Regulatory Assets and Liabilities

Xcel Energy Inc. and subsidiaries prepare their consolidated financial statements in accordance with the applicable accounting guidance, as discussed in Note 1. Under this guidance, regulatory assets and liabilities are created for amounts that regulators may allow to be collected, or may require to be paid back to customers in future electric and natural gas rates. Any portion of Xcel Energy’s business that is not regulated cannot establish regulatory assets and liabilities. If changes in the utility industry or the business of Xcel Energy no longer allow for the application of regulatory accounting guidance under GAAP, Xcel Energy would be required to recognize the write-off of regulatory assets and liabilities in net income or OCI.

The components of regulatory assets shown on the consolidated balance sheets at Dec. 31, 2015 and 2014 are:



(Thousands of Dollars)	See Note(s)	Remaining Amortization Period	Dec. 31, 2015				Dec. 31, 2014
Regulatory Assets			Current		Noncurrent		Current		Noncurrent
Pension and retiree medical obligations ^(a)	9	Various	$	90,249	$	1,368,115	$	95,054	$	1,402,360
Recoverable deferred taxes on AFUDC recorded in plant	1	Plant lives	—		408,994		—		395,329
Net AROs ^(b)	1, 13, 14	Plant lives	—		306,671		—		189,056
Environmental remediation costs	1, 13	Various	6,702		166,883		4,594		149,812
Contract valuation adjustments ^(c)	1, 11	Term of related contract	26,379		128,780		17,730		144,273
Depreciation differences	1	One to sixteen years	14,221		99,835		10,700		104,743
Purchased power contract costs	13	Term of related contract	1,587		70,411		858		69,908
PI EPU	12	Nineteen years	2,967		65,060		8,743		67,379
Conservation programs ^(d)	1	One to five years	31,793		50,047		61,866		58,174
Nuclear refueling outage costs	1	One to two years	67,545		28,913		62,499		19,745
State commission adjustments	1	Plant lives	988		26,708		571		26,092
Losses on reacquired debt	4	Term of related debt	5,008		26,268		5,258		31,276
Renewable resources and environmental initiatives	13	One to two years	33,014		23,565		24,891		29,902
Property tax		One to six years	21,757		14,428		28,024		31,429
Gas pipeline inspection and remediation costs	12	One to four years	6,858		13,662		9,981		21,869
Recoverable purchased natural gas and electric energy costs	1	One to two years	11,783		12,762		68,841		4,745
Other		Various	23,779		47,639		44,448		28,124
Total regulatory assets			$	344,630	$	2,858,741	$	444,058	$	2,774,216

^(a)

Includes $257.5 million and $282.4 million for the regulatory recognition of the NSP-Minnesota pension expense of which $21.3 million and $23.8 million is included in the current asset at Dec. 31, 2015 and 2014, respectively. Also included are $12.5 million and $26.1 million of regulatory assets related to the nonqualified pension plan of which $4.0 million and $2.5 million is included in the current asset at Dec. 31, 2015 and 2014, respectively.


^(b)	Includes amounts recorded for future recovery of AROs, less amounts recovered through nuclear decommissioning accruals and gains from decommissioning investments.


^(c)	Includes the fair value of certain long-term PPAs used to meet energy capacity requirements and valuation adjustments on natural gas commodity purchases.


^(d)	Includes costs for conservation programs, as well as incentives allowed in certain jurisdictions.

The components of regulatory liabilities shown on the consolidated balance sheets at Dec. 31, 2015 and 2014 are:



(Thousands of Dollars)	See Note(s)	Remaining Amortization Period	Dec. 31, 2015				Dec. 31, 2014
Regulatory Liabilities			Current		Noncurrent		Current		Noncurrent
Plant removal costs	1, 13	Plant lives	$	—	$	1,131,023	$	—	$	953,660
Investment tax credit deferrals	1, 6	Various	—		48,985		—		52,666
Deferred income tax adjustment	1, 6	Various	—		46,737		—		48,622
Renewable resources and environmental initiatives	12, 13	Various	6,271		41,869		10,427		10,376
PSCo earnings test	12	One to two years	42,868		9,472		57,127		42,819
Gas pipeline inspection costs		Various	1,140		4,273		13,970		642
Gain from asset sales	12	Various	2,640		2,584		2,893		4,472
Deferred electric and steam production and natural gas costs	1	Less than one year	146,235		—		88,527		—
Conservation programs ^(a)	1, 12	Less than one year	34,444		—		103,351		—
Contract valuation adjustments ^(b)	1, 11	Term of related contract	21,661		—		55,751		2,521
DOE settlement	12	One to two years	16,139		—		49,492		—
Low income discount program		Less than one year	2,475		—		3,355		—
Excess depreciation reserve		Less than one year	60		—		10,999		—
Other		Various	32,897		47,946		14,837		47,651
Total regulatory liabilities ^(c)			$	306,830	$	1,332,889	$	410,729	$	1,163,429


^(a)	Includes costs for conservation programs, as well as incentives allowed in certain jurisdictions.


^(b)	Includes the fair value of certain long-term PPAs used to meet energy capacity requirements and valuation adjustments on natural gas commodity purchases.


^(c)	Revenue subject to refund of $75.0 million and $128.3 million for 2015 and 2014, respectively, is included in other current liabilities.

At Dec. 31, 2015 and 2014, approximately $169 million and $323 million of Xcel Energy’s regulatory assets represented past expenditures not currently earning a return, respectively. This amount primarily includes recoverable purchased natural gas and electric energy costs and certain expenditures associated with renewable resources and environmental initiatives.