Regulatory (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Regulatory Assets and Regulatory Liabilities

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

Regulatory Assets and Liabilities

	December 31,		December 31,
(millions)	2018		2017
Regulatory assets:
Regulatory tax asset ⁽¹⁾	$	56	$	45
Cost-recovery clauses ⁽²⁾		55		13
Environmental remediation ⁽³⁾		23		33
Postretirement benefits ⁽⁴⁾		295		272
Storm reserve ⁽⁵⁾		3		47
Other		26		23
Total regulatory assets		458		433
Less: Current portion		88		77
Long-term regulatory assets	$	370	$	356
Regulatory liabilities:
Regulatory tax liability ⁽⁶⁾	$	715	$	730
Cost-recovery clauses ⁽²⁾		17		32
Storm reserve ⁽⁷⁾		56		0
Accumulated reserve—cost of removal ⁽⁸⁾		513		518
Other		9		5
Total regulatory liabilities		1,310		1,285
Less: Current portion		44		58
Long-term regulatory liabilities	$	1,266	$	1,227

(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. The regulatory tax asset balance reflects the impact of the federal tax rate reduction.

(2)	These assets and liabilities are related to FPSC clauses and riders. They are recovered or refunded through cost-recovery mechanisms approved by the FPSC on a dollar-for-dollar basis in the next year.

(3)

This asset is related to costs associated with environmental remediation primarily at MGP sites. The balance is included in rate base, partially offsetting the related liability, and earns a rate of return as permitted by the FPSC. The timing of recovery is based on a settlement agreement approved by the FPSC.

(4)

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.

(5)

See Tampa Electric Storm Restoration Cost Recovery discussion above for information regarding the storm reserve regulatory asset. The Tampa Electric regulatory asset reflected at December 31, 2017 was effectively recovered in 2018. Additionally, in October 2018, Hurricane Michael impacted PGS’s Panama City division and the cost of restoration exceeded PGS’s storm reserve balance. The balance at December 31, 2018 reflects PGS’s storm reserve costs expected to be recovered in 2019. The regulatory assets were included in rate base and earned a rate of return as permitted by the FPSC.

(6)

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 income tax rate. The liability related to the revaluation of the deferred income tax balances will be amortized and returned to customers through rate reductions or other revenue offsets based on IRS regulations and a settlement agreement for tax reform benefits approved by the FPSC. See Note 4 to the TEC Consolidated Financial Statements for further information.

(7)	See Tampa Electric Storm Restoration Cost Recovery discussion above for information regarding this reserve. The regulatory liability is being replenished to the FPSC-allowed storm reserve balance of $56 million.

(8)

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.