Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Property, Plant and Equipment by Classification

A summary of property, plant and equipment by classification as of December 31, 2013 and 2012 is provided in the following table:



	As of December 31,
(in thousands)	2013			2012
Property, plant and equipment
Regulated Energy
Natural gas distribution – Delmarva	$	179,724		$	149,558
Natural gas distribution – Florida	199,289			170,943
Natural gas transmission	242,163			202,968
Electric distribution – Florida	70,346			61,960
Unregulated Energy
Propane distribution—Delmarva	54,865			53,156
Propane distribution – Florida	20,829			16,823
Other unregulated energy	573			239
Other	21,002			20,067
Total property, plant and equipment	788,791			675,714
Less: Accumulated depreciation and amortization	(174,148		)	(155,378		)
Plus: Construction work in progress	16,603			21,445
Net property, plant and equipment	$	631,246		$	541,781

Average Depreciation Rates

The following table shows the average depreciation rates used during the years ended December 31, 2013, 2012 and 2011:



	2013		2012		2011
Natural gas distribution – Delmarva	2.7	%	2.5	%	2.5	%
Natural gas distribution – Florida	3.3	%	3.2	%	3.5	%
Natural gas transmission	2.7	%	2.7	%	2.6	%
Electric distribution – Florida	3.6	%	3.8	%	4.2	%

Estimated Useful Lives of Assets

For our unregulated operations, we compute depreciation expense on a straight line basis over the following estimated useful lives of the assets:



Asset Description	Useful Life
Propane distribution mains	10-37 years
Propane bulk plants and tanks	10-40 years
Liquefied petroleum gas equipment	5-33 years
Meters and meter installations	5-33 years
Measuring and regulating station equipment	5-37 years
Office furniture and equipment	3-10 years
Transportation equipment	4-20 years
Structures and improvements	5-45 years
Other	Various

Schedule of Regulatory Assets

These assets and liabilities will be recognized as revenues and expenses in future periods as they are reflected in customers’ rates.



	As of December 31,
	2013		2012
(in thousands)
Regulatory Assets
Under-recovered purchased fuel costs ⁽¹⁾	$	1,549	$	2,219
Deferred post retirement benefits ⁽²⁾	8,578		17,755
Deferred transaction and transition costs ⁽³⁾	471		1,035
Deferred conversion and development costs ⁽¹⁾	1,320		842
Environmental regulatory assets and expenditures ⁽⁴⁾	5,170		5,432
Acquisition adjustment ⁽⁵⁾	47,478		48,724
Loss on reacquired debt ⁽⁶⁾	1,486		1,484
Other	2,968		2,653
Total Regulatory Assets	$	69,020	$	80,144
Regulatory Liabilities
Self insurance ⁽⁹⁾	$	1,000	$	1,212
Over-recovered purchased fuel costs ⁽¹⁾	2,818		218
Conservation cost recovery ⁽¹⁾	51		356
Storm reserve ⁽⁹⁾	2,875		2,742
Accrued asset removal cost ⁽⁸⁾	39,510		38,096
Deferred gains ⁽⁷⁾	783		1,977
Other	1,032		526
Total Regulatory Liabilities	$	48,069	$	45,127


⁽¹⁾	We are allowed to recover the asset or are required to pay the liability in rates. We do not earn an overall rate of return on these assets.


⁽²⁾	The Florida PSC allowed FPU to treat as a regulatory asset the portion of the unrecognized costs pursuant to ASC Topic 715, Compensation - Retirement Benefits, related to its regulated operations. See Note 16, Employee Benefit Plans, for additional information.


⁽³⁾	The Florida PSC approved the inclusion of the FPU merger-related costs in our rate base and the recovery of those costs in rates. The balances at December 31, 2013 and 2012 include the gross-up of this regulatory asset for income tax because a portion of the merger-related costs is not tax-deductible.


⁽⁴⁾	All of our environmental expenditures incurred to date and current estimate of future environmental expenditures have been approved by various PSCs for recovery. See Note 19, Environmental Commitments and Contingencies, for additional information on our environmental contingencies.

⁽⁵⁾

We are allowed to include the premiums paid in various natural gas utility acquisitions in Florida in our rate bases and recover them over a specific time period pursuant to the Florida PSC approvals. Included in these amounts are $1.3 million of the premium paid by FPU, $34.2 million of the premium paid by Chesapeake in 2009, including the gross up of the amount for income tax, because it is not tax deductible, and $746,000 of the premium paid by FPU in 2010.


⁽⁶⁾	Gains and losses resulting from the reacquisition of long-term debt are amortized over future periods as adjustments to interest expense in accordance with established regulatory practice.


⁽⁷⁾	Pursuant to the Florida PSC order, we are required to defer and amortize over a specific time period certain gains identified during the FPU merger integration.

⁽⁸⁾

In accordance with regulatory treatment, our depreciation rates are comprised of two components – historical cost and the estimated cost of removal, net of estimated salvage, of certain regulated properties. We collect these costs in base rates through depreciation expense with a corresponding credit to accumulated depreciation. Because the accumulated estimated removal costs meet the requirements of authoritative guidance related to regulated operations, we have accounted for them as a regulatory liability and have reclassified them from accumulated depreciation to accumulated removal costs in our consolidated balance sheets.


⁽⁹⁾	We have self-insurance and storm reserves that allow us to collect through rates amounts to be used against general claims, storm restoration costs and other losses as they are incurred.

Schedule of Regulatory Liabilities



	As of December 31,
	2013		2012
(in thousands)
Regulatory Assets
Under-recovered purchased fuel costs ⁽¹⁾	$	1,549	$	2,219
Deferred post retirement benefits ⁽²⁾	8,578		17,755
Deferred transaction and transition costs ⁽³⁾	471		1,035
Deferred conversion and development costs ⁽¹⁾	1,320		842
Environmental regulatory assets and expenditures ⁽⁴⁾	5,170		5,432
Acquisition adjustment ⁽⁵⁾	47,478		48,724
Loss on reacquired debt ⁽⁶⁾	1,486		1,484
Other	2,968		2,653
Total Regulatory Assets	$	69,020	$	80,144
Regulatory Liabilities
Self insurance ⁽⁹⁾	$	1,000	$	1,212
Over-recovered purchased fuel costs ⁽¹⁾	2,818		218
Conservation cost recovery ⁽¹⁾	51		356
Storm reserve ⁽⁹⁾	2,875		2,742
Accrued asset removal cost ⁽⁸⁾	39,510		38,096
Deferred gains ⁽⁷⁾	783		1,977
Other	1,032		526
Total Regulatory Liabilities	$	48,069	$	45,127


⁽¹⁾	We are allowed to recover the asset or are required to pay the liability in rates. We do not earn an overall rate of return on these assets.


⁽²⁾	The Florida PSC allowed FPU to treat as a regulatory asset the portion of the unrecognized costs pursuant to ASC Topic 715, Compensation - Retirement Benefits, related to its regulated operations. See Note 16, Employee Benefit Plans, for additional information.


⁽³⁾	The Florida PSC approved the inclusion of the FPU merger-related costs in our rate base and the recovery of those costs in rates. The balances at December 31, 2013 and 2012 include the gross-up of this regulatory asset for income tax because a portion of the merger-related costs is not tax-deductible.


⁽⁴⁾	All of our environmental expenditures incurred to date and current estimate of future environmental expenditures have been approved by various PSCs for recovery. See Note 19, Environmental Commitments and Contingencies, for additional information on our environmental contingencies.

⁽⁵⁾


⁽⁶⁾	Gains and losses resulting from the reacquisition of long-term debt are amortized over future periods as adjustments to interest expense in accordance with established regulatory practice.


⁽⁷⁾	Pursuant to the Florida PSC order, we are required to defer and amortize over a specific time period certain gains identified during the FPU merger integration.

⁽⁸⁾


⁽⁹⁾	We have self-insurance and storm reserves that allow us to collect through rates amounts to be used against general claims, storm restoration costs and other losses as they are incurred.