Regulatory assets and liabilities are as follows (dollars in thousands):


	March 31,		December 31,
	2017		2016
Regulatory assets
Deferred income tax expense (1)	$	30,517	$	30,517
Deferred prepaid lease expense – Craig 3 Lease (2)		8,091		9,710
Deferred prepaid lease expense – Springerville 3 Lease (3)		90,014		90,587
Goodwill – J.M. Shafer (4)		56,980		57,692
Goodwill – Colowyo Coal (5)		40,035		40,294
Deferred debt prepayment transaction costs (6)		164,659		166,815
Total regulatory assets		390,296		395,615

Regulatory liabilities
Interest rate swaps (7)		14,202		12,140
Deferred revenues (8)		28,300		35,800
Membership withdrawal (9)		45,073		47,572
Total regulatory liabilities		87,575		95,512
Net regulatory asset	$	302,721	$	300,103

(1)

A regulatory asset or liability associated with deferred income taxes generally represents the future increase or decrease in income taxes payable that will be received or settled through future rate revenues.

(2)

Deferral of loss on acquisition related to the Craig Generating Station Unit 3 prepaid lease expense upon acquisitions of equity interests in 2002 and 2006. The regulatory asset for the deferred prepaid lease expense is being amortized to depreciation, amortization and depletion expense in the amount of $6.5 million annually through the remaining original life of the lease ending June 30, 2018 and recovered from our Members in rates.

(3)

Deferral of loss on acquisition related to the Springerville Generating Station Unit 3 (“Springerville Unit 3”) prepaid lease expense upon acquiring a controlling interest in the Springerville Unit 3 Partnership LP (“Springerville Partnership”) in 2009. The regulatory asset for the deferred prepaid lease expense is being amortized to depreciation, amortization and depletion expense in the amount of $2.3 million annually through the 47-year period ending in 2056 and recovered from our Members in rates.

(4)

Represents goodwill related to our acquisition of Thermo Cogeneration Partnership, LP (“TCP”) in December 2011. Goodwill is being amortized to depreciation, amortization and depletion expense in the amount of $2.8 million annually through the 25-year period ending in 2036 and recovered from our Members in rates.

(5)

Represents goodwill related to our acquisition of Colowyo Coal Company LP (“Colowyo Coal”) in December 2011. Goodwill is being amortized to depreciation, amortization and depletion expense in the amount of $1.0 million annually through the 44-year period ending in 2056 and recovered from our Members in rates.

(6)

Represents transaction costs that we incurred related to the prepayment of our long-term debt in 2014. These costs are being amortized to depreciation, amortization and depletion expense in the amount of $8.6 million annually over the 21.4-year average life of the new debt issued and recovered from our Members in rates.

(7)

Represents deferral of the unrealized gain related to the change in fair value of forward starting interest rate swaps that were entered into in order to hedge interest rates on anticipated future borrowings. Upon settlement of these interest rate swaps, the realized gain or loss will be amortized to interest expense over the term of the associated long-term debt borrowing. See Note 6 – Long-Term Debt and Note 11 – Fair Value.

(8)

Represents deferral of the recognition of $10 million of non-member electric sales revenue received in 2008 and $35 million of non-member electric sales revenue received in 2011. $9.2 million of this deferred revenue was recognized in non-member electric sales revenue in 2016. As part of our Board approving the A‑40 rate schedule, which was implemented on January 1, 2017, the Board approved the income recognition in 2017 of $10.0 million of previously deferred 2008 non-member electric sales revenue and $20.0 million of previously deferred 2011 non-member electric sales revenue. $7.5 million of this deferred revenue was recognized in non-member electric sales revenue for the period ended March 31, 2017. The remaining deferred non-member electric sales revenues will be refunded to Members through reduced rates when recognized in non-member electric sales revenue in future periods.

Represents the deferral of the recognition of other income of $47.6 million recorded in connection with the June 30, 2016 withdrawal of Kit Carson Electric Cooperative, Inc. from membership in us. As part of our Board approving the A‑40 rate schedule, which was implemented on January 1, 2017, the Board approved the income recognition in 2017 of $10.0 million of deferred membership withdrawal income. $2.5 million of this deferred membership withdrawal income was recognized in other income for the period ended March 31, 2017. The remaining deferred membership withdrawal income will be refunded to Members through reduced rates when recognized in other income in future periods.