Details of the regulatory assets and liabilities as of December 31, 2017 and 2016 are presented in the following table:

Regulatory Assets and Liabilities

	December 31,		December 31,
(millions)	2017		2016
Regulatory assets:
Regulatory tax asset ⁽¹⁾	$	45	$	86
Cost-recovery clauses - deferred balances ⁽²⁾		12		8
Cost-recovery clauses - offsets to derivative liabilities ⁽²⁾		1		0
Environmental remediation ⁽³⁾		33		37
Postretirement benefits ⁽⁴⁾		272		272
Storm reserve ⁽⁵⁾		47		0
Other		23		18
Total regulatory assets		433		421
Less: Current portion		77		28
Long-term regulatory assets	$	356	$	393
Regulatory liabilities:
Regulatory tax liability ⁽⁶⁾	$	730	$	6
Cost-recovery clauses ⁽²⁾		32		112
Cost-recovery clauses - offsets to derivative assets ⁽²⁾		0		17
Storm reserve ⁽⁵⁾		0		56
Accumulated reserve—cost of removal ⁽⁷⁾		518		547
Other		5		7
Total regulatory liabilities		1,285		745
Less: Current portion		58		154
Long-term regulatory liabilities	$	1,227	$	591

(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 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 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 the next year. In the case of the regulatory asset related to derivative liabilities, recovery occurs in the year following the settlement of the derivative position. In the case of the regulatory liability related to derivative assets, refund occurs in the year following the settlement of the derivative position.

(3)

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.

(4)

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.

(5)	See the Tampa Electric Storm Restoration Cost Recovery section above for information regarding this reserve. The regulatory asset is included in rate base and earns a rate of return as permitted by the FPSC. The asset will be recovered within a 12-month period.

(6)

The increase in the regulatory tax liability is primarily related to the revaluation of TEC’s deferred income tax balances at the lower income tax rate. As of December 31, 2017, all of the liability has been classified as non-current due to uncertainties around the timing and other regulatory decisions that will affect the amount of regulatory tax liability amortized and returned to customers through rate reductions or other revenue offsets in 2018. See Note 4 for further information.

(7)

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.