Regulatory (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of Regulatory Assets and Regulatory Liabilities

Details of the regulatory assets and liabilities are presented in the following table:

Regulatory Assets and Liabilities


	December 31,		December 31,
(millions)	2021		2020
Regulatory assets:
Regulatory tax asset (1)	$	117	$	90
Cost-recovery clauses (2)		89		38
Capital cost recovery for early retired assets (3)		518		0
Environmental remediation (4)		22		22
Postretirement benefits (5)		230		309
Asset retirement obligation (6)		11		13
Other		15		13
Total regulatory assets		1,002		485
Less: Current portion		136		79
Long-term regulatory assets	$	866	$	406
Regulatory liabilities:
Regulatory tax liability (7)	$	638	$	691
Cost-recovery clauses - deferred balances (2)		16		23
Accumulated reserve—cost of removal (8)		468		498
Storm reserve (9)		46		48
Other		2		1
Total regulatory liabilities		1,170		1,261
Less: Current portion		78		67
Long-term regulatory liabilities	$	1,092	$	1,194

(1)

The regulatory tax asset is primarily associated with the depreciation and recovery of AFUDC-equity. This asset does not earn a return but rather is included in the capital structure, which is used in the calculation of the weighted cost of capital used to determine revenue requirements. It will be recovered over the expected life of the related assets. The regulatory tax asset balance reflects the impact of the federal corporate income tax rate reduction.

(2)

These assets and liabilities are related to FPSC clauses and riders. They are recovered or refunded through cost-recovery mechanisms approved by the FPSC on a dollar-for-dollar basis in a subsequent period.

(3)

This regulatory asset is related to the remaining net book value of Big Bend Units 1 through 3 and smart meter assets that were retired. The balance earns a rate of return as permitted by the FPSC and will be recovered as a separate line item on customer bills for a period of 15 years. See “Tampa Electric Big Bend Modernization Project” above for further information.

(4)

This asset is related to costs associated with environmental remediation primarily at MGP sites. The balance is included in rate base, partially offsetting the related liability, and earns a rate of return as permitted by the FPSC. The timing of recovery is based on a settlement agreement approved by the FPSC.

(5)

This asset is related to the deferred costs of postretirement benefits and it is amortized over the remaining service life of plan participants. Deferred costs of postretirement benefits that are included in expense are recognized as cost of service for rate-making purposes as permitted by the FPSC.

(6)

This asset is related to costs associated with an asset retirement obligation, which is a legal obligation for the future retirement of certain tangible, long-lived assets. This regulatory asset does not earn a return because it is offset with related assets and liabilities within rate base. It is recovered and removed as the obligation is settled and removed as the activities for the retirement of the related assets have been completed.

(7)

The regulatory tax liability is primarily related to the revaluation of TEC’s deferred income tax balances recorded on December 31, 2017 at the lower corporate income tax rate due to U.S. tax reform. The liability related to the revaluation of the deferred income tax balances is amortized and returned to customers through rate reductions or other revenue offsets based on IRS regulations and the settlement agreement for tax reform benefits approved by the FPSC.

(8)

This item represents the non-ARO cost of removal in the accumulated reserve for depreciation. AROs are costs for legally required removal of property, plant and equipment. Non-ARO cost of removal represents estimated funds received from customers through depreciation rates to cover future non-legally required cost of removal of property, plant and equipment, net of salvage value upon retirement, which reduces rate base for ratemaking purposes. This liability is reduced as costs of removal are incurred.

(9)

See “Tampa Electric Storm Restoration Cost Recovery” discussion above for information regarding this reserve.