Regulatory Assets and Liabilities

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



(Millions)	2014		2013		See Note
Regulatory assets ^{(1) (2)}
Environmental remediation costs (net of insurance recoveries)⁽³⁾	$	635.8	$	652.1	17
Unrecognized pension and other postretirement benefit costs ⁽⁴⁾	513.1		382.6		18
Asset retirement obligations	109.4		89.0		15
Merger and acquisition-related pension and other postretirement benefit costs ⁽⁵⁾	86.6		98.3
Income tax related items	60.6		55.3		16
Derivatives	55.2		11.7		1(h)
Termination of a tolling agreement with Fox Energy Company LLC	44.6		50.0		3
Crane Creek production tax credits ⁽⁶⁾	32.2		33.6
Energy costs recoverable through rate adjustments ⁽⁷⁾	22.2		17.0
De Pere Energy Center ⁽⁸⁾	21.4		23.8
Unamortized loss on reacquired debt ⁽⁹⁾	16.6		16.2		1(o)
Uncollectible expense ⁽¹⁰⁾	13.6		4.7
Energy efficiency programs ⁽¹¹⁾	2.8		16.8
Pension and other postretirement costs recoverable through rate adjustments ⁽¹²⁾	—		9.4		25
Decoupling	—		8.6		25
Other	18.4		19.7
Total regulatory assets	$	1,632.5	$	1,488.8

Balance Sheet Presentation
Current assets	$	118.9	$	127.4
Long-term assets	1,513.6		1,361.4
Total regulatory assets	$	1,632.5	$	1,488.8


⁽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; unrecognized pension and other postretirement benefit costs at MERC, NSG, and PGL; asset retirement obligations, derivatives, and uncollectible expense at all utilities; merger and acquisition-related pension and other postretirement benefit costs at NSG and PGL; natural gas costs recoverable through rate adjustments at MERC and WPS; unamortized loss on reacquired debt at NSG and PGL; energy efficiency programs at WPS; pension and other postretirement costs recoverable through rate adjustments at WPS; and decoupling at MGU. However, these regulatory assets are expected to be recovered from customers in future rates.


⁽³⁾	As of December 31, 2014, we had not yet made cash expenditures for $579.9 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 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 they are authorized recovery of the other postretirement benefit portion through 2019.

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

⁽⁸⁾

Prior to WPS purchasing the De Pere Energy Center in 2002, WPS had a long-term power purchase contract with them 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.


⁽⁹⁾	Amounts are recovered over the term of the replacement debt for NSG and PGL as authorized by the ICC.


⁽¹⁰⁾	Represents amounts recoverable from customers related to uncollectible expense. We are allowed to recover or refund the difference between the rate case authorized uncollectible expense and the actual uncollectible write-offs reported to the applicable commissions each year.


⁽¹¹⁾	Represents amounts recoverable from customers related to programs at the utility subsidiaries designed to meet energy efficiency standards.


⁽¹²⁾	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)	2014		2013		See Note
Regulatory liabilities
Removal costs ⁽¹⁾	$	334.0	$	318.0
Decoupling	49.4		51.5		25
Unrecognized pension and other postretirement benefit costs ⁽²⁾	45.2		30.2		18
Energy costs refundable through rate adjustments ⁽³⁾	44.8		27.1
Energy efficiency programs ⁽⁴⁾	21.3		19.6
Derivatives	19.8		6.6		1(h)
Uncollectible expense	15.7		10.1		25
Crane Creek depreciation deferral ⁽⁵⁾	8.7		9.0
Fox Energy Center ⁽⁶⁾	4.6		5.6		3
Other	10.1		7.1
Total regulatory liabilities	$	553.6	$	484.8

Balance Sheet Presentation
Current liabilities	$	153.7	$	101.1
Long-term liabilities	399.9		383.7
Total regulatory liabilities	$	553.6	$	484.8


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


⁽²⁾	Represents the unrecognized future other postretirement benefit costs resulting from actuarial gains on other postretirement benefit plans. We will amortize this regulatory liability into net periodic benefit cost over the average remaining service life of each plan.


⁽³⁾	Represents the over-collection of energy costs that will be refunded to customers in the future.


⁽⁴⁾	Represents amounts refundable to customers related to programs at the utility subsidiaries designed to meet energy efficiency standards.


⁽⁵⁾	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 above.


⁽⁶⁾	Represents the deferral of incremental costs associated with WPS owning and operating the Fox Energy Center, which was purchased in March 2013. In accordance with GAAP, the deferral does not include an allowance for return on equity, which has created the net regulatory liability. This allowance was $22.8 million and $22.1 million, at December 31, 2014, and 2013, respectively.