Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2015

Summary of Property, Plant and Equipment by Classification

A summary of property, plant and equipment by classification as of December 31, 2015 and 2014 is provided in the following table:



	As of December 31,
(in thousands)	2015			2014
Property, plant and equipment
Regulated Energy
Natural gas distribution – Delmarva	$	207,127		$	193,071
Natural gas distribution – Florida	286,538			234,344
Natural gas transmission – Delmarva	249,274			243,560
Natural gas transmission – Florida	20,291			18,240
Electric distribution – Florida	79,526			77,640
Unregulated Energy
Propane distribution – Delmarva	66,403			61,390
Propane distribution – Florida	24,589			23,142
Other unregulated natural gas services – Ohio	54,607			—
Other unregulated energy	135			241
Other	18,999			18,497
Total property, plant and equipment	1,007,489			870,125
Less: Accumulated depreciation and amortization	(215,313		)	(193,369		)
Plus: Construction work in progress	62,774			13,006
Net property, plant and equipment	$	854,950		$	689,762

Average Depreciation Rates

We compute depreciation expense for our regulated operations by applying composite, annual rates, as approved by the respective regulatory bodies. The following table shows the average depreciation rates used during the years ended December 31, 2015, 2014 and 2013:



	2015	2014	2013
Natural gas distribution – Delmarva	2.4%	2.5%	2.5%
Natural gas distribution – Florida	2.9%	2.9%	3.4%
Natural gas transmission – Delmarva	2.7%	2.7%	2.7%
Natural gas transmission – Florida	4.0%	4.0%	4.8%
Electric distribution – Florida	3.5%	3.8%	3.6%

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
Propane equipment	5-33 years
Meters and meter installations	5-33 years
Measuring and regulating station equipment	5-37 years
Natural gas pipelines	45 years
Natural gas right of ways	Perpetual
Natural gas processing equipment	20-25 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,
	2015		2014
(in thousands)
Regulatory Assets
Under-recovered purchased fuel and conservation cost recovery ⁽¹⁾	$	4,598	$	6,865
Under-recovered GRIP revenue ⁽¹⁾	3,091		1,491
Deferred post retirement benefits ⁽²⁾	19,479		19,762
Deferred conversion and development costs ⁽¹⁾	5,729		3,745
Environmental regulatory assets and expenditures ⁽³⁾	4,158		4,452
Acquisition adjustment ⁽⁴⁾	43,735		45,607
Loss on reacquired debt ⁽⁵⁾	1,259		1,372
Other	3,738		3,809
Total Regulatory Assets	$	85,787	$	87,103
Regulatory Liabilities
Self insurance ⁽⁶⁾	$	1,031	$	1,003
Over-recovered purchased fuel and conservation cost recovery ⁽¹⁾	6,994		2,936
Storm reserve ⁽⁶⁾	2,973		2,982
Accrued asset removal cost ⁽⁷⁾	39,206		39,583
Other	225		183
Total Regulatory Liabilities	$	50,429	$	46,687


⁽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⁾	All of our environmental expenditures incurred to date and our 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.

⁽⁴⁾

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 us 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.


⁽⁵⁾	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.


⁽⁶⁾	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.

⁽⁷⁾

In accordance with typical regulatory policy, 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.

Schedule of Regulatory Liabilities



	As of December 31,
	2015		2014
(in thousands)
Regulatory Assets
Under-recovered purchased fuel and conservation cost recovery ⁽¹⁾	$	4,598	$	6,865
Under-recovered GRIP revenue ⁽¹⁾	3,091		1,491
Deferred post retirement benefits ⁽²⁾	19,479		19,762
Deferred conversion and development costs ⁽¹⁾	5,729		3,745
Environmental regulatory assets and expenditures ⁽³⁾	4,158		4,452
Acquisition adjustment ⁽⁴⁾	43,735		45,607
Loss on reacquired debt ⁽⁵⁾	1,259		1,372
Other	3,738		3,809
Total Regulatory Assets	$	85,787	$	87,103
Regulatory Liabilities
Self insurance ⁽⁶⁾	$	1,031	$	1,003
Over-recovered purchased fuel and conservation cost recovery ⁽¹⁾	6,994		2,936
Storm reserve ⁽⁶⁾	2,973		2,982
Accrued asset removal cost ⁽⁷⁾	39,206		39,583
Other	225		183
Total Regulatory Liabilities	$	50,429	$	46,687


⁽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⁾	All of our environmental expenditures incurred to date and our 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.

⁽⁴⁾


⁽⁵⁾	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.


⁽⁶⁾	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.

⁽⁷⁾