We are subject to rate regulation and our financial statements reflect regulatory assets and liabilities in accordance with accounting standards related to the effect of certain types of regulation. Regulatory assets and liabilities represent probable future revenues that will be recovered from or refunded to customers through the ratemaking process based on PURA and/or the PUCT’s orders, precedents or substantive rules. Rate regulation is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital subject to PUCT review for reasonableness. Regulatory decisions can have an impact on the recovery of costs, the rate earned on invested capital and the timing and amount of assets to be recovered by rates.

Components of our regulatory assets and liabilities and their remaining recovery periods as of September 30, 2022 are provided in the table below. Amounts not currently earning a return through rate regulation are noted.


	Remaining Rate Recovery/Amortization Period
	At September 30, 2022	At September 30, 2022		At December 31, 2021
Regulatory assets:
Employee retirement liability (a)(b)(c)	To be determined	$	309	$	328
Employee retirement costs being amortized	5 years		166		193
Employee retirement costs incurred since the last rate review period (b)	To be determined		93		99
Self-insurance reserve (primarily storm recovery costs) being amortized	5 years		191		223
Self-insurance reserve incurred since the last rate review period (primarily storm related) (b)	To be determined		542		373
Debt reacquisition costs	Lives of related debt		16		19
Under-recovered AMS costs	5 years		112		128
Energy efficiency performance bonus (a)	1 year or less		36		31
Wholesale distribution substation service	To be determined		89		75
Unrecovered expenses related to COVID-19 (b)	To be determined		37		35
Recoverable deferred income taxes – net	Various		22		16
Uncollectible payments from REPs (b)	To be determined		8		9
Other regulatory assets	Various		25		18
Total regulatory assets			1,646		1,547

Regulatory liabilities:
Estimated net removal costs	Lives of related assets		1,412		1,348
Excess deferred taxes	Primarily over lives of related assets		1,392		1,442
Over-recovered wholesale transmission service expense (a)	1 year or less		85		7
Unamortized gain on reacquisition of debt	Lives of related debt		25		26
Employee retirement costs over-recovered since last rate review period (b)	To be determined		55		39
Other regulatory liabilities	Various		31		14
Total regulatory liabilities			3,000		2,876
Net regulatory assets (liabilities)		$	(1,354)	$	(1,329)

(b)Recovery/refund is specifically authorized by statute or by the PUCT, subject to reasonableness review.

(c)Represents unfunded liabilities recorded in accordance with pension and OPEB accounting standards.

In May 2022, we filed a request for a base rate review with the PUCT and the 209 cities in our service territory that have retained original jurisdiction over rates. The rate review test year is based on calendar year 2021 results with certain adjustments. The rate review includes a request for an average annual revenue requirement increase over current adjusted rates of 4.5% and, if approved as requested, would result in an aggregate annual revenue requirement increase of approximately $251 million. The rate review also requests a revised regulatory capital structure ratio of 55% debt to 45% equity and an authorized return on equity of 10.3%. Our current authorized regulatory capital structure ratio is 57.5% debt to 42.5% equity and our current authorized return on equity is 9.8%. A hearing on the merits was held before the State Office of Administrative Hearings from September 26, 2022 to October 4, 2022, and a proposal for decision is expected from the administrative law judges to the PUCT for its consideration by December 27, 2022. Resolution of the base rate review requires issuance of a final order by the PUCT, which is expected by the end of the first quarter of 2023, and new rates would go into effect following issuance of that order.

PUCT Project No. 50664, Issues Related to the State of Disaster for the Coronavirus Disease 2019