Regulatory Assets And Liabilities

12 Months Ended

Dec. 31, 2023

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Assets And Liabilities

NOTE 9—Regulatory Assets and Liabilities

In accordance with Accounting for Regulated Operations, we record regulatory assets and liabilities that result from our ratemaking. Our regulatory assets and liabilities as of December 31, 2023 and 2022, were as follows:

	December 31,
	2023		2022
	(in thousands)
Regulatory Assets:
Unamortized losses on reacquired debt	$	527	$	787
Deferred asset retirement costs		197		214
NOVEC contract termination fee		12,234		14,681
Interest rate hedge		1,325		1,461
Deferred net unrealized losses on derivative instruments		79,991		—
PJM capacity performance event, net		—		20,106
Total Regulatory Assets	$	94,274	$	37,249
Regulatory Assets included in Current Assets:
Deferred energy	$	—	$	83,836
Regulatory Liabilities:
North Anna asset retirement obligation deferral	$	68,419	$	68,803
North Anna nuclear decommissioning trust unrealized gain		73,682		44,357
Unamortized gains on reacquired debt		—		54
Deferred net unrealized gains on derivative instruments		—		48,739
Total Regulatory Liabilities	$	142,101	$	161,953
Regulatory Liabilities included in Current Liabilities:
Deferred energy	$	30,702	$	—

The regulatory assets will be recognized as expenses concurrent with their collection through rates and the regulatory liabilities will be recognized as reductions to expenses concurrent with their return through rates.

Regulatory assets included in deferred charges and other assets are detailed as follows:

•Unamortized losses on reacquired debt are the costs we incurred to purchase our outstanding indebtedness prior to its scheduled retirement. These losses are amortized over the life of the original indebtedness and will be fully amortized in 2028.

•Deferred asset retirement costs reflect the cumulative effect of change in accounting principle for the Clover and distributed generation facilities as a result of the adoption of Accounting for Asset Retirement and Environmental Obligations. These costs will be fully amortized in 2034.

•NOVEC contract termination fee reflects the amount allocated to the contract value of the payment to NOVEC in 2008 as part of the termination agreement. The wholesale power contract with NOVEC was scheduled to expire in 2028, thus the contract termination fee will be amortized ratably through 2028.

•Interest rate hedge. To mitigate a portion of our exposure to fluctuations in long-term interest rates related to the debt we issued in 2011, we entered into an interest rate hedge. This will be amortized over the life of the 2011 debt and will be fully amortized in 2050.

•Deferred net unrealized losses on derivative instruments will be matched and recognized in the same period the
expense is incurred for the hedged item.

•PJM capacity performance event, net. In December 2022, we incurred charges from PJM for a capacity performance event related to Winter Storm Elliott. On December 23 and 24, 2022, PJM issued two separate Performance Assessment Interval (“PAI”) events totaling approximately 23 hours. During a PAI event, owners of generating facilities, including ODEC, are subject to significant capacity performance charges if their generating facilities do not perform when called upon by PJM; and also are eligible for capacity performance bonus payments if those facilities perform in excess of their required capacity obligations. The capacity performance charges that PJM collects are redistributed to the PJM generators that are eligible for capacity performance bonus payments. During the Winter Storm Elliott PAI events, many PJM members, including ODEC, experienced forced outages and were unable to perform at times as a result of natural gas availability constraints and mechanical issues. Additionally, some PJM members, including ODEC, performed in excess of their required capacity obligations at times. As a result of the forced outages we experienced during the Winter Storm Elliott PAI events, in 2022, we recorded a $20.1 million liability for estimated capacity performance charges and established a regulatory asset to defer these charges. On December 19, 2023, FERC issued an order approving a settlement agreement that resolved 15 separate FERC complaints related to non-performance charges resulting from Winter Storm Elliott. As a result of the settlement, our total non-performance charges were reduced to $13.6 million, which were more than offset by capacity performance bonus payments of $18.3 million, resulting in a net regulatory liability of $4.7 million. The $4.7 million was both recorded and subsequently fully amortized in the fourth quarter of 2023 as a reduction to purchased power expense.

Regulatory assets included in current assets are detailed as follows:

•Deferred energy represents the net accumulation of under-collection of energy costs. We use the deferral method of accounting to recognize differences between our energy revenues collected from our member distribution cooperatives and our energy expenses. Under-collected deferred energy balances are collected from our member distribution cooperatives in subsequent periods.

Regulatory liabilities included in deferred credits and other liabilities are detailed as follows:

•North Anna asset retirement obligation deferral is the cumulative effect of change in accounting principle as a result of the adoption of Accounting for Asset Retirement and Environmental Obligations plus the deferral of subsequent activity primarily related to accretion expense offset by interest income on the nuclear decommissioning trust.

•North Anna nuclear decommissioning trust unrealized gain (net of losses) reflects the unrealized gain on the investments in the nuclear decommissioning trust.

•Unamortized gains on reacquired debt are the gains we recognized when we purchased our outstanding indebtedness prior to its scheduled retirement. These gains are amortized over the life of the original indebtedness and were fully amortized in 2023.

•Deferred net unrealized gains on derivative instruments will be matched and recognized in the same period the expense is incurred for the hedged item.

Regulatory liabilities included in current liabilities are detailed as follows:

•Deferred energy represents the net accumulation of over-collection of energy costs. We use the deferral method of accounting to recognize differences between our energy revenues collected from our member distribution cooperatives and our energy expenses. Over-collected deferred energy balances are returned to our member distribution cooperatives in subsequent periods.