Rate and Other Regulatory Matters (Tables)

3 Months Ended

Mar. 31, 2021

Schedule of Regulatory Assets and Liabilities

	March 31,		December 31,
(millions)	2021		2020
Regulatory assets:
NND Project costs⁽¹⁾	$	138	$	138
Deferred employee benefit plan costs⁽²⁾		9		9
Other unrecovered plant⁽³⁾		14		14
DSM programs⁽⁴⁾		26		29
AROs⁽⁵⁾		2		2
Cost of fuel and purchased gas under-collections⁽⁶⁾		—		1
Other		37		36
Regulatory assets - current		226		229
NND Project costs⁽¹⁾		2,330		2,364
AROs⁽⁵⁾		317		309
Cost of reacquired debt⁽⁷⁾		241		243
Deferred employee benefit plan costs⁽²⁾		156		159
Deferred losses on interest rate derivatives⁽⁸⁾		297		308
Other unrecovered plant⁽³⁾		60		61
DSM programs⁽⁴⁾		46		46
Environmental remediation costs⁽⁹⁾		20		20
Deferred storm damage costs⁽¹⁰⁾		45		45
Deferred transmission operating costs⁽¹¹⁾		69		63
Other⁽¹²⁾		109		108
Regulatory assets - noncurrent		3,690		3,726
Total regulatory assets	$	3,916	$	3,955
Regulatory liabilities:
Monetization of guaranty settlement⁽¹³⁾	$	67	$	67
Income taxes refundable through future rates⁽¹⁴⁾		22		21
Reserve for refunds to electric utility customers⁽¹⁵⁾		127		128
Cost of fuel and purchased gas over-collections⁽⁶⁾		53		58
Other		11		9
Regulatory liabilities - current		280		283
Monetization of guaranty settlement⁽¹³⁾		886		903
Income taxes refundable through future rates⁽¹⁴⁾		916		919
Asset removal costs⁽¹⁶⁾		571		564
Deferred gains on interest rate derivatives⁽⁸⁾		69		69
Reserve for refunds to electric utility customers⁽¹⁵⁾		505		540
Other		15		10
Regulatory liabilities - noncurrent		2,962		3,005
Total regulatory liabilities	$	3,242	$	3,288

(1)	Reflects expenditures associated with the NND Project, which pursuant to the SCANA Merger Approval Order, will be recovered from electric service customers over a 20-year period ending in 2039. See Note 10 for more information.

(2)

Employee benefit plan costs have historically been recovered as they have been recorded under GAAP. Deferred employee benefit plan costs represent amounts of pension and other postretirement benefit costs which were accrued as liabilities and treated as regulatory assets pursuant to FERC guidance, and costs deferred pursuant to specific South Carolina Commission regulatory orders. DESC expects to recover deferred pension costs through utility rates over periods through 2044. DESC expects to recover other deferred benefit costs through utility rates, primarily over average service periods of participating employees up to 11 years.

(3)

Represents the carrying value of coal-fired generating units, including related materials and supplies inventory, retired from service prior to being fully depreciated. DESC is amortizing these amounts through cost of service rates following deprecation amounts that were designed to recover the retired units’ cost over their previous estimated remaining useful lives, which has been estimated to be through 2025. Based on current projections of remaining decommissioning costs, projected recovery is expected to extend to 2028. Unamortized amounts are included in rate base and are earning a current return.

(4)	Represents deferred costs associated with electric demand reduction programs, and such deferred costs are currently being recovered over three years through an approved rate rider.

(5)

Represents deferred depreciation and accretion expense related to legal obligations associated with the future retirement of generation, transmission and distribution properties. The AROs primarily relate to DESC’s electric generating facilities, including Summer, and are expected to be recovered over the related property lives and periods of decommissioning which may range up to approximately 105 years.

(6)	Represents amounts under- or over-collected from customers pursuant to the cost of fuel and purchased gas components approved by the South Carolina Commission.

(7)	Costs of the reacquisition of debt are deferred and amortized as interest expense over the would-be remaining life of the reacquired debt or over the life of the replacement debt if refinanced. The reacquired debt had a weighted-average life of approximately 26 years as of March 31, 2021.

(8)

Represents (i) the changes in fair value and payments made or received upon settlement of certain interest rate derivatives designated as cash flow hedges and (ii) the changes in fair value and payments made or received upon settlement of certain other interest rate derivatives not so designated. The amounts recorded with respect to (i) are expected to be amortized to interest expense over the lives of the underlying debt through 2043.The amounts recorded with respect to (ii) are expected to be similarly amortized to interest expense through 2065.

(9)	Reflects amounts associated with the assessment and clean-up of sites currently or formerly owned by DESC. Such remediation costs are expected to be recovered over periods of up to 15 years. See Note 10 for more information.

(10)	Represents storm restoration costs for which DESC expects to receive future recovery through customer rates.

(11)	Includes deferred depreciation and property taxes associated with certain transmission assets for which DESC expects recovery from customers through future rates. See Note 10 for more information.

(12)	Various other regulatory assets are expected to be recovered through rates over varying periods through 2047.

(13)

Represents proceeds related to the monetization of the Toshiba Settlement. In accordance with the SCANA Merger Approval Order, this balance, net of amounts that may be required to satisfy liens, will be refunded to electric customers over a 20-year period ending in 2039. See Note 12 to the Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2020.

(14)

Includes (i) excess deferred income taxes arising from the remeasurement of deferred income taxes in connection with the enactment of the 2017 Tax Reform Act (certain of which are protected under normalization rules and will be amortized over the remaining lives of related property, and certain of which will be amortized to the benefit of customers over prescribed periods as instructed by regulators) and (ii) deferred income taxes arising from investment tax credits, offset by (iii) deferred income taxes that arise from utility operations that have not been included in customer rates (a portion of which relate to depreciation and are expected to be recovered over the remaining lives of the related property which may range up to 85 years). See Note 6 for more information.

(15)

Reflects amounts previously collected from retail electric customers of DESC for the NND Project to be credited to customers over an estimated 11-year period effective February 2019 in connection with the SCANA Merger Approval Order. See Note 12 to the Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2020.

(16)	Represents estimated net collections through depreciation rates of amounts to be expended for the removal of assets in the future.