Dominion Power 2001 Annual Report Download - page 72

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Regulatory Assets and Liabilities
Regulatory assets represent probable future revenue associated
with certain costs that will be recovered from customers through
the ratemaking process. Regulatory liabilities represent probable
future reductions in revenues associated with amounts that are
to be credited to customers through the ratemaking process.
Dominion’s regulatory assets and liabilities included the follow-
ing at December 31, 2001 and 2000:
(millions) 2001 2000
Regulatory assets
Unrecovered gas costs $9 $263
Other postretirement benefit costs(1) 115 126
Income taxes recoverable through future rates (2) 179 164
Deferred cost of fuel used in electric generation 119 98
Cost of decommissioning DOE uranium
enrichment facilities (3) 42 49
Customer bad debts (4) 80 —
Other 39 60
Regulatory assets, net 574 497
Total regulatory assets 583 760
Regulatory liabilities
Amounts payable to customers 91 —
Estimated rate contingencies and refunds (5) 43 41
Total regulatory liabilities $134 $41
(1) Costs recognized in excess of amounts included in regulated rates charged by Dominion’s
regulated gas operations before rates were updated to reflect the new method of
accounting and the cost related to the accrued benefit obligation recognized as part of
Dominion’s accounting for its acquisition of CNG.
(2) Income taxes recoverable or refundable through future rates resulted from the
recognition of additional deferred income taxes, not previously recorded because of past
ratemaking practices.
(3) Cost of decommissioning the Department of Energy’s uranium enrichment facilities,
representing the unamortized portion of Dominion’s required contributions. Beginning
in 1992, Dominion began making contributions over a 15-year period and collecting
these costs in electric customers’ fuel rates.
(4) In 2001 the Public Utilities Commission of Ohio authorized the deferral of costs
associated with certain uncollectible customer accounts not contemplated by current
rates. Dominion expects recovery of such costs, which will be included in Dominion’s
next base rate case.
(5) Estimated rate contingencies and refunds are associated with certain increases in prices
by Dominion’s rate regulated utilities and other rate-making issues that are subject to
final modification in regulatory proceedings.
The incurred costs underlying regulatory assets may repre-
sent past expenditures by Dominion’s rate regulated electric and
gas operations or may represent the recognition of liabilities that
ultimately will be settled at some future time. At December 31,
2001, approximately $130 million of Dominion’s regulatory
assets represented past expenditures on which it does not earn a
return. These expenditures consist primarily of unrecovered gas
costs, customer bad debts and a portion of deferred fuel costs.
Unrecovered gas and deferred fuel costs are recovered within
two years; recovery of these customer bad debts is expected to be
addressed in the next base rate case.
Note 18 Short-Term Debt and Credit Agreements
Dominion and its subsidiaries have credit agreements with vari-
ous expiration dates and pay fees in lieu of compensating bal-
ances in connection with these agreements. These agreements
provided for maximum borrowing capacity of $2.5 billion and
$4.4 billion at December 31, 2001 and December 31, 2000,
respectively. In 2000, $295 million was borrowed under these
agreements. There were no borrowings as of December 31, 2001.
These credit agreements also supported $1.9 billion and
$2.7 billion of commercial paper at December 31, 2001 and
2000, respectively. These borrowings were used primarily to
fund working capital requirements, bridge financing of acquisi-
tions and operational needs at Dominion and its subsidiaries. At
December 31, 2000, a total of $250 million of the commercial
paper was classified as long-term debt since a portion of the
commercial paper was supported by credit agreements that had
expiration dates extending beyond one year.
At December 31, 2001, Dominion had commercial paper
programs with an aggregate amount of $2.05 billion supported by
a $1.75 billion 364-day revolving credit facility and a $300 mil-
lion multi-year facility. Dominion expects to renew these credit
facilities after their maturities in the second quarter of 2002.
A summary of the amounts that are classified as short-term
debt at December 31 follows:
2001 2000
Weighted Weighted
Average Average
Amount Interest Amount Interest
(millions, except percentages) Outstanding Rate Outstanding Rate
Commercial paper $1,859 4.23% $2,414 6.50%
Term notes —— 823 7.02%
Tot al $1,859 $3,237
Note 19
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