Regulatory Assets And Liabilities

12 Months Ended

Dec. 31, 2021

Regulatory Assets And Liabilities Disclosure [Abstract]

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, 2021 and 2020, were as follows:

	December 31,
	2021		2020
	(in thousands)
Regulatory Assets:
Unamortized losses on reacquired debt	$	2,518	$	4,382
Deferred asset retirement costs		230		246
NOVEC contract termination fee		17,128		19,575
Interest rate hedge		1,604		1,754
Voluntary prepayment to NRECA Retirement Security Plan		773		1,547
Deferred net unrealized losses on derivative instruments		—		3,627
Total Regulatory Assets	$	22,253	$	31,131

Regulatory Assets included in Current Assets:
Deferred energy	$	5,005	$	—

Regulatory Liabilities:
North Anna asset retirement obligation deferral	$	72,226	$	58,231
North Anna nuclear decommissioning trust unrealized gain (net of losses)		98,567		84,321
Unamortized gains on reacquired debt		113		172
Deferred net unrealized gains on derivative instruments		49,713		—
Total Regulatory Liabilities	$	220,619	$	142,724

Regulatory Liabilities included in Current Liabilities
Deferred energy	$	—	$	23,112

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 2023.

•

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.

•

Voluntary prepayment to NRECA Retirement Security Plan. In April 2013, we elected to make a voluntary prepayment of $7.7 million to the NRECA Retirement Security Plan, a noncontributory, defined benefit pension plan qualified under Section 401 and tax-exempt under Section 501(a) of the IRC. It is considered a multi-employer plan under accounting standards. We recorded this prepayment as a regulatory asset which will be fully amortized in 2022. See Note 12—Employee Benefit Plans.

•

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

Regulatory assets included in current assets are detailed as follows:

•

Deferred energy balance 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 will be 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 balance 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.