Regulatory Assets And Liabilities

12 Months Ended

Dec. 31, 2016

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, 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, 2016 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,
	2016		2015		Recovery/Refund Period
	Millions
Regulatory Assets
Current
New Jersey Clean Energy Program	$	142	$	142	Annual filing for recovery (2)
Weather Normalization Clause (WNC)	49		10		Annual filing for recovery (2)
Underrecovered Electric Energy Costs—Basic Generation Service	2		11		Annual filing for recovery (1) (2)
Other	6		1		Various
Total Current Regulatory Assets	$	199	$	164
Noncurrent
Pension and OPEB Costs	$	1,403	$	1,270	Various
Deferred Income Taxes	507		467		Various
Manufactured Gas Plant (MGP) Remediation Costs	403		431		Various (2)
Storm Damage Deferrals	239		233		To be determined
Electric Transmission and Gas Cost of Removal	189		160		Through depreciation rates
Remediation Adjustment Charge (RAC) (Other SBC)	180		174		Through 2022 (1) (2)
Conditional Asset Retirement Obligation	157		152		Various
Green Program Recovery Charges (GPRC)	91		104		Various (1) (2)
Unamortized Loss on Reacquired Debt and Debt Expense	61		67		Over remaining debt life
Mark-to-Market (MTM) Contracts	—		63		Through 2017
Other	89		75		Various
Total Noncurrent Regulatory Assets	$	3,319	$	3,196
Total Regulatory Assets	$	3,518	$	3,360




	As of December 31,
	2016		2015		Recovery/Refund Period
	Millions
Regulatory Liabilities
Current
FERC Formula Rate True-up	$	34	$	19	Annual filing for recovery (1) (2)
GPRC	28		36		Annual filing for recovery (1) (2)
Gas Margin Adjustment Clause	11		13		Annual filing for recovery (1) (2)
Overrecovered Gas Costs —Basic Gas Supply Service	6		1		Annual filing for recovery (1) (2)
Overrecovered Non-Utility Generation Charge (NGC)	5		1		Annual filing for recovery (1) (2)
Societal Benefit Clause (SBC)	4		31		Various (1) (2)
Stranded Costs (including $42 in 2015 related to VIEs)	—		64		Through December 2016 (2)
Total Current Regulatory Liabilities	$	88	$	165
Noncurrent
Electric Distribution Cost of Removal	$	94	$	122	Through depreciation rates
MTM Contracts	20		—		Various
FERC Formula Rate True-up	1		49		Annual filing for recovery (1) (2)
Other	3		4		Various
Total Noncurrent Regulatory Liabilities	$	118	$	175
Total Regulatory Liabilities	$	206	$	340


(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 4 All Extension II, 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 contract. 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 2017. The BPU funding requirements are recovered through the SBC.


•	NGC: These costs represent the difference between the cost of non-utility generation and the benefit realized from the energy received at market rates.

•

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 2016. As of December 31, 2016, this includes the $220 million of storm costs, net of insurance recoveries, primarily as a result of Hurricane Irene and Superstorm Sandy, approved for recovery in a future base rate case proceeding under a BPU order received in September 2014.

•

Stranded Costs: As of December 31, 2015, the balance represented overrecovered costs, which were collected by PSE&G as servicer on behalf of Transition Funding and Transition Funding II, respectively through the securitization transition charges authorized by the BPU in irrevocable financing. Collected funds were remitted to Transition Funding and Transition Funding II and 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 remained. In 2016, PSE&G refunded over-collections from customers associated with Stranded Costs and as of December 31, 2016, there were no remaining Regulatory Assets or Liabilities associated with this program.


•	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 2016 regulatory orders received and currently pending rate filings with FERC and the BPU by PSE&G are as follows:

•

Transmission Formula Rate Filings—In June 2016, PSE&G filed its 2015 true-up adjustment pertaining to its transmission formula rates in effect for 2015. This resulted in an adjustment of $34 million less than the 2015 originally filed revenues primarily due to the impact of bonus depreciation legislation enacted after PSE&G filed its 2015 formula rate requirement in October 2014. PSE&G had recognized the majority of this adjustment in its Consolidated Statement of Operations for the year ended December 31, 2015. For the year ended December 31, 2016, PSE&G does not anticipate a significant true-up adjustment to its 2016 Annual Formula rate. That true-up will be filed by no later than June 15, 2017. In October 2016, the 2017 Annual Formula Rate Update was filed with FERC and requests approximately $121 million in increased annual transmission revenues effective January 1, 2017, subject to true-up.

•

Energy Strong Recovery Filing—In March and September of each year, PSE&G files with the BPU for base rate recovery of Energy Strong investments which include a return of and on its investment. In June 2016, PSE&G updated its March cost recovery petition to include Energy Strong investments in service as of May 31, 2016 which represents estimated annual increases in electric and gas revenues of $16 million and $23 million, respectively. In August 2016, the BPU approved these rate increases effective September 1, 2016.

In September 2016, PSE&G filed its 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, 2016 through November 30, 2016. In February 2017, the BPU approved PSE&G’s request for an annualized increase in electric revenue requirements of $12 million with rates effective March 1, 2017.


•	Gas System Modernization Program (GSMP)—In December 2016, the BPU approved PSE&G’s initial annual GSMP cost recovery petition which results in an annual revenue increase of $10 million effective January 1, 2017. This increase represents the return of and on investment for GSMP infrastructure in service through September 30, 2016.

•

Green Program Recovery Charges (GPRC)—Each year PSE&G files with the BPU for annual recovery of its Green Program investments which include a return on its investment and recovery of expenses. In July 2016, PSE&G filed its 2016 GPRC cost recovery petition requesting recovery for the nine combined components of the electric and gas GPRC. In September 2016, the BPU approved rates on a provisional basis effective October 1, 2016 designed to recover approximately $44 million and $13 million in electric and gas revenues, respectively, on an annual basis associated with PSE&G’s implementation of these BPU approved programs.

In November 2016, the BPU approved PSE&G’s petition for a Solar 4 All Extension II Program for an additional 33 MWs of solar development on brownfields and closed landfills. The order allows PSE&G to extend the program under the same clause recovery process as its existing Solar 4 All Programs, with an estimated initial capital investment (excluding AFUDC) of approximately $80 million with a 9.75% ROE. The Solar 4 All Extension II Program is the tenth component of the GPRC.

•

BGSS—In June 2016, PSE&G made its annual BGSS filing with the BPU requesting a reduction of $87 million in annual BGSS revenues. In September 2016, the BPU approved a Stipulation in this matter on a provisional basis and the BGSS rate was reduced from approximately 40 cents to 34 cents per therm effective October 1, 2016. The rate is subject to final settlement. In December 2016, PSE&G filed with the BPU for a self-implementing two-month bill credit of 7.5 cents per therm for the months of January and February 2017. In February 2017, PSE&G filed with the BPU to extend the self-implementing bill credit of 7.5 cents per therm to customers through March 2017. The 3-month bill credits are estimated to provide approximately $47 million in customer credits. The specific amount returned will depend on actual usage over that period.

•

Weather Normalization Clause—In July 2016, PSE&G filed a petition requesting approval to collect $54 million in net deficiency gas revenues as a result of the warmer than normal 2015-2016 Winter Period. The deficiency gas revenues would be collected from customers over the 2016-2017 and 2017-2018 Winter Periods (October 1 through May 31). In September 2016, the BPU approved PSE&G’s filing on a provisional basis with respect to the $54 million in deficiency revenues to be collected from customers effective October 1, 2016. This matter is pending.

•

Remediation Adjustment Charge (RAC)—In April 2016, the BPU approved PSE&G’s filing with respect to its RAC 23 petition allowing recovery of $54 million effective May 7, 2016 related to net Manufactured Gas Plant expenditures from August 1, 2014 through July 31, 2015. In November 2016, PSE&G filed a RAC 24 Petition with the BPU requesting recovery of $41 million of net Manufactured Gas Plant expenditures from August 1, 2015 through July 31, 2016. This matter is pending.

•

Universal Service Fund (USF)/Lifeline—In September 2016, the BPU approved rates set to recover state-wide costs incurred by New Jersey electric and gas distribution companies under the State’s USF/Lifeline energy assistance programs effective October 1, 2016. PSE&G earns no margin on the collection of the USF and Lifeline programs resulting in no impact on its Consolidated Statement of Operations.

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,
	2016		2015		Recovery/Refund Period
	Millions
Regulatory Assets
Current
New Jersey Clean Energy Program	$	142	$	142	Annual filing for recovery (2)
Weather Normalization Clause (WNC)	49		10		Annual filing for recovery (2)
Underrecovered Electric Energy Costs—Basic Generation Service	2		11		Annual filing for recovery (1) (2)
Other	6		1		Various
Total Current Regulatory Assets	$	199	$	164
Noncurrent
Pension and OPEB Costs	$	1,403	$	1,270	Various
Deferred Income Taxes	507		467		Various
Manufactured Gas Plant (MGP) Remediation Costs	403		431		Various (2)
Storm Damage Deferrals	239		233		To be determined
Electric Transmission and Gas Cost of Removal	189		160		Through depreciation rates
Remediation Adjustment Charge (RAC) (Other SBC)	180		174		Through 2022 (1) (2)
Conditional Asset Retirement Obligation	157		152		Various
Green Program Recovery Charges (GPRC)	91		104		Various (1) (2)
Unamortized Loss on Reacquired Debt and Debt Expense	61		67		Over remaining debt life
Mark-to-Market (MTM) Contracts	—		63		Through 2017
Other	89		75		Various
Total Noncurrent Regulatory Assets	$	3,319	$	3,196
Total Regulatory Assets	$	3,518	$	3,360




	As of December 31,
	2016		2015		Recovery/Refund Period
	Millions
Regulatory Liabilities
Current
FERC Formula Rate True-up	$	34	$	19	Annual filing for recovery (1) (2)
GPRC	28		36		Annual filing for recovery (1) (2)
Gas Margin Adjustment Clause	11		13		Annual filing for recovery (1) (2)
Overrecovered Gas Costs —Basic Gas Supply Service	6		1		Annual filing for recovery (1) (2)
Overrecovered Non-Utility Generation Charge (NGC)	5		1		Annual filing for recovery (1) (2)
Societal Benefit Clause (SBC)	4		31		Various (1) (2)
Stranded Costs (including $42 in 2015 related to VIEs)	—		64		Through December 2016 (2)
Total Current Regulatory Liabilities	$	88	$	165
Noncurrent
Electric Distribution Cost of Removal	$	94	$	122	Through depreciation rates
MTM Contracts	20		—		Various
FERC Formula Rate True-up	1		49		Annual filing for recovery (1) (2)
Other	3		4		Various
Total Noncurrent Regulatory Liabilities	$	118	$	175
Total Regulatory Liabilities	$	206	$	340


(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 contract. 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 2017. The BPU funding requirements are recovered through the SBC.


•	NGC: These costs represent the difference between the cost of non-utility generation and the benefit realized from the energy received at market rates.

•


•	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 2016. As of December 31, 2016, this includes the $220 million of storm costs, net of insurance recoveries, primarily as a result of Hurricane Irene and Superstorm Sandy, approved for recovery in a future base rate case proceeding under a BPU order received in September 2014.

•


•	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 2016 regulatory orders received and currently pending rate filings with FERC and the BPU by PSE&G are as follows:

•


•	Gas System Modernization Program (GSMP)—In December 2016, the BPU approved PSE&G’s initial annual GSMP cost recovery petition which results in an annual revenue increase of $10 million effective January 1, 2017. This increase represents the return of and on investment for GSMP infrastructure in service through September 30, 2016.

•