Regulatory Assets And Liabilities

12 Months Ended

Dec. 31, 2012

6. REGULATORY ASSETS AND LIABILITIES

Regulatory assets represent deferred costs or credits that have been included as allowable costs or credits for ratemaking purposes. IPL has recorded regulatory assets or liabilities relating to certain costs or credits as authorized by the IURC or established regulatory practices in accordance with ASC 980. IPL is amortizing non tax-related regulatory assets to expense over periods ranging from 1 to 35 years. Tax-related regulatory assets represent the net income tax costs to be considered in future regulatory proceedings generally as the tax-related amounts are paid.

The amounts of regulatory assets and regulatory liabilities at December 31 are as follows:


	2012		2011		Recovery Period
	*(In Thousands)*
Regulatory Assets
Current:
Deferred fuel	$	1,332	$	7,098	Through 2013 ⁽¹⁾
Environmental project costs		3,574		-	Through 2013 ⁽¹⁾
DSM program costs		-		326	Through 2012 ⁽¹⁾
Total current regulatory assets		4,906		7,424

Long-term:
Unrecognized pension and other postretirement benefit plan costs		341,471		306,923	Various
Income taxes recoverable from customers		44,259		49,525	Various
Deferred MISO costs		89,479		80,367	To be determined ⁽²⁾
Unamortized Petersburg Unit 4 carrying charges and certain other costs		14,803		15,466	Through 2026 ⁽¹⁾⁽³⁾
Unamortized reacquisition premium on debt		27,510		29,086	Over remaining life of debt
Environmental project costs		5,935		4,545	Through 2021 ⁽¹⁾
Other miscellaneous		382		20	To be determined ⁽²⁾
Total long-term regulatory assets		523,839		485,932
Total regulatory assets	$	528,745	$	493,356

Regulatory Liabilities
Current:
FTR's	$	2,419	$	2,779	Through 2013 ⁽¹⁾
Fuel related		2,500		2,500	Through 2013 ⁽⁴⁾
Environmental project costs		-		3,984	Through 2012 ⁽¹⁾
DSM program costs		5,556		-	Through 2013 ⁽¹⁾
Total current regulatory liabilities		10,475		9,263

Long-term:
ARO and accrued asset removal costs		559,760		536,920	Not Applicable
Unamortized investment tax credit		5,307		6,370	Through 2021
Fuel related		5,277		7,142	To be determined ⁽⁴⁾
Total long-term regulatory liabilities		570,344		550,432
Total regulatory liabilities	$	580,819	$	559,695

⁽¹⁾ Recovered (credited) per specific rate orders
⁽²⁾ Recovery is probable but timing not yet determined
⁽³⁾ Recovered with a current return
⁽⁴⁾ Per IURC Order, offset MISO transmission expansion costs beginning October 2011

Deferred Fuel

Deferred fuel costs are a component of current regulatory assets and are expected to be recovered through future FAC proceedings. IPL records deferred fuel in accordance with standards prescribed by the FERC. The deferred fuel adjustment is the result of variances between estimated fuel and purchased power costs in IPL's FAC and actual fuel and purchased power costs. IPL is generally permitted to recover underestimated fuel and purchased power costs in future rates through the FAC proceedings and therefore the costs are deferred when incurred and amortized into fuel expense in the same period that IPL's rates are adjusted to reflect these costs. Deferred fuel was a regulatory asset of $1.3 million and $7.1 million as of December 31, 2012 and December 31, 2011, respectively. The deferred fuel asset decreased $5.8 million in 2012 as a result of IPL charging more for fuel than our actual costs to our jurisdictional customers.

Unrecognized Pension and Postretirement Benefit Plan Costs

In accordance with ASC 715 "Compensation - Retirement Benefits" and ASC 980, we recognize a regulatory asset equal to the unrecognized actuarial gains and losses and prior service costs. Pension expenses are recorded based on the benefit plan's actuarially determined pension liability and associated level of annual expenses to be recognized. The other postretirement benefit plan's deferred benefit cost is the excess of the other postretirement benefit liability over the amount previously recognized.

Deferred Income Taxes

This amount represents the portion of deferred income taxes that we believe will be recovered through future rates, based upon established regulatory practices, which permit the recovery of current taxes. Accordingly, this regulatory asset is offset by a deferred tax liability and is expected to be recovered, without interest, over the period underlying book-tax timing differences reverse and become current taxes.

Deferred MISO Costs

These consist of administrative costs for transmission services, transmission expansion cost sharing, and certain other operational and administrative costs from the MISO market. IPL received orders from the IURC that granted authority for IPL to defer such costs and seek recovery in a future basic rate case. Recovery of these costs is believed to be probable, but not certain. See Note 3, "Regulatory Matters."

Asset Retirement Obligation and Accrued Asset Removal Costs

In accordance with ASC 715 and ASC 980, IPL, a regulated utility, recognizes the cost of removal component of its depreciation reserve that does not have an associated legal retirement obligation as a deferred liability. This amount is net of the portion of legal Asset Retirement Obligations ("ARO") costs that is currently being recovered in rates.

Indianapolis Power And Light Company [Member]

Regulatory Assets And Liabilities