Regulatory Assets and Liabilities

12 Months Ended

Dec. 31, 2022

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Assets and Liabilities

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. SPS would be required to recognize the write-off of regulatory assets and liabilities in net income or other comprehensive income if changes in the utility industry no longer allow for the application of regulatory accounting guidance under GAAP.

Components of regulatory assets:

(Millions of Dollars)	See Note(s)	Remaining Amortization Period	Dec. 31, 2022				Dec. 31, 2021 (a)
Regulatory Assets			Current		Noncurrent		Current		Noncurrent
Pension and retiree medical obligations	9	Various	$	2	$	146	$	11	$	135
Net AROs (b)	1, 10	Various	—		48		—		40
Excess deferred taxes — TCJA	7	Various	1		48		2		50
Recoverable deferred taxes on AFUDC		Plant lives	—		40		—		41
Deferred natural gas and electric energy/fuel costs		One to three years	136		34		146		4
Losses on reacquired debt		Term of related debt	1		19		1		19
Texas revenue surcharges		One year	69		—		20		64
Other		Various	8		24		13		27
Total regulatory assets			$	217	$	359	$	193	$	380

(a)Prior period amounts have been restated to conform with current year presentation.

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

Components of regulatory liabilities:

(Millions of Dollars)	See Note(s)	Remaining Amortization Period	Dec. 31, 2022				Dec. 31, 2021 (a)
Regulatory Liabilities			Current		Noncurrent		Current		Noncurrent
Deferred income tax adjustments and TCJA refunds (b)	7	Various	$	—	$	469	$	15	$	486
Plant removal costs	1, 10	Various	—		198		—		190
Effects of regulation on employee benefit costs		Various	—		20		—		19
Renewable resources and environmental initiatives		Various	—		14		—		7
Formula rates		One to two years	10		8		6		4
Contract valuation adjustments (c)	1, 8	One to two years	119		1		27		1
Other		Various	19		5		6		2
Total regulatory liabilities			$	148	$	715	$	54	$	709

(a)Prior period amounts have been restated to conform with current year presentation.

(b)Includes the revaluation of recoverable/regulated plant accumulated deferred income taxes and revaluation impact of non-plant accumulated deferred income taxes due to the TCJA.

(c)Includes the fair value of FTR instruments utilized/intended to offset the impacts of transmission system congestion.

SPS’ regulatory assets not earning a return include the unfunded portion of pension and retiree medical obligations and net AROs (i.e. deferrals for which cash has not been disbursed). In addition, regulatory assets included $48 million and $292 million at Dec. 31, 2022 and 2021, respectively, of past expenditures not earning a return. Amounts are predominately related to losses on reacquired debt, rate case expenses, and transmission-related deferrals and amortizations.