Regulatory Assets and Liabilities

12 Months Ended

Dec. 31, 2019

Regulatory Assets and Liabilities Disclosure [Abstract]

The following regulatory assets were reflected on our balance sheets as of December 31:



(in millions)	2019		2018		See Note
Regulatory assets ^{(1) (2)}
Pension and OPEB costs ⁽³⁾	$	1,066.6	$	1,193.5	19
Plant retirements ⁽⁴⁾	856.4		832.3		6
Environmental remediation costs ⁽⁵⁾	685.5		687.1		23
Income tax related items ⁽⁶⁾	457.8		369.1		15
SSR ⁽⁷⁾	151.5		316.7		25
AROs	137.5		185.4		8
Uncollectible expense ⁽⁸⁾	52.2		38.7		1(d)
Derivatives	33.8		17.8		1(q)
We Power generation ⁽⁹⁾	25.8		43.0
Electric transmission costs	0.3		58.1		25
Other, net	60.2		114.1
Total regulatory assets	$	3,527.6	$	3,855.8

Balance sheet presentation
Other current assets	$	20.9	$	50.7
Regulatory assets	3,506.7		3,805.1
Total regulatory assets	$	3,527.6	$	3,855.8


⁽¹⁾	Based on prior and current rate treatment, we believe it is probable that our utilities will continue to recover from customers the regulatory assets in this table. In accordance with GAAP, our regulatory assets do not include the allowance for ROE that is capitalized for regulatory purposes. This allowance was $24.3 million and $18.2 million at December 31, 2019 and 2018, respectively.


⁽²⁾	As of December 31, 2019, we had $175.1 million of regulatory assets not earning a return, $29.1 million of regulatory assets earning a return based on short-term interest rates, and $151.5 million of regulatory assets earning a return based on long-term interest rates. The regulatory

assets not earning a return primarily relate to certain environmental remediation costs, the recovery of which depends on the timing of the actual expenditures, as well as uncollectible expense, our electric real-time market pricing program, and unamortized loss on reacquired debt. The other regulatory assets in the table either earn a return at the applicable utility's weighted average cost of capital or the cash has not yet been expended, in which case the regulatory assets are offset by liabilities.


⁽³⁾	Primarily represents the unrecognized future pension and OPEB costs related to our defined benefit pension and OPEB plans. We are authorized recovery of these regulatory assets over the average remaining service life of each plan.


⁽⁴⁾	In accordance with the rate orders issued by the PSCW in December 2019, amounts previously collected from customers for the future removal of our recently retired plants were used to reduce our unrecovered plant balances during December 2019. Any additional removal costs that we incur will increase our plant retirement regulatory assets.


⁽⁵⁾	As of December 31, 2019, we had made cash expenditures of $96.3 million related to these environmental remediation costs. The remaining $589.2 million represents our estimated future cash expenditures.


⁽⁶⁾	For information on the flow through of tax repairs and the regulatory treatment of the impacts of the Tax Legislation in our various jurisdictions, see Note 25, Regulatory Environment.


⁽⁷⁾	As a result of the rate order WE received from the PSCW in December 2019, the regulatory liability related to its mines deferral was offset against its SSR regulatory asset during December 2019. The rate order also authorized recovery of WE's SSR regulatory asset over a 15-year period that began on January 1, 2020.


⁽⁸⁾	Represents amounts recoverable from customers related to our uncollectible expense tracking mechanisms and riders. These mechanisms allow us to recover or refund the difference between actual uncollectible write-offs and the amounts recovered in rates.


⁽⁹⁾	Represents amounts recoverable from customers related to WE's costs of the generating units leased from We Power, including subsequent capital additions.

The following regulatory liabilities were reflected on our balance sheets as of December 31:



(in millions)	2019		2018		See Note
Regulatory liabilities
Income tax related items ⁽¹⁾	$	2,248.8	$	2,406.6	15
Removal costs ⁽²⁾	1,181.5		1,329.6
Pension and OPEB benefits ⁽³⁾	354.9		238.3		19
Energy costs refundable through rate adjustments ⁽⁴⁾	89.8		39.6		1(d)
Earnings sharing mechanisms ⁽⁵⁾	43.5		30.0		25
Electric transmission costs ⁽⁵⁾	42.2		9.7		25
Uncollectible expense ⁽⁶⁾	39.1		30.5		1(d)
Decoupling	36.8		30.5		1(d)
Energy efficiency programs ⁽⁷⁾	30.7		31.7
Derivatives	6.7		16.4		1(q)
Mines deferral ⁽⁸⁾	—		120.8
Other, net	6.4		4.7
Total regulatory liabilities	$	4,080.4	$	4,288.4

Balance sheet presentation
Other current liabilities	$	87.6	$	36.8
Regulatory liabilities	3,992.8		4,251.6
Total regulatory liabilities	$	4,080.4	$	4,288.4


⁽¹⁾	For information on the regulatory treatment of the impacts of the Tax Legislation in our various jurisdictions, see Note 25, Regulatory Environment.


⁽²⁾	Represents amounts collected from customers to cover the future cost of property, plant, and equipment removals that are not legally required. Legal obligations related to the removal of property, plant, and equipment are recorded as AROs. See Note 8, Asset Retirement Obligations, for more information on our legal obligations.


⁽³⁾	Primarily represents the unrecognized future pension and OPEB benefits related to our defined benefit pension and OPEB plans. We will amortize these regulatory liabilities into net periodic benefit cost over the average remaining service life of each plan.


⁽⁴⁾	Represents an over-collection of energy costs that will be refunded to customers in the future. When the rates we charge to customers include energy costs that are higher than our actual energy costs, any over-collection outside of the allowable energy cost price variance is refunded to customers.

⁽⁵⁾

Based on orders received from the PSCW, WE was required to apply the refunds due to customers from its earnings sharing mechanism to its electric transmission escrow through 2019. As a result, $38.6 million of WE's earnings sharing refunds were reflected in its electric transmission regulatory liability at December 31, 2019, and $37.2 million of WE's earnings sharing refunds were netted against its electric transmission regulatory asset at December 31, 2018.


⁽⁶⁾	Represents amounts refundable to customers related to our uncollectible expense tracking mechanisms and riders. These mechanisms allow us to recover or refund the difference between actual uncollectible write-offs and the amounts recovered in rates.


⁽⁷⁾	Represents amounts refundable to customers related to programs at the utilities designed to meet energy efficiency standards.

⁽⁸⁾

Represents the deferral of revenues less the associated cost of sales related to Tilden, which were not included in the PSCW's 2015 rate order. As a result of the rate order WE received from the PSCW in December 2019, this regulatory liability was offset against WE's SSR regulatory asset during December 2019.