REGULATED OPERATIONS - The Utility accounts for its regulated operations in accordance with ASC Topic 980. This Topic sets forth the application of generally accepted accounting principles in the United States of America (GAAP) for those companies whose rates are established by or are subject to approval by an independent third-party regulator. The provisions of this accounting guidance require, among other things, that financial statements of a regulated enterprise reflect the actions of regulators, where appropriate. These actions may result in the recognition of revenues and expenses in time periods that are different than non-regulated enterprises. When this occurs, costs are deferred as assets in the balance sheet (regulatory assets) and recorded as expenses when those amounts are reflected in rates. Also, regulators can impose liabilities upon a regulated company for amounts previously collected from customers and for recovery of costs that are expected to be incurred in the future (regulatory liabilities).
The following regulatory assets and regulatory liabilities were reflected in the Consolidated Balance Sheets as of September 30:
|
| | | | | | | |
(Thousands) | 2013 | | 2012 |
Regulatory Assets: | | | |
Future income taxes due from customers | $ | 112,912 |
| | $ | 118,997 |
|
Pension and postretirement benefit costs | 381,395 |
| | 304,446 |
|
Unamortized purchased gas adjustments | 17,533 |
| | 40,674 |
|
Purchased gas costs | 18,249 |
| | 18,386 |
|
Compensated absences | 8,004 |
| | 7,836 |
|
Other | 25,387 |
| | 6,382 |
|
Total Regulatory Assets | $ | 563,480 |
| | $ | 496,721 |
|
Regulatory Liabilities: | | | |
Unamortized investment tax credits | $ | 2,900 |
| | $ | 3,113 |
|
Accrued cost of removal | 59,066 |
| | 55,103 |
|
Other | 23,494 |
| | 1,216 |
|
Total Regulatory Liabilities | $ | 85,460 |
| | $ | 59,432 |
|
The regulatory assets are expected to be recovered in rates charged to customers. A portion of the Company's regulatory assets are not earning a return; however, these regulatory assets are expected to be recovered from customers in future rates. Excluding deferred income taxes and purchased gas adjustment items, as of September 30, 2013 and 2012, approximately $17.2 million and $7.8 million, respectively, of regulatory assets were not earning a rate of return. The Company expects these items to be recovered over a period not to exceed 15 years consistent with precedent set by the MoPSC. The portion of the regulatory asset related to pensions and other postemployment benefits that relates to unfunded differences between the projected benefit obligation and plan assets also does not earn a rate of return.
As authorized by the MoPSC, the Utility discontinued deferring certain costs for future recovery, as expenses associated with those specific areas were included in approved rates effective December 27, 1999. Previously deferred costs of $10.5 million are being recovered and amortized on a straight-line basis over a fifteen-year period, without return on investment. Amortization of these costs totaled $9.7 million from December 27, 1999 through September 30, 2013.
