Regulatory (Tables)

9 Months Ended

Sep. 30, 2023

Schedule of Regulatory Assets and Regulatory Liabilities

Details of the regulatory assets and liabilities are presented in the following table:


Regulatory Assets and Liabilities
(millions)	September 30, 2023		December 31, 2022
Regulatory assets:
Regulatory tax asset (1)	$	111	$	124
Cost-recovery clauses (2)		199		525
Capital cost recovery for early retired assets (3)		499		497
Environmental remediation (4)		0		20
Postretirement benefits (5)		238		272
Asset retirement obligation (6)		11		13
Storm reserve (7)		39		76
Other		19		25
Total regulatory assets		1,116		1,552
Less: Current portion		227		361
Long-term regulatory assets	$	889	$	1,191
Regulatory liabilities:
Regulatory tax liability (8)	$	478	$	601
Cost-recovery clauses - deferred balances (2)		23		30
Accumulated reserve - cost of removal (9)		288		498
Other		24		11
Total regulatory liabilities		813		1,140
Less: Current portion		86		85
Long-term regulatory liabilities	$	727	$	1,055

(1)

The regulatory tax asset is primarily associated with the depreciation and recovery of AFUDC-equity. This asset does not earn a return but rather is included in the capital structure, which is used in the calculation of the weighted cost of capital used to determine revenue requirements. It will be recovered over the expected life of the related assets.

(2)

These assets and liabilities are related to FPSC clauses and riders, primarily related to the fuel clause and the increase in natural gas prices experienced in 2022. They are recovered or refunded through cost-recovery mechanisms approved by the FPSC on a dollar-for-dollar basis in a subsequent period.

(3)

This asset is related to the remaining net book value of Big Bend Units 1 through 3 and meter assets that were retired. The balance earns a rate of return as permitted by the FPSC and will be recovered as a separate line item on customer bills for a period of 15 years. See “Tampa Electric Base Rates” above for further information.

(4)

This asset was related to PGS costs associated with environmental remediation primarily at MGP sites.

(5)

This asset is related to the deferred costs of postretirement benefits and it is amortized over the remaining service life of plan participants. Deferred costs of postretirement benefits that are included in expense are recognized as cost of service for rate-making purposes as permitted by the FPSC.

(6)

This asset is related to costs associated with an asset retirement obligation, which is a legal obligation for the future retirement of certain tangible, long-lived assets. This regulatory asset does not earn a return because it is offset with related assets and liabilities within rate base. It is recovered and removed as the obligation is settled and removed as the activities for the retirement of the related assets have been completed.

(7)

See "Tampa Electric Storm Restoration Cost Recovery" above for information regarding this reserve. The regulatory asset is included in rate base and earns interest as permitted by the FPSC.

(8)

The regulatory tax liability is primarily related to the revaluation of TEC’s deferred income tax balances recorded on December 31, 2017 at the lower corporate income tax rate due to U.S. tax reform. The liability related to the revaluation of the deferred income tax balances is amortized and returned to customers through rate reductions or other revenue offsets based on IRS regulations and the settlement agreement for tax reform benefits approved by the FPSC.

(9)

This item represents the non-ARO cost of removal in the accumulated reserve for depreciation. AROs are costs for legally required removal of property, plant and equipment. Non-ARO cost of removal represents estimated funds received from customers through depreciation rates to cover future non-legally required cost of removal of property, plant and equipment, net of salvage value upon retirement, which reduces rate base for ratemaking purposes. This liability is reduced as costs of removal are incurred.