Regulatory Assets and Liabilities

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



(Millions)	2013		2012		See Note
Regulatory assets ^{(1) (2)}
Environmental remediation costs (net of insurance recoveries)⁽³⁾	$	653.0	$	689.7	15
Unrecognized pension and other postretirement benefit costs ⁽⁴⁾	428.8		810.0		17
Merger and acquisition related pension and other postretirement benefit costs ⁽⁵⁾	98.3		110.1
Asset retirement obligations	89.5		73.9		13
Income tax related items	55.3		47.6		14
Termination of a tolling agreement with Fox Energy Company LLC	50.0		—		3
Crane Creek production tax credits ⁽⁶⁾	33.6		34.9
De Pere Energy Center ⁽⁷⁾	23.8		26.2
Unamortized loss on reacquired debt ⁽⁸⁾	18.5		18.2		1(n)
Energy efficiency programs ⁽⁹⁾	18.0		16.7
Energy costs receivable through rate adjustments ⁽¹⁰⁾	16.0		18.1
Derivatives	11.8		30.7		1(h)
Pension and other postretirement costs receivable through rate adjustments ⁽¹¹⁾	9.4		—		26
Decoupling	9.3		10.6		26
Other	26.7		37.9
Total regulatory assets	$	1,542.0	$	1,924.6

Balance Sheet Presentation
Current assets	$	129.4	$	110.8
Long-term assets	1,412.6		1,813.8
Total regulatory assets	$	1,542.0	$	1,924.6


⁽¹⁾	Based on prior and current rate treatment, we believe it is probable that our utility subsidiaries will continue to recover from customers the regulatory assets described above.

⁽²⁾

The following regulatory assets are not earning a return: environmental remediation costs at WPS and UPPCO; unrecognized pension and other postretirement benefit costs at PGL and NSG; merger and acquisition related pension and other postretirement benefit costs at PGL and NSG; unamortized loss on reacquired debt at NSG, PGL, UPPCO and WPS; WPS energy efficiency programs; energy costs receivable through rate adjustments at MERC and WPS; asset retirement obligations and derivatives at all utilities; and decoupling at MGU and UPPCO. However, these regulatory assets are expected to be recovered from customers in future rates.


⁽³⁾	As of December 31, 2013, we had not yet made cash expenditures for $600.8 million of these environmental remediation costs. The recovery of these costs depends on the timing of the actual expenditures.


⁽⁴⁾	Represents the unrecognized future pension and other postretirement costs resulting from actuarial gains and losses on Integrys Energy Group's defined benefit and other postretirement plans. We are authorized recovery of this regulatory asset over the average future remaining service life of each plan.


⁽⁵⁾	Composed of unrecognized benefit costs that existed prior to the PELLC merger and the MERC and MGU acquisitions. MERC and MGU are authorized recovery of this regulatory asset through 2026. PGL and NSG are authorized recovery of the pension portion of this regulatory asset through 2023, and through 2019 for the portion related to other postretirement benefit costs.

⁽⁶⁾

In 2012, WPS elected to claim and subsequently received a Section 1603 Grant for the Crane Creek wind project in lieu of the production tax credit. As a result, WPS reversed previously recorded production tax credits. WPS also reduced the depreciable basis of the qualifying facility by the amount of the grant proceeds, which will result in a reduction of depreciation and amortization expense over a 12-year period. WPS recorded a regulatory asset for the deferral of previously recorded production tax credits and is authorized recovery of this net regulatory asset through 2039.

⁽⁷⁾

Prior to WPS purchasing the De Pere Energy Center in 2002, WPS had a long-term power purchase contract with the De Pere Energy Center that was accounted for as a capital lease. As a result of the purchase, the capital lease obligation was reversed and the difference between the capital lease asset and the purchase price was recorded as a regulatory asset. WPS is authorized recovery of this regulatory asset through 2023.


⁽⁸⁾	Amounts are recovered over the term of the replacement debt as authorized by the various commissions.


⁽⁹⁾	Represents amounts recoverable from customers related to programs at the utility subsidiaries designed to meet energy efficiency standards.


⁽¹⁰⁾	Represents the under-collection of energy costs that will be recovered from customers in the future.


⁽¹¹⁾	Represents the under-collection of pension and other postretirement costs that will be recovered from customers in the future.

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



(Millions)	2013		2012		See Note
Regulatory liabilities
Removal costs ⁽¹⁾	$	335.3	$	318.4
Decoupling	51.7		15.9		26
Unrecognized pension and other postretirement benefit costs	30.2		17.7		17
Energy costs refundable through rate adjustments ⁽²⁾	27.2		44.4
Energy efficiency programs ⁽³⁾	19.6		8.8
Uncollectible expense	10.1		10.0		26
Crane Creek depreciation deferral ⁽⁴⁾	9.0		9.4
Derivatives	6.6		4.3		1(h)
Fox Energy Center ⁽⁵⁾	5.6		—		3
Other	7.1		7.2
Total regulatory liabilities	$	502.4	$	436.1

Balance Sheet Presentation
Current liabilities	$	101.5	$	65.6
Long-term liabilities	400.9		370.5
Total regulatory liabilities	$	502.4	$	436.1


⁽¹⁾	Represents amounts collected from customers to cover the cost of future removal of property, plant, and equipment.


⁽²⁾	Represents the over-collection of energy costs that will be refunded to customers in the future.


⁽³⁾	Represents amounts refundable to customers related to programs at the utility subsidiaries designed to meet energy efficiency standards.


⁽⁴⁾	Represents the book depreciation taken on the Crane Creek wind project prior to WPS's election to claim a Section 1603 Grant for the project in lieu of the production tax credit. See more information in the regulatory assets section.


⁽⁵⁾	Represents the deferral of incremental costs associated with WPS owning and operating the Fox Energy Center, which was purchased in March 2013. The deferral does not include an allowance for earnings on shareholders' investment of $26.7 million, in accordance with GAAP requirements, which has created the net regulatory liability.