Consolidated Statement of Operations for the year ended December 31, 2014. In accordance with PSE&G’s formula rate protocols this Rate Year 2014 true-up adjustment has been incorporated into PSE&G's Annual Formula Rate Update for the 2016 Rate Year.

The 2016 Annual Formula Rate Update was filed with FERC in October 2015 and provides for $146 million in increased annual transmission revenues effective January 1, 2016. Each year, transmission revenues are adjusted to reflect items such as updating estimates used in the filing with actual data. The adjustment for 2016 will include the impact of the extension of bonus depreciation, which was enacted after our 2016 filing was made. This adjustment will be incorporated with the 2016 true-up adjustments filed in 2017 and will be incorporated into PSE&G’s Annual Formula Rate Update for the 2017 Rate Year.


•	RAC—In August 2015, the BPU approved PSE&G's filing with respect to its RAC 22 petition allowing recovery of $85 million effective September 1, 2015 related to net Manufactured Gas Plant expenditures from August 1, 2013 through July 31, 2014.


•	USF/Lifeline—In September 2015, the BPU approved rates set to recover costs incurred under the USF/Lifeline energy assistance programs effective October 1, 2015.


•	SBC and NGC—In May 2015, PSE&G filed a petition to recover approximately $311 million in actual SBC and NGC costs incurred through December 31, 2014 under its Energy Efficiency & Renewable Energy Programs, Social Programs and NGC. In January 2016, the BPU approved PSE&G’s petition with rates effective February 1, 2016.

PSE&G [Member]

Regulatory Assets And Liabilities [Line Items]

Regulatory Assets and Liabilities

PSE&G had the following Regulatory Assets and Liabilities:




	As of December 31,
	2015		2014		Recovery/Refund Period
	Millions
Regulatory Assets
Current
New Jersey Clean Energy Program	$	142	$	142	Annual filing for recovery (2)
Stranded Costs (including $249 in 2014 related to VIEs)	—		412		Through December 2015 (2)
Underrecovered Electric Energy Costs—Basic Generation Service	11		—		Annual filing for recovery (1) (2)
Weather Normalization Clause (WNC)	10		—		Annual filing for recovery (2)
Solar and Energy Efficiency Recovery Charges (Green Program Recovery Charges (GPRC))	1		13		Annual filing for recovery (1) (2)
Other	—		5		Various
Total Current Regulatory Assets	$	164	$	572
Noncurrent
Pension and OPEB Costs	$	1,270	$	1,265	Various
Deferred Income Taxes	467		473		Various
Manufactured Gas Plant (MGP) Remediation Costs	431		434		Various (2)
Storm Damage Deferrals	233		245		To be determined
Remediation Adjustment Charge (RAC) (Other SBC)	174		164		Through 2022 (1) (2)
Conditional Asset Retirement Obligation	152		138		Various
Electric Transmission Cost of Removal	133		91		Through depreciation rates
GPRC	104		134		Various (1) (2)
Unamortized Loss on Reacquired Debt and Debt Expense	67		74		Over remaining debt life
Mark-to-Market (MTM) Contracts	63		75		Through 2017
Other	102		99		Various
Total Noncurrent Regulatory Assets	$	3,196	$	3,192
Total Regulatory Assets	$	3,360	$	3,764




	As of December 31,
	2015		2014		Recovery/Refund Period
	Millions
Regulatory Liabilities
Current
Stranded Costs (including $42 in 2015 related to VIEs)	$	64	$	—	Through December 2016 (2)
GPRC	36		6		Annual filing for recovery (1) (2)
Societal Benefit Clause (SBC)	31		13		Various (1) (2)
FERC Formula Rate True-up	19		—		Annual filing for recovery (1) (2)
Gas Margin Adjustment Clause	13		28		Annual filing for recovery (1) (2)
Overrecovered Gas Costs —Basic Gas Supply Service	1		46		Annual filing for recovery (1) (2)
WNC	—		31		Annual filing for recovery (2)
Deferred Income Taxes	—		28		Various
Overrecovered Electric Energy Costs— Basic Generation Service	—		21		Annual filing for recovery (1) (2)
Overrecovered Non-Utility Generation Charge (NGC)	1		13		Annual filing for recovery (1) (2)
Total Current Regulatory Liabilities	$	165	$	186
Noncurrent
Electric Distribution Cost of Removal	$	122	$	133	Through depreciation rates
FERC Formula Rate True-up	49		26		Annual filing for recovery (1) (2)
Stranded Costs (including $39 in 2014 related to VIEs)	—		134		Through December 2016 (2)
Other	4		4		Various
Total Noncurrent Regulatory Liabilities	$	175	$	297
Total Regulatory Liabilities	$	340	$	483


(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:


•	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.


•	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.


•	Electric and Gas Cost of Removal: PSE&G accrues and collects in rates for the cost of removing, dismantling and disposing of its transmission and distribution assets upon retirement. The regulatory asset or liability for non-legally required cost of removal represents the difference between amounts collected in rates and costs actually incurred.


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


•	Gas Margin Adjustment Clause: This mechanism credits Firm delivery customers for net distribution margin revenue collected from Transportation Gas Service Non-Firm (TSG-NF) delivery customers. The balance represents the difference between the net margin collected from the TSG-NF Customers versus bill credits provided to Firm delivery customers.

•


•	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.


•	MTM Contracts: The estimated fair value of gas hedge contracts and gas cogeneration supply contracts. 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.


•	New Jersey Clean Energy Program: The BPU approved future funding requirements for Energy Efficiency and Renewable Energy Programs through the first half of 2016. Once the rates are measured, they are recovered through the SBC.


•	NGC: These costs represent the difference between rate payer collections and the cost of non-utility generation netted against amounts realized from selling that energy at market rates through PJM.

•


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

•


•	Storm Damage Deferrals: Costs incurred in the cleanup of major storms in 2010 through 2015. As of December 31, 2015, this includes the $220 million of storm costs, net of insurance recoveries, primarily as a result of Hurricane Irene and Superstorm Sandy, approved for future recovery under a BPU Order received in September 2014.

•

Effective January 1, 2016, PSE&G commenced refunding the overcollections from customers associated with Stranded Costs and expects to fully refund these liabilities in 2016.


•	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.


•	Underrecovered Electric Energy Costs: These costs represent the underrecovered amounts associated with BGS, as approved by the BPU. For BGS, interest is accrued on both overrecovered and underrecovered balances.

•

Significant 2015 regulatory orders received and currently pending rate filings with FERC and the BPU by PSE&G are as follows:

•


•	WNC—On April 15, 2015, the BPU approved PSE&G's final filing with respect to excess revenues collected during the colder than normal 2013-2014 Winter Period (October 1, 2013 through May 31, 2014). Effective October 1, 2014, PSEG commenced returning $45 million in revenues to its customers during the 2014-2015 Winter Period (October 1, 2014 through May 31, 2015).

•


•	RAC—In August 2015, the BPU approved PSE&G's filing with respect to its RAC 22 petition allowing recovery of $85 million effective September 1, 2015 related to net Manufactured Gas Plant expenditures from August 1, 2013 through July 31, 2014.


•	USF/Lifeline—In September 2015, the BPU approved rates set to recover costs incurred under the USF/Lifeline energy assistance programs effective October 1, 2015.


•	SBC and NGC—In May 2015, PSE&G filed a petition to recover approximately $311 million in actual SBC and NGC costs incurred through December 31, 2014 under its Energy Efficiency & Renewable Energy Programs, Social Programs and NGC. In January 2016, the BPU approved PSE&G’s petition with rates effective February 1, 2016.