16. REGULATORY MATTERS

Regulatory Accounting

Due to over or under recovery adjustments made in accordance with the FERC’s authoritative guidance and our cost-of-service recovery model, we recognize assets and liabilities for regulatory purposes. The assets and liabilities that we recognize for regulatory purposes are recorded on a net basis in “Other current assets” or “Accounts payable and other,” respectively, on our consolidated statements of financial position. These regulatory assets and liabilities are amortized on a straight-line basis over a one-year recovery period. Our over and under recovery revenue adjustments and net regulatory asset amortization for the three months ended March 31, 2016 and 2015 are as follows:

	For the three months ended March 31,
	2016			2015
	(in millions)
Net regulatory asset balance at beginning of period	$	29.9		$	6.0
Current period (over)/under recovery revenue adjustments		7.7			(9.1	)
Amortization of prior year regulatory asset		(6.4	)		(3.7	)
Net regulatory asset (liability) balance at end of period	$	31.2		$	(6.8	)

Other Contractual Obligations

Qualifying Volumes

We have certain contractual obligations with our customers in which a portion of the revenue earned on volumes above certain predetermined shipment levels, or qualifying volumes, are returned to the shippers through future rate adjustments. At March 31, 2016 we had $8.1 million in qualifying volume liabilities mostly related to the original Southern Access and Alberta Clipper agreements on our consolidated statements of financial position. At December 31, 2015 we had no qualifying volume liabilities.

We amortize the liability on a straight-line basis as an adjustment to revenue in the following year, reflecting the related rate adjustment. There was no amortization for qualifying volume liabilities for the three months ended March 31, 2016 and 2015.

Alberta Clipper Pipeline Property Taxes

A portion of the rates we charge our customers includes an estimate for annual property taxes. If the estimated property tax we collect from our customers is higher or lower than the actual property tax imposed, we are contractually obligated to refund to our customers or entitled to collect from our customers 50% of the property tax over or under recovery, respectively. At March 31, 2016 and December 31, 2015, we had $0.9 million and $0.8 million, respectively, in property tax under recovery assets related to our Alberta Clipper Pipeline on our consolidated statements of financial position.

During 2015 and 2014, we incurred liabilities related to contractual obligations with our customers on the Alberta Clipper Pipeline related to property taxes. As a result, in 2015 and 2014, we recorded a liability for the contractual amounts due back to our shippers with the corresponding amount as a reduction to revenue. We amortized the liability on a straight-line basis as an adjustment to revenue in the following year, reflecting the related rate adjustment. For the three months ended March 31, 2016 and 2015, we amortized through revenue $0.2 million of property tax under recovery assets and $1.4 million of property tax over recovery liabilities, respectively, on our consolidated statements of income with a corresponding amount reducing the contractual obligation on our consolidated statements of financial position.

Allowance for Equity Used During Construction

We are permitted to capitalize and recover costs for rate-making purposes that include an allowance for equity costs during construction, referred to as AEDC. In connection with construction of the Eastern Access Projects, Line 3 Replacement and Mainline Expansion Projects, we recorded $12.3 million and $23.0 million of “Allowance for equity used during construction” on our consolidated statement of income for the three months ended March 31, 2016 and 2015, respectively, and a corresponding amount in “Property, plant and equipment, net” on our consolidated statement of financial position at March 31, 2016 and 2015, respectively.