Regulatory Assets and Liabilities

SPS’ financial statements are prepared in accordance with the applicable accounting guidance, as discussed in Note 1. Under this guidance, regulatory assets and liabilities are created for amounts that regulators may allow to be collected, or may require to be paid back to customers in future electric rates. If changes in the utility industry or the business of SPS no longer allow for the application of regulatory accounting guidance under GAAP, SPS would be required to recognize the write-off of regulatory assets and liabilities in net income or OCI.

The components of regulatory assets shown on the balance sheets of SPS at Dec. 31, 2013 and 2012 are:



(Thousands of Dollars)	See Note(s)	Remaining Amortization Period	Dec. 31, 2013				Dec. 31, 2012
Regulatory Assets			Current		Noncurrent		Current		Noncurrent
Pension and retiree medical obligations ^(a)	7	Various	$	17,382	$	200,158	$	15,038	$	238,398
Recoverable deferred taxes on AFUDC recorded in plant	1	Plant lives	—		31,362		—		27,591
Net AROs ^(b)	11	Plant lives	—		21,382		—		21,714
Conservation programs ^(c)	1	One to six years	1,951		7,753		1,735		9,095
Renewable resources and environmental initiatives	11	One to four years	3,428		17,671		4,094		15,101
Losses on reacquired debt	4	Term of related debt	1,225		3,697		1,225		4,922
Deferred income tax adjustment	1, 6	Typically plant lives	—		3,375		—		4,859
Recoverable electric energy costs	1	Less than one year	491		—		873		—
Other		Various	3,118		5,017		1,055		2,401
Total regulatory assets			$	27,595	$	290,415	$	24,020	$	324,081


^(a)	Includes the non-qualified pension plan.


^(b)	Includes amounts recorded for future recovery of AROs.


^(c)	Includes costs for conservation programs, as well as incentives allowed in certain jurisdictions.

The components of regulatory liabilities shown on the balance sheets of SPS at Dec. Dec. 31, 2013 and 2012 are:



(Thousands of Dollars)	See Note(s)	Remaining Amortization Period	Dec. 31, 2013				Dec. 31, 2012
Regulatory Liabilities			Current		Noncurrent		Current		Noncurrent
Plant removal costs	11	Plant lives	$	—	$	53,006	$	—	$	66,575
Deferred electric energy costs	1	Less than one year	55,395		—		61,874		—
Contract valuation adjustments ^(a)	1, 9	Term of related contract	14,243		6,849		4,292		11,159
Gain from asset sales	10	Various	11,172		4,201		4,903		8,272
Conservation programs ^(b)	1	Less than one year	1,465		—		1,875		—
Other		Various	1,484		17,448		2,947		5,809
Total regulatory liabilities			$	83,759	$	81,504	$	75,891	$	91,815


^(a)	Includes the fair value of certain long-term PPAs used to meet energy capacity requirements.


^(b)	Includes costs for conservation programs as well as incentives allowed in certain jurisdictions.

At Dec. 31, 2013 and 2012, approximately $30 million and $25 million of SPS’ regulatory assets represented past expenditures not currently earning a return, respectively. This amount primarily includes certain expenditures associated with renewable resources and environmental initiatives.