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Regulatory Assets and Liabilities | 12 Months Ended
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Dec. 31, 2011
REGULATORY ASSETS AND LIABILITIES | 10. REGULATORY ASSETS & LIABILITIES The Company has recorded regulatory assets and liabilities that it expects to pass through to its customers in accordance with, and subject to, regulatory provisions as follows:
|  |  | December 31, |  |
|  |  | 2011 |  | 2010 |  | Recovery Period
REGULATORY ASSETS |  | (in millions) |  |
Current regulatory assets: |  |  |  |  |  |  |  |
Brazil tariff recoveries:(1) |  |  |  |  |  |  |  |
| Energy purchases |  | $ | 79 |  | $ | 62 |  | Over tariff reset period
| Transmission costs, regulatory fees and other |  |  | 185 |  |  | 82 |  | Over tariff reset period
El Salvador tariff recoveries(2) |  |  | 108 |  |  | 67 |  | Over tariff reset period
Other(3) |  |  | 19 |  |  | 1 |  | Various
Total current regulatory assets |  |  | 391 |  |  | 212 |  |
Noncurrent regulatory assets: |  |  |  |  |  |  |  |
Defined benefit pension obligations at IPL and DPL(4)(5) |  |  | 399 |  |  | 235 |  | Various
Income taxes recoverable from customers(4)(6) |  |  | 76 |  |  | 66 |  | Various
Brazil tariff recoveries:(1) |  |  |  |  |  |  |  |
| Energy purchases |  |  | 84 |  |  | 18 |  | Over tariff reset period
| Transmission costs, regulatory fees and other |  |  | 86 |  |  | 32 |  | Over tariff reset period
Deferred Midwest ISO costs(7) |  |  | 80 |  |  | 80 |  | To be determined
Other(3) |  |  | 122 |  |  | 39 |  | Various
Total noncurrent regulatory assets |  |  | 847 |  |  | 470 |  |
TOTAL REGULATORY ASSETS |  | $ | 1,238 |  | $ | 682 |  |
REGULATORY LIABILITIES |  |  |  |  |  |  |  |
Current regulatory liabilities: |  |  |  |  |  |  |  |
Brazil tariff reset adjustment(8) |  | $ | 190 |  | $ | - |  | To be determined
Efficiency program costs(9) |  |  | 29 |  |  | 58 |  | Over tariff reset period
Brazil tariff recoveries:(1) |  |  |  |  |  |  |  |
| Energy purchases |  |  | 305 |  |  | 118 |  | Over tariff reset period
| Transmission costs, regulatory fees and other |  |  | 172 |  |  | 71 |  | Over tariff reset period
Other(10) |  |  | 37 |  |  | 37 |  | Various
Total current regulatory liabilities |  |  | 733 |  |  | 284 |  |
Noncurrent regulatory liabilities: |  |  |  |  |  |  |  |
Asset retirement obligations(11) |  |  | 649 |  |  | 509 |  | Over life of assets
Brazil special obligations(12) |  |  | 422 |  |  | 435 |  | To be determined
Brazil tariff recoveries:(1) |  |  |  |  |  |  |  |
| Energy purchases |  |  | 76 |  |  | 69 |  | Over tariff reset period
| Transmission costs, regulatory fees and other |  |  | 64 |  |  | 57 |  | Over tariff reset period
Efficiency program costs(9) |  |  | 44 |  |  | 54 |  | Over tariff reset period
Other(10) |  |  | 24 |  |  | 8 |  | Various
Total noncurrent regulatory liabilities |  |  | 1,279 |  |  | 1,132 |  |
TOTAL REGULATORY LIABILITIES |  | $ | 2,012 |  | $ | 1,416 |  |
(1) Recoverable per National Electric Energy Agency (“ANEEL”) regulations through the Annual Tariff Adjustment (“IRT”). These costs are generally non-controllable costs and primarily consist of purchased electricity, energy transmission costs and sector costs that are considered volatile. These costs are recovered in 24 installments through the annual IRT process and are amortized over the tariff reset period. (2) Deferred fuel costs incurred by our El Salvador subsidiaries associated with purchase of energy from the El Salvador spot market and the power generation plants. In El Salvador, the deferred fuel adjustment represents the variance between the actual fuel costs and the fuel costs recovered in the tariffs. The variance is recovered semi-annually at the tariff reset period. (3) Includes assets with and without a rate of return. Other current reg ul atory assets that did not earn a rate of return were $12 million and $0 million, as of December 31, 2011 and 2010, respectively. Other noncurrent regulatory assets that did not earn a rate of return were $37 million and $14 million, as of December 31, 2011 and 2010, respectively. Other Current and Noncurrent Regulatory Assets primarily consist of: • Unamortized losses on long-term debt reacquired or redeemed in prior periods at IPL and DPL, which are amortized over the lives of the original issues in accordance with the FERC and PUCO rules. • Unamortized carrying charges and certain other costs related to Petersburg unit 4 at IPL. • Deferred storm costs incurred to repair 2008 storm damage at DPL, which have been deferred until such time that DPL seeks recovery in a future rate proceeding. (4) Past expenditures on which the Company does not earn a rate of return. (5) The regulatory accounting standards allow the defined pension and postretirement benefit obligation to be recorded as a regulatory asset equal to the previously unrecognized actuarial gains and losses and prior service costs that are expected to be recovered through future rates. Pension expense is recognized based on the plan's actuarially determined pension liability. Recovery of costs is pr obable, but not yet determined. Pension contributions made by our Brazilian subsidiaries are not included in regulatory assets as those contributions are not covered by the established tariff in Brazil. (6) Probable of recovery through future rates, based upon established regulatory practices, which permit the recovery of current taxes. This amount is expected to be recovered, without interest, over the period as book-tax temporary differences reverse and become current taxes. (7) Transmission service costs and other administrative costs from IPL's participation in the Midwest ISO market, which are recoverable but do not earn a rate of return. Recovery of costs is probable, but the timing is not yet determined. (8) I n July 2011, the Brazilian energy regulator (the “Regulator”) postponed the periodic review and reset of a component of Eletropaulo's regulated tariff, which determines the margin to be earned by Eletropaulo. The review and reset of this tariff component is performed every four years. From July 2011 through Dec ember 2011, Eletropaulo continued to invoice customers under the existing tariff rate, as required by the Regulator. Management believes that it is probable that the new tariff rate will be lower than the existing tariff rate, resulting in future refunds to customers, and has estimated the amount of this liability. Accordingly, as of December 31, 2011, Eletropaulo recognized a regulatory liability. It is at least reasonably possible that future events confirming the final amount of the regulatory liability or a change in the estimated amount of the liability will occur in the near term as the periodic review and tariff reset process progresses with the Regulator in 2012. The primary factor in the ongoing discussions between Eletropaulo and the Regulator that cause s the estimate to be sensitive to change is the regulatory asset base which will be used by the Regulator to determine the return included in the revised tariff. The final amount of the regulatory liability may differ from the estimated amount recognized as of December 31, 2011. (9) Payments received for costs expected to be incurred to improve the efficiency of our plants in Brazil that are refunded as part of the IRT. (10) Other Current and Noncurrent Regulatory Liabilities primarily consist of t he cost incurred by electricity generators due to variance in energy prices during rationing periods (“Free Energy”). Our Brazilian subsidiaries are authorized to recover or refund this cost associated with monthly energy price variances between the wholesale energy market prices owed to the power generation plants producing F ree E nergy and the capped price reimbursed by the local distribution companies which are passed through to the final customers through energy tariffs. (11) O bligation s for removal costs which do not have an associated legal retirement obligation as defined by the accounting standards on asset retirement obligations. (1 2) Obligations established by ANEEL in Brazil associated with electric utility concessions and represent amounts received from customers or donations not subject to return. These donations are allocated to support energy network expansion and to improve utility operations to meet customers' needs. The term of the obligation is established by ANEEL. S ettlement shall occur when the concession ends. The current regulatory assets and liabilities are recorded in “O ther current assets” and “A ccrued and other liabilities,” respectively, on the accompanying Consolidated Balance Sheets. The noncurrent regulatory assets and liabilities are recorded in “O ther noncurrent assets” and “O ther long-term liabilities,” respectively, in the accompanying Consolidated Balance Sheets. The following table summarizes regulatory assets by region as of December 31, 2011 and 2010:
|  | December 31,
|  | 2011 |  | 2010
|  | (in millions)
Latin America |  | $ | 546 |  | $ | 265
North America |  |  | 692 |  |  | 417
Total regulatory assets |  | $ | 1,238 |  | $ | 682
The following table summarizes regulatory liabilities by region as of December 31, 2011 and 2010:
|  | December 31,
|  | 2011 |  | 2010
|  | (in millions)
Latin America |  | $ | 1,333 |  | $ | 890
North America |  |  | 679 |  |  | 526
Total regulatory liabilities |  | $ | 2,012 |  | $ | 1,416

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- Definition The entire disclosure for public utilities. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 71 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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