Regulatory Assets and Liabilities

12 Months Ended

Dec. 31, 2025

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, 2025				Dec. 31, 2024 (a)
Regulatory Assets			Current		Noncurrent		Current		Noncurrent
Pension and retiree medical obligations	9	Various	$	5	$	150	$	4	$	156
Net AROs (b)	1, 10	Various	—		83		—		70
Recoverable deferred taxes on AFUDC		Plant lives	—		52		—		46
Excess deferred taxes — TCJA	7	Various	1		32		1		45
Losses on reacquired debt		Term of related debt	1		16		1		17
Excess liability insurance costs		Two years	—		14		—		—
Other		Various	17		29		37		25
Total regulatory assets			$	24	$	376	$	43	$	359

(a)Prior period amounts have been reclassified 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, 2025				Dec. 31, 2024 (a)
Regulatory Liabilities			Current		Noncurrent		Current		Noncurrent
Deferred income tax adjustments and TCJA refunds (b)	7	Various	$	—	$	418	$	—	$	436
Plant removal costs	1, 10	Various	—		283		—		267
LP&L departure payment		Eight years	4		26		4		29
Contract valuation adjustments (c)	1, 8	Less than one year	79		—		67		—
Deferred electric energy costs		Less than one year	20		—		41		—
Other		Various	15		45		30		36
Total regulatory liabilities			$	118	$	772	$	142	$	768

(a)Prior period amounts have been reclassified 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 past expenditures of $78 million and $126 million at Dec. 31, 2025 and 2024, respectively, which predominately relate to losses on reacquired debt, deferred excess liability insurance costs and transmission-related deferrals and amortizations. Additionally, the unfunded portion of pension and retiree medical obligations and net AROs (i.e., deferrals for which cash has not been disbursed) do not earn a return.