Regulatory Assets And Liabilities

12 Months Ended

Dec. 31, 2017

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, 2017 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,
	2017		2016
	Millions
Regulatory Assets
Current
New Jersey Clean Energy Program	$	128	$	142
Weather Normalization Clause (WNC)	40		49
Electric Energy Costs—Basic Generation Service	23		2
FERC Formula Rate True-up	12		—
Other	8		6
Total Current Regulatory Assets	$	211	$	199
Noncurrent
Pension and OPEB Costs	$	1,488	$	1,403
Manufactured Gas Plant (MGP) Remediation Costs	358		403
Deferred Income Taxes	282		507
Storm Damage Deferrals	241		239
Electric Transmission and Gas Cost of Removal	199		189
Remediation Adjustment Charge (RAC) (Other SBC)	172		180
Conditional Asset Retirement Obligation	162		157
Green Program Recovery Charges (GPRC)	98		91
Unamortized Loss on Reacquired Debt and Debt Expense	55		61
Gas Costs—Basic Gas Supply Service (BGSS)	30		—
FERC Formula Rate True-up	16		—
Other	121		89
Total Noncurrent Regulatory Assets	$	3,222	$	3,319
Total Regulatory Assets	$	3,433	$	3,518




	As of December 31,
	2017		2016
	Millions
Regulatory Liabilities
Current
Gas Costs —BGSS	$	30	$	6
Gas Margin Adjustment Clause	12		11
GPRC	3		28
FERC Formula Rate True-up	—		34
Other	2		9
Total Current Regulatory Liabilities	$	47	$	88
Noncurrent
Excess Deferred Income Tax Regulatory Liability	$	2,868	$	—
Electric Distribution Cost of Removal	80		94
Mark-to-Market (MTM) Contracts	—		20
Other	—		4
Total Noncurrent Regulatory Liabilities	$	2,948	$	118
Total Regulatory Liabilities	$	2,995	$	206

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 as assets are retired.

•

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. In December 2017, new tax legislation was enacted (Tax Act) reducing the statutory U.S. corporate income tax rate from a maximum of 35% to 21%, effective January 1, 2018. PSE&G is subject to Financial Accounting Standards Board (FASB) Accounting Standards Codification 740, Income Taxes (ASC 740), which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate was enacted. The impact of reduction in tax rate is the primary reason for the decrease in the Regulatory Asset.


•	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.

•

Electric Energy Costs—Basic Generation Service: These costs represent the over or under recovered amounts associated with Basic Generation Services (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. Over or under recovered balances with interest are returned or recovered through monthly filings.

•

Excess Deferred Income Tax Regulatory Liability: The $2.9 billion Regulatory Liability represents the future revenue reduction of PSE&G’s existing $2.1 billion Accumulated Deferred Income Tax liabilities that are in excess of what is needed to offset future tax liabilities as a result of the Tax Act that reduces the federal corporate income tax rate from a maximum of 35% to 21% effective January 1, 2018. The excess deferred income taxes are primarily related to the difference between book and tax plant depreciation and under the new tax legislation cannot be returned to customers any faster than over the remaining regulatory lives of the related property. For the remaining excess deferred taxes, the mechanism and timing of these refunds will be determined by the BPU and FERC.


•	FERC Formula Rate True-up: Over or under collection of transmission earnings calculated using a FERC approved formula. Over or under collected balances with interest are returned or recovered through the subsequent annual filing.

•

Gas Costs—Basic Gas Supply Service: These costs represent the over or under recovered 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. Over or under collected balances are returned or recovered through an annual filing. Interest is accrued only on over recovered balances.

•

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. Over or under recovered balances with interest are returned or recovered through the subsequent annual filing.

•

GPRC: This amount represents costs of the over or under collected balances associated with various renewable energy and energy efficiency programs. The Company files annually with the BPU for recovery of amounts that include a return on and of its investment over the lives of the underlying investments and capital assets which range from 5 to 10 years. Interest is accrued monthly on any over or under recovered balances. Components of the GPRC include: Carbon Abatement, Energy Efficiency Economic Stimulus Program (EEE), 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, Solar Loan III Program and the Energy Efficiency 2017 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 over a seven year period with interest.


•	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 2018. The BPU funding requirements are recovered through the SBC.

•

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 with interest through an annual filing.

•

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. Over or under recovered balances with interest are to be returned or recovered through an annual filing.


•	Storm Damage Deferrals: Costs incurred in the cleanup of major storms in 2010 through 2017. As of December 31, 2017, 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.

•

WNC: This represents the over or under recovery of gas margin under the BPU’s weather normalization clause which is filed annually. 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 returned to customers in the next winter season while under recoveries (subject to an earnings cap) are recovered from customers in the next winter season.

Significant 2017 regulatory orders received and currently pending rate filings with FERC and the BPU by PSE&G are as follows:

•

Electric and Gas Distribution Base Rate Filing—In January 2018, PSE&G filed a distribution base rate case as required as a condition of approval of its Energy Strong Program approved by the BPU in 2014. The filing requests an approximate one percent increase in revenues and seeks to recover investments made to strengthen electric and gas distribution systems. In its filing, PSE&G requested that these rates take into account a reduction in the revenue requirement as a result of the federal corporate income tax rate reduction from 35% to 21% provided in the Tax Act, including a one-time credit for estimated excess income taxes collected between January 1, 2018 and the time new rates go into effect, and the flow back to customers of certain additional tax benefits. PSE&G anticipates the new base rates will go into effect in the fourth quarter of 2018.

Separately, in January 2018, the BPU issued an order commencing a proceeding to ensure that the rate revenue resulting from expenses relating to taxes reflected in rates but no longer owed as the result of the Tax Act shall be passed onto the ratepayers. The BPU directed New Jersey utilities (including PSE&G) to make filings by March 2, 2018 setting forth interim rates to be effective April 1, 2018 reflecting the new federal corporate tax rate, and to subsequently file proposed final rates, effective July 1, 2018, incorporating all other effects of the Tax Act. This proceeding is currently pending.


•	Transmission Formula Rate Filings—In June 2017, PSE&G filed its 2016 true-up adjustment pertaining to its transmission formula rates in effect for 2016. This resulted in an adjustment of $12 million more than the 2016 originally filed revenues.

For the year ended December 31, 2017, PSE&G recorded an estimated true-up adjustment of $16 million to its 2017 Annual Formula rate. That true-up will be filed by no later than June 15, 2018.

In October 2017, the 2018 Annual Formula Rate Update was filed with FERC and requested approximately $212 million in increased annual transmission revenues effective January 1, 2018, subject to true-up. In January 2018, PSE&G filed with FERC a revised 2018 Annual Transmission Formula Rate Update reducing the 2018 transmission annual revenue requirement to reflect the federal corporate income tax rate reduction from 35% to 21%, effective January 1, 2018, provided in the Tax Act. This change in the federal corporate tax rate reduces the annual revenue requirement by $148 million. The revised increase in annual transmission revenues effective January 1, 2018 is $64 million.


•	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 2017, PSE&G submitted the planned update to its March Energy Strong cost recovery petition, originally filed in March 2017, to include Energy Strong investments in service as of May 31, 2017. This filing requested estimated annual increases in electric and gas revenues of $16 million and $2 million, respectively. In August 2017, the BPU approved these rate increases effective September 1, 2017.

In September 2017, 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, 2017 through November 30, 2017. The filing was updated in December 2017 requesting an annual increase in electric revenues of $8 million. This matter is pending.


•	Gas System Modernization Program (GSMP)—In July of each year, PSE&G files with the BPU for base rate recovery of GSMP investments which include a return of and on its investment.

In December 2017, the BPU approved PSE&G’s annual GSMP cost recovery petition, originally filed in July 2017, and updated in October 2017, to include GSMP investments in service as of September 30, 2017. The BPU approved an annual increase in gas revenues of $25 million, effective January 1, 2018.

•

BGSS—In June 2017, PSE&G made its annual BGSS filing with the BPU requesting an increase in the BGSS rate from approximately 34 cents to 37 cents per therm effective October 1, 2017. In September 2017, the BPU approved a Stipulation in this matter on a provisional basis and the BGSS rate was increased. In December 2017 and February 2018, PSE&G filed with the BPU for self-implementing monthly bill credits of 15 cents per therm for the months of January, February and March 2018. These monthly bill credits are estimated to provide approximately $100 million in customer credits. In November 2017, a filing was made by the Retail Energy Supply Association (RESA) with the BPU requesting that the BPU revisit the BGSS process and establish a gas capacity release program. This filing, which remains pending, is applicable to all New Jersey gas utilities.


•	Green Program Recovery Charges (GPRC)—Each year PSE&G files with the BPU for annual recovery for the 11 combined components of its electric and gas Green Program investments which include a return on its investment and recovery of expenses.

In March 2017, the BPU gave final approval to PSE&G’s 2016 GPRC cost recovery petition to recover approximately$37 million and $13 million in electric and gas revenues, respectively, on an annual basis associated with PSE&G’s implementation of these BPU approved GPRC programs for the period October 1, 2016 through September 30, 2017. The rates were effective May 1, 2017. This Order also included the return of approximately $5 million in remaining overcollections from the completed Securitization Transition Charge.

In June 2017, PSE&G filed its 2017 GPRC cost recovery petition requesting recovery of approximately $47 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 for the period October 1, 2017 through September 30, 2018. This proceeding is ongoing.

In August 2017, the BPU approved PSE&G’s petition for an Energy Efficiency 2017 Program (EE 2017) to extend three existing energy efficiency subprograms (multi-family, direct install and hospital efficiency) and establish two new residential energy efficiency offerings. The two new offerings include deployment of smart thermostats and a pilot program to provide residential customers with energy usage information enabling them to reduce consumption. The Order allows PSE&G to extend the subprogram offerings and establish the residential energy efficiency subprograms under its existing energy efficiency clause recovery process. The EE 2017 allows for $69 million of additional investment and $16 million of additional administrative and information technology costs. The EE 2017 was added as the 11th component of the GPRC rate effective September 1, 2017.


•	Weather Normalization Clause—In April 2017, the BPU gave final approval to PSE&G petition to collect $54 million in net deficiency gas revenues as a result of the warmer than normal 2015-2016 Winter Period.

In September 2017, the BPU approved on a provisional basis, PSE&G’s petition to collect $31 million in net deficiency gas revenues as a result of the warmer than normal 2016-2017 Winter Period and a remaining carryover balance of $24 million in net deficiency gas revenues from the 2015-2016 Winter Period for a total recovery of $55 million in net deficiency revenues. The deficiency will be collected from customers over the 2017-2018 and 2018-2019 Winter Periods (October 1 through May 31). Final approval in this matter is pending.

•

Remediation Adjustment Charge (RAC)—In June 2017, the BPU approved PSE&G’s filing with respect to its RAC 24 petition allowing recovery of $41 million effective July 10, 2017 related to net Manufactured Gas Plant expenditures from August 1, 2015 through July 31, 2016. In February 2018, PSE&G filed a RAC 25 Petition with the BPU requesting recovery of $63 million of net Manufactured Gas Plant expenditures from August 1, 2016 through July 31, 2017. This matter is pending.

•

Universal Service Fund (USF)/Lifeline—In September 2017, 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, 2017. 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,
	2017		2016
	Millions
Regulatory Assets
Current
New Jersey Clean Energy Program	$	128	$	142
Weather Normalization Clause (WNC)	40		49
Electric Energy Costs—Basic Generation Service	23		2
FERC Formula Rate True-up	12		—
Other	8		6
Total Current Regulatory Assets	$	211	$	199
Noncurrent
Pension and OPEB Costs	$	1,488	$	1,403
Manufactured Gas Plant (MGP) Remediation Costs	358		403
Deferred Income Taxes	282		507
Storm Damage Deferrals	241		239
Electric Transmission and Gas Cost of Removal	199		189
Remediation Adjustment Charge (RAC) (Other SBC)	172		180
Conditional Asset Retirement Obligation	162		157
Green Program Recovery Charges (GPRC)	98		91
Unamortized Loss on Reacquired Debt and Debt Expense	55		61
Gas Costs—Basic Gas Supply Service (BGSS)	30		—
FERC Formula Rate True-up	16		—
Other	121		89
Total Noncurrent Regulatory Assets	$	3,222	$	3,319
Total Regulatory Assets	$	3,433	$	3,518




	As of December 31,
	2017		2016
	Millions
Regulatory Liabilities
Current
Gas Costs —BGSS	$	30	$	6
Gas Margin Adjustment Clause	12		11
GPRC	3		28
FERC Formula Rate True-up	—		34
Other	2		9
Total Current Regulatory Liabilities	$	47	$	88
Noncurrent
Excess Deferred Income Tax Regulatory Liability	$	2,868	$	—
Electric Distribution Cost of Removal	80		94
Mark-to-Market (MTM) Contracts	—		20
Other	—		4
Total Noncurrent Regulatory Liabilities	$	2,948	$	118
Total Regulatory Liabilities	$	2,995	$	206

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 as assets are retired.

•


•	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: Over or under collection of transmission earnings calculated using a FERC approved formula. Over or under collected balances with interest are returned or recovered through the subsequent annual filing.

•


•	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 over a seven year period with interest.


•	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 2018. The BPU funding requirements are recovered through the SBC.

•


•	RAC (Other SBC): Costs incurred to clean up manufactured gas plants which are recovered over seven years with interest through an annual filing.

•


•	Storm Damage Deferrals: Costs incurred in the cleanup of major storms in 2010 through 2017. As of December 31, 2017, 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.

•

Significant 2017 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 2017, PSE&G filed its 2016 true-up adjustment pertaining to its transmission formula rates in effect for 2016. This resulted in an adjustment of $12 million more than the 2016 originally filed revenues.

For the year ended December 31, 2017, PSE&G recorded an estimated true-up adjustment of $16 million to its 2017 Annual Formula rate. That true-up will be filed by no later than June 15, 2018.


•	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.


•	Gas System Modernization Program (GSMP)—In July of each year, PSE&G files with the BPU for base rate recovery of GSMP investments which include a return of and on its investment.

•


•	Green Program Recovery Charges (GPRC)—Each year PSE&G files with the BPU for annual recovery for the 11 combined components of its electric and gas Green Program investments which include a return on its investment and recovery of expenses.


•	Weather Normalization Clause—In April 2017, the BPU gave final approval to PSE&G petition to collect $54 million in net deficiency gas revenues as a result of the warmer than normal 2015-2016 Winter Period.

•