Regulatory Assets and Liabilities

9 Months Ended

Sep. 30, 2019

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Assets and Liabilities

Regulatory Assets and Liabilities

Regulatory Assets

SCE's regulatory assets included on the consolidated balance sheets are:

(in millions)	September 30, 2019		December 31, 2018
Current:
Regulatory balancing accounts	$	823	$	814
Power contracts	275		305
Other	22		14
Total current	1,120		1,133
Long-term:
Deferred income taxes, net of liabilities	3,950		3,589
Pensions and other postretirement benefits	281		271
Power contracts	465		700
Unamortized investments, net of accumulated amortization	117		118
Unamortized loss on reacquired debt	145		153
Regulatory balancing accounts	550		360
Environmental remediation	132		134
Other	91		55
Total long-term	5,731		5,380
Total regulatory assets	$	6,851	$	6,513

Regulatory Liabilities

SCE's regulatory liabilities included on the consolidated balance sheets are:

(in millions)	September 30, 2019		December 31, 2018
Current:
Regulatory balancing accounts	$	957	$	1,080
Energy derivatives	41		158
2018 GRC1	—		274
Other	12		20
Total current	1,010		1,532
Long-term:
Cost of removal	2,721		2,769
Re-measurement of deferred taxes2	2,474		2,776
Recoveries in excess of ARO liabilities3	1,494		1,130
Regulatory balancing accounts	1,490		1,344
Other postretirement benefits	198		185
Other	167		125
Total long-term	8,544		8,329
Total regulatory liabilities	$	9,554	$	9,861

¹ During 2018, SCE recorded CPUC revenue based on the 2017 authorized revenue requirement adjusted for the July 2017 cost of capital decision and Tax Reform pending the outcome of the 2018 GRC. SCE recorded regulatory liabilities associated with these adjustments. In May 2019, these regulatory liabilities were reversed due to the adoption of 2018 GRC final decision. For further information, see Note 1.

²  SCE decreased its regulatory liability and recorded an income tax benefit of $69 million during the first nine months of 2019 related to changes in the allocation of deferred tax re-measurement between customers and shareholders. For further information, see Note 8.

³ Represents the cumulative differences between ARO expenses and amounts collected in rates primarily for the decommissioning of SCE's nuclear generation facilities. Decommissioning costs recovered through rates are primarily placed in nuclear decommissioning trusts. This regulatory liability also represents the deferral of realized and unrealized gains and losses on the nuclear decommissioning trust investments. See Note 10 for further discussion.

Net Regulatory Balancing and Memorandum Accounts

The following table summarizes the significant components of regulatory balancing and memorandum accounts included in the above tables of regulatory assets and liabilities:

(in millions)	September 30, 2019			December 31, 2018
Asset (liability)
Energy resource recovery account	$	205		$	815
Portfolio allocation balancing account1	341			—
New system generation balancing account	102			(74		)
Public purpose programs and energy efficiency programs	(1,260		)	(1,200		)
Tax accounting memorandum account and pole loading balancing account2	(18		)	28
Base revenue requirement balancing account3	(595		)	(628		)
DOE litigation memorandum account	(70		)	(69		)
Greenhouse gas auction revenue and low carbon fuel standard revenue	(222		)	(81		)
FERC balancing accounts	(96		)	(180		)
Wildfire-related memorandum accounts4	506			272
Other	33			(133		)
Liability	$	(1,074	)	$	(1,250	)

¹  In May 2019, the CPUC approved a portfolio allocation balancing account to determine and pro-ratably recover from responsible bundled service and departing load customers the “above-market” costs of all generation resources that are eligible for cost recovery.

²  The 2018 GRC final decision approved changes to expand the use of the two-way TAMA. The expanded TAMA will track revenue differences resulting from changes in income tax expense caused by net revenue changes, mandatory or elective tax law changes, tax accounting changes, tax procedural changes, or tax policy changes during the 2018 GRC period.

³ The base revenue requirement balancing account at September 30, 2019 includes recovery of $107 million of premiums related to a 12-month, $300 million wildfire insurance policy purchased in December 2017.

⁴ The wildfire-related memorandum accounts represent wildfire-related costs that are probable of future recovery from customers, subject to a reasonableness review. The Catastrophic Event Memorandum Account ("CEMA") is used to track the costs related to restoring service and damage repair, upon declaration of disasters by state or federal authorities. In December 2018, the CPUC approved the establishment of the Wildfire Expense Memorandum Account ("WEMA") to track incremental wildfire insurance costs and uninsured wildfire-related claims costs. In March 2019, the CPUC approved a fire risk mitigation memorandum account to track costs related to the reduction of fire risk that are incremental to the amount in SCE's revenue requirement. In June 2019, the CPUC approved a wildfire mitigation plan memorandum account to track costs incurred to implement SCE's Wildfire Mitigation Plan that are not currently reflected in revenue requirements.