National Grid 2008 Annual Report Download - page 306

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 33423
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.6.1, Doc: 6, Page: 100
Description: EXH 2(B).6.1
0/2704.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/704/2*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 33423
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.6.1, Doc: 6, Page: 100 Description: EXH 2(B).6.1
0/2704.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/704/2*
F-15
16 Reclassifications
Certain amounts from prior years have been reclassified on the accompanyin
g
consolidated financial statements to conform to
the fiscal 2007
p
resentation.
NOTE B – RATES AND REGULATORY
The Company’s re
g
ulated subsidiaries
g
enerally use the same accountin
g
policies and practices for financial reportin
g
purposes as non-re
g
ulated companies under US GAAP. However, actions by the FERC and the state utility commissions can
result in accounting treatment that is different from that used by non-re
g
ulated companies. The Company applies the
provisions of the SFAS No. 71, “Accounting for Certain Types of Regulation.” In accordance with SFAS No. 71, the Company’s
re
g
ulated subsidiaries record re
g
ulatory assets (expenses deferred for future recovery from customers) and re
g
ulatory
liabilities (amounts provided in current rates to cover costs to be incurred in the future) on their balance sheets. This permits
the re
g
ulated subsidiaries to defer certain costs (because they are expected to be recovered throu
g
h customer billin
g
s) and
revenues (because they are expected to be refunded to customers), which would otherwise be char
g
ed to expense or
revenue, when authorized to do so by the re
g
ulator. The Company is earnin
g
a return on most of its re
g
ulatory assets under its
rate
p
lans.
The following table details the various categories of regulatory assets and liabilities:
At March 31
2007 2006
(In thousands
)
Regulatory assets included in accounts receivable:
Rate ad
j
ustment mechanisms $ 12,665 $ 53,777
Regulatory liabilities included in other accrued expenses:
Rate ad
j
ustment mechanisms
(
129,286
)
(
67,921
)
Current portion of regulatory assets:
Derivative and swa
p
contracts
(
Note E
)
264,497 324,858
Purchase power obligations 10,949 13,559
Yankee nuclear decommissionin
g
costs
(
Note C
)
28,527 54,796
Total net re
g
ulator
y
assets current 187,352 379,069
Re
g
ulatory assets
:
Stranded costs 2,273,238 2,478,018
Purchase
p
ower obli
g
ations 119,944 114,829
Derivative and swap contracts (Note E) 254,663 506,328
Re
g
ulator
y
tax asset 139,792 148,678
Deferred environmental restoration costs (Note C) 633,630 563,871
Pension and post-retirement benefit plans other than pension costs (Note F) 1,248,708 550,179
Additional minimum
p
ension liabilit
y
— 79,923
Yankee nuclear decommissioning costs (Note C) 117,416 140,832
Loss on reac
q
uired debt 69,223 78,966
Long-term portion of standard offer under-recovery 49,864 46,803
Other 194,892 556,362