Regulatory Accounting—The Company’s principal business is the distribution of electricity and natural gas by the three distribution utilities: Unitil Energy, Fitchburg and Northern Utilities. Unitil Energy and Fitchburg are subject to regulation by the FERC. Fitchburg is also regulated by the Massachusetts Department of Public Utilities (MDPU), Unitil Energy is regulated by the New Hampshire Public Utilities Commission (NHPUC) and Northern Utilities is regulated by the Maine Public Utilities Commission (MPUC) and NHPUC. Granite State, the Company’s natural gas transmission pipeline, is regulated by the FERC. Accordingly, the Company uses the Regulated Operations guidance as set forth in the Financial Accounting Standards Board (FASB) Codification. The Company has recorded Regulatory Assets and Regulatory Liabilities which will be recovered from customers, or applied for customer benefit, in accordance with rate provisions approved by the applicable public utility regulatory commission.
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Regulatory Assets consist of the following (millions) |
December 31, | |||||||
| 2013 | 2012 | |||||||
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Energy Supply & Other Regulatory Tracker Mechanisms |
$ | 32.5 | $ | 41.0 | ||||
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Deferred Restructuring Costs |
9.3 | 20.1 | ||||||
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Retirement Benefits |
42.6 | 62.5 | ||||||
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Income Taxes |
11.9 | 10.2 | ||||||
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Environmental |
16.1 | 16.8 | ||||||
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Deferred Storm Charges |
25.6 | 27.8 | ||||||
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Other |
5.7 | 8.1 | ||||||
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Total Regulatory Assets |
$ | 143.7 | $ | 186.5 | ||||
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Less: Current Portion of Regulatory Assets(1) |
43.6 | 51.9 | ||||||
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Regulatory Assets—noncurrent |
$ | 100.1 | $ | 134.6 | ||||
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Reflects amounts included in Accrued Revenue on the Company’s Consolidated Balance Sheets. |
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Regulatory Liabilities consist of the following (millions) |
December 31, | |||||||
| 2013 | 2012 | |||||||
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Regulatory Tracker Mechanisms |
$ | 9.7 | $ | 6.8 | ||||
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Total Regulatory Liabilities |
$ | 9.7 | $ | 6.8 | ||||
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Generally, the Company receives a return on investment on its regulated assets for which a cash outflow has been made. Regulatory commissions can reach different conclusions about the recovery of costs, which can have a material impact on the Company’s Consolidated Financial Statements. The Company believes it is probable that its regulated distribution and transmission utilities will recover their investments in long-lived assets, including regulatory assets. If the Company, or a portion of its assets or operations, were to cease meeting the criteria for application of these accounting rules, accounting standards for businesses in general would become applicable and immediate recognition of any previously deferred costs, or a portion of deferred costs, would be required in the year in which the criteria are no longer met, if such deferred costs were not recoverable in the portion of the business that continues to meet the criteria for application of the FASB Codification topic on Regulated Operations. If unable to continue to apply the FASB Codification provisions for Regulated Operations, the Company would be required to apply the provisions for the Discontinuation of Rate-Regulated Accounting included in the FASB Codification. In the Company’s opinion, its regulated operations will be subject to the FASB Codification provisions for Regulated Operations for the foreseeable future.
Prior to June 30, 2013, certain regulatory tracker mechanisms which are currently recorded in Regulatory Liabilities had been recorded in Accrued Revenue and Other Current Liabilities on the Consolidated Balance Sheets. Amounts previously reported have been reclassified to conform to current year presentation.