REGULATORY ASSETS AND LIABILITIES

12 Months Ended

Dec. 31, 2021

Regulatory Assets and Liabilities Disclosure [Abstract]

The following regulatory assets were reflected on our balance sheets as of December 31:


(in millions)	2021		2020		See Note
Regulatory assets (1) (2)
Environmental remediation costs (3)	$	120.1	$	116.1	21
Pension and OPEB costs (4)	74.1		161.4		19
Income tax related items	54.5		46.7		16
Plant retirement related items	50.2		58.5
ReACT™	15.6		18.2		23
AROs	14.2		13.1		9
Uncollectible expense	5.5		12.5		5
Forward Wind (5)	2.8		10.3
Other, net	10.9		12.6
Total regulatory assets	$	347.9	$	449.4

(1) Based on prior and current rate treatment, we believe it is probable that we will continue to recover from customers the regulatory assets in this table. In accordance with GAAP, our regulatory assets do not include the allowance for ROE that is capitalized for regulatory purposes. This allowance was $12.3 million and $16.6 million at December 31, 2021 and 2020, respectively.

(2) As of December 31, 2021, we had $32.4 million of regulatory assets not earning a return. The regulatory assets not earning a return primarily relate to certain environmental remediation costs and our electric real-time market pricing program. The other regulatory assets in the table either earn a return at our weighted average cost of capital or the cash has not yet been expended, in which case the regulatory assets are offset by liabilities.

(3) As of December 31, 2021, we had made cash expenditures of $25.1 million related to these environmental remediation costs. The remaining $95.0 million represents our estimated future cash expenditures.

(4) Primarily represents the unrecognized future pension and OPEB costs related to our defined benefit pension and OPEB plans. We are authorized recovery of these regulatory assets over the average remaining service life of each plan.

(5) In April 2018, we, along with two unaffiliated utilities, purchased Forward Wind. Based on an order from the PSCW, we were allowed to defer as a regulatory asset the incremental non-fuel costs associated with the purchase, ownership, and operation of Forward Wind. In the rate order we received from the PSCW in December 2019, we were authorized recovery of this regulatory asset over a period of two years that began on January 1, 2020.

The following regulatory liabilities were reflected on our balance sheets as of December 31:


(in millions)	2021		2020		See Note
Regulatory liabilities
Income tax related items	$	352.7	$	397.0	16
Removal costs (1)	189.9		193.7
Pension and OPEB benefits (2)	116.5		115.9		19
Derivatives (3)	26.9		3.1		18
Earnings sharing mechanism	26.7		36.8		23
Electric transmission costs (4)	19.7		16.8
Energy costs refundable through rate adjustments	8.4		9.7		1(d)
Other, net	3.1		3.2
Total regulatory liabilities	$	743.9	$	776.2

Balance sheet presentation
Other current liabilities	$	8.4	$	3.6
Regulatory liabilities	735.5		772.6
Total regulatory liabilities	$	743.9	$	776.2

(1) Represents amounts collected from customers to cover the future cost of property, plant, and equipment removals that are not legally required. Legal obligations related to the removal of property, plant, and equipment are recorded as AROs. See Note 9, Asset Retirement Obligations, for more information on our legal obligations.

(2) Primarily represents the unrecognized future pension and OPEB benefits related to our defined benefit pension and OPEB plans. We will amortize these regulatory liabilities into net periodic benefit cost over the average remaining service life of each plan.

(3) For most energy-related physical and financial contracts that qualify as derivatives, the PSCW allows the effects of fair value accounting to be offset to regulatory assets and liabilities.

(4) In accordance with the PSCW's approval of escrow accounting for our ATC and MISO network transmission expenses, we defer as a regulatory asset or liability the difference between actual transmission costs and those included in rates until recovery or refund is authorized in a future rate proceeding.

Pulliam Power Plant

In connection with a MISO ruling, we retired Pulliam Units 7 and 8 on October 21, 2018. The net book value of the Pulliam units was $38.0 million at December 31, 2021, representing book value less cost of removal and accumulated depreciation. This amount was classified as a regulatory asset on our balance sheet at December 31, 2021 as a result of the retirement of the plant. Effective with our rate order issued by the PSCW in December 2019, we received approval to collect a return of and on the entire net book value of the Pulliam units, and as a result, will continue to amortize this regulatory asset on a straight-line basis through 2031, using the composite depreciation rates approved by the PSCW before these generating units were retired. Amortization is included in depreciation and amortization in the income statement. We have FERC approval to continue to collect the net book value of the Pulliam power plant using the approved composite depreciation rates, in addition to a return on the remaining net book value. FERC has completed its prudency review of Pulliam, concluding that the retirement of this plant was prudent.

Edgewater Unit 4

The Edgewater 4 generating unit was retired on September 28, 2018. The net book value of the generating unit was $3.6 million at December 31, 2021, representing book value less cost of removal and accumulated depreciation. This amount was classified as a regulatory asset on our balance sheet at December 31, 2021 as a result of the retirement of the plant. Effective with our rate order issued by the PSCW in December 2019, we received approval to collect a return of and on the entire net book value of the Edgewater 4 generating unit, and as a result, will continue to amortize this regulatory asset on a straight-line basis through 2026, using the composite depreciation rates approved by the PSCW before this generating unit was retired. Amortization is included in depreciation and amortization in the income statement. We have FERC approval to continue to collect the net book value of the Edgewater 4 generating unit using the approved composite depreciation rates, in addition to a return on the remaining net book value. FERC has completed its prudency review of Edgewater 4, concluding that the retirement of this plant was prudent.