Regulatory Assets And Liabilities

12 Months Ended

Dec. 31, 2017

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:



	2017		2016		Recovery Period
	(In Thousands)
Regulatory Assets
Current:
Undercollections of rate riders	$	22,990	$	19,959	Approximately 1 year⁽¹⁾
Costs being recovered through base rates	12,351		13,953		Approximately 1 year⁽¹⁾
Total current regulatory assets	35,341		33,912
Long-term:
Unrecognized pension and other
postretirement benefit plan costs	205,573		218,070		Various⁽²⁾
Deferred income taxes recoverable through rates	—		51,131		Various
Deferred MISO costs	101,562		114,359		Through 2026⁽³⁾
Unamortized Petersburg Unit 4 carrying
charges and certain other costs	9,139		10,193		Through 2026⁽¹⁾⁽⁴⁾
Unamortized reacquisition premium on debt	21,109		22,501		Over remaining life of debt
Environmental projects	40,434		30,678		Through 2050⁽¹⁾⁽⁴⁾
Other miscellaneous	1,087		3,778		To be determined⁽¹⁾⁽⁵⁾
Total long-term regulatory assets	378,904		450,710
Total regulatory assets	$	414,245	$	484,622
Regulatory Liabilities
Current:
Overcollections of rate riders	$	—	$	3,311	Approximately 1 year⁽¹⁾
FTRs	2,532		4,393		Approximately 1 year⁽¹⁾
Total current regulatory liabilities	2,532		7,704
Long-term:
ARO and accrued asset removal costs	696,973		668,787		Not Applicable
Deferred income taxes payable through rates	154,461		—		Various
Unamortized investment tax credit	320		1,507		Through 2021
Total long-term regulatory liabilities	851,754		670,294
Total regulatory liabilities	$	854,286	$	677,998


(1)	Recovered (credited) per specific rate orders


(2)	IPL receives a return on its discretionary funding


(3)	The majority of these costs are being recovered per specific rate order; recovery for the remaining costs is probable but timing not yet determined


(4)	Recovered with a current return


(5)	A portion of this amount will be recovered over the next two years

Deferred Fuel

Deferred fuel costs are a component of current regulatory assets or liabilities (which is a result of IPL charging either more or less for fuel than our actual costs to our jurisdictional customers) 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.

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 Recoverable/Payable Through Rates

A deferred income tax asset or liability is created from a difference in timing of income recognition between tax laws and accounting methods. As a regulated utility, IPL includes in ratemaking the impacts of current income taxes and changes in deferred income tax liabilities or assets.

The regulatory asset of $51.1 million as of December 31, 2016 represents the portion of IPL’s net deferred income tax liability that IPL believed would be recovered through future rates, without interest, based upon established regulatory practices. That asset as of December 31, 2016 was based upon a future federal income tax rate of 35% and was offset by a deferred income tax liability.

On December 22, 2017, the U.S.federal government enacted the TCJA, which includes a provision to, among other things, reduce the federal corporate income tax rate from 35% to 21%, beginning January 1, 2018. As required by GAAP, on December 31, 2017, IPL and IPALCO remeasured their deferred income tax assets and liabilities using the new tax rate. The Company believes that the impact of the reduction of the income tax rate on deferred income taxes will be used in future ratemaking to reduce jurisdictional retail rates. Accordingly, we now have a net regulatory liability of $154.5 million as of December 31, 2017.

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. The majority of these costs are being recovered per specific rate order; recovery for the remaining costs is probable but timing not yet determined. See Note 2, “Regulatory Matters.”

ARO and Accrued Asset Removal Costs

In accordance with ASC 410 and ASC 980, IPL 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 ARO costs that is currently being recovered in rates.

Indianapolis Power And Light Company [Member]

Entity Information [Line Items]

Regulatory Assets and Liabilities

REGULATORY ASSETS AND LIABILITIES

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



	2017			2016		Recovery Period
	(In Thousands)
Regulatory Assets
Current:
Undercollections of rate riders	$	22,990	8,002	$	19,959	Approximately 1 year⁽¹⁾
Costs being recovered through base rates	12,351			13,953		Approximately 1 year⁽¹⁾
Total current regulatory assets	35,341			33,912
Long-term:
Unrecognized pension and other
postretirement benefit plan costs	205,573			218,070		Various⁽²⁾
Deferred income taxes recoverable through rates	—			51,131		Various
Deferred MISO costs	101,562			114,359		Through 2026⁽³⁾
Unamortized Petersburg Unit 4 carrying
charges and certain other costs	9,139			10,193		Through 2026⁽¹⁾⁽⁴⁾
Unamortized reacquisition premium on debt	21,109			22,501		Over remaining life of debt
Environmental projects	40,434			30,678		Through 2050⁽¹⁾⁽⁴⁾
Other miscellaneous	1,087			3,778		To be determined⁽¹⁾⁽⁵⁾
Total long-term regulatory assets	378,904			450,710
Total regulatory assets	$	414,245		$	484,622
Regulatory Liabilities
Current:
Overcollections of rate riders	$	—		$	3,311	Approximately 1 year⁽¹⁾
FTRs	2,532			4,393		Approximately 1 year⁽¹⁾
Total current regulatory liabilities	2,532			7,704
Long-term:
ARO and accrued asset removal costs	696,973			668,787		Not Applicable
Deferred income taxes payable through rates	154,461			—		Various
Unamortized investment tax credit	320			1,507		Through 2021
Total long-term regulatory liabilities	851,754			670,294
Total regulatory liabilities	$	854,286		$	677,998


(1)	Recovered (credited) per specific rate orders


(2)	IPL receives a return on its discretionary funding


(3)	The majority of these costs are being recovered per specific rate order; recovery for the remaining costs is probable but timing not yet determined


(4)	Recovered with a current return


(5)	A portion of this amount will be recovered over the next two years

Deferred Fuel

Unrecognized Pension and Postretirement Benefit Plan Costs

In accordance with ASC 715 “Compensation – Retirement Benefits” and ASC 980, IPL recognizes 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 Recoverable/Payable Through Rates

On December 22, 2017, the U.S. federal government enacted the TCJA, which includes a provision to, among other things, reduce the federal corporate income tax rate from 35% to 21%, beginning January 1, 2018. As required by GAAP, on December 31, 2017, IPL remeasured their deferred income tax assets and liabilities using the new tax rate. IPL believes that the impact of the reduction of the income tax rate on deferred income taxes will be used in future ratemaking to reduce jurisdictional retail rates. Accordingly, IPL now has a net regulatory liability of $154.5 million as of December 31, 2017.

Deferred MISO Costs

ARO and Accrued Asset Removal Costs