Rate and Other Regulatory Matters (Tables)

3 Months Ended

Mar. 31, 2022

Schedule of Regulatory Assets and Liabilities

	March 31,		December 31,
(millions)	2022		2021
Regulatory assets:
NND Project costs⁽¹⁾	$	138	$	138
Deferred employee benefit plan costs⁽²⁾		4		8
Other unrecovered plant⁽³⁾		16		16
DSM programs⁽⁴⁾		22		23
AROs⁽⁵⁾		2		2
Cost of fuel and purchased gas under-collections⁽⁶⁾		121		126
Other		47		48
Regulatory assets - current		350		361
NND Project costs⁽¹⁾		2,191		2,226
AROs⁽⁵⁾		341		311
Deferred employee benefit plan costs⁽²⁾		110		106
Deferred losses on interest rate derivatives⁽⁷⁾		286		295
Other unrecovered plant⁽³⁾		63		57
DSM programs⁽⁴⁾		44		45
Environmental remediation costs⁽⁸⁾		37		30
Deferred storm damage costs⁽⁹⁾		38		38
Deferred transmission operating costs⁽¹⁰⁾		77		77
Other⁽¹¹⁾		136		138
Regulatory assets - noncurrent		3,323		3,323
Total regulatory assets	$	3,673	$	3,684
Regulatory liabilities:
Monetization of guaranty settlement⁽¹²⁾	$	67	$	67
Income taxes refundable through future rates⁽¹³⁾		41		42
Reserve for refunds to electric utility customers⁽¹⁴⁾		109		113
Cost of fuel and purchased gas over-collections⁽⁶⁾		4		—
Derivatives⁽¹⁵⁾		52		18
Other		8		5
Regulatory liabilities - current		281		245
Monetization of guaranty settlement⁽¹²⁾		753		831
Income taxes refundable through future rates⁽¹³⁾		895		903
Asset removal costs⁽¹⁶⁾		572		570
Deferred gains on interest rate derivatives⁽⁷⁾		66		67
Reserve for refunds to electric utility customers⁽¹⁴⁾		394		425
Derivatives⁽¹⁵⁾		173		131
Other		10		9
Regulatory liabilities - noncurrent		2,863		2,936
Total regulatory liabilities	$	3,144	$	3,181

(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 12 to the Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional 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 2029. In addition, amounts include unrecovered costs of existing meters and equipment retired from service prior to being fully depreciated as part of the Advance Metering Infrastructure project, which are being recovered through rates through 2028. This amount also includes certain inventory and preliminary survey and investigation charges being amortized over five years related to the transition or conversion from coal to gas fired generation at certain facilities. In addition, reflects an increase of approximately $7 million related to the abandonment of certain peaking gas generation facilities, such amounts having been reclassified from property, plant and equipment to noncurrent other unrecovered plant. 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. Reflects a $66 million reduction recorded in the first quarter of 2022 from the application of a portion of the monetization of guarantee settlement previously reflected as regulatory liabilities associated with the approval of DESC’s cost of fuel proceedings. See above for additional information.

(7)

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.

(8)	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 27 years. See Note 10 for additional information.

(9)	Represents storm restoration costs which DESC expects to recover through customer rates over approximately 10 years pursuant to the settlement agreement approved in DESC’s retail electric base rate case. Unamortized amounts are included in rate base and are earning a current return.

(10)

Includes deferred depreciation and property taxes associated with certain transmission assets which DESC expects to recover from customers through 2063, pursuant to the settlement agreement approved in DESC’s retail electric base rate case. Unamortized amounts are included in rate base and are earning a current return.

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

(12)

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, 2021 for additional information.

(13)

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 7 to the Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

(14)

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, 2021.

(15)	For jurisdictions subject to cost-based rate regulation, changes in the fair value of derivative instruments result in the recognition of regulatory assets or regulatory liabilities as they are expected to be recovered from or refunded to customers.

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