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Regulatory Assets and Liabilities | 12 Months Ended
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Dec. 31, 2015
Regulated Operations [Abstract] |
REGULATORY ASSETS AND LIABILITIES | REGULATORY ASSETS AND LIABILITIES The Company has recorded regulatory assets and liabilities (in millions) that it expects to pass through to its customers in accordance with, and subject to, regulatory provisions as follows:
December 31, | 2015 |  | 2014 |  | Recovery/Refund Period
REGULATORY ASSETS |  |  |
Current regulatory assets: |  |  |  |  |
Brazil tariff recoveries:(1) |  |  |  |  |
Energy purchases/sales | $ | 416 |  |  | $ | 424 |  |  | Annually as part of the tariff adjustment
Transmission costs, regulatory fees and other | 264 |  |  | 63 |  |  | Annually as part of the tariff adjustment
El Salvador tariff recoveries(2) | 43 |  |  | 92 |  |  | Quarterly as part of the tariff adjustment
Other(3) | 23 |  |  | 58 |  |  | Various
Total current regulatory assets | 746 |  |  | 637 |  |  |
Noncurrent regulatory assets: |  |  |  |  |
Defined benefit pension obligations at IPL and DPL(4)(5) | 227 |  |  | 329 |  |  | Various
Income taxes recoverable from customers(4)(6) | 36 |  |  | 74 |  |  | Various
Brazil tariff recoveries:(1) |  |  |  |  |
Energy purchases/sales | 147 |  |  | 266 |  |  | Annually as part of the tariff adjustment
Transmission costs, regulatory fees and other | 140 |  |  | 14 |  |  | Annually as part of the tariff adjustment
Deferred Midwest ISO costs(7) | 129 |  |  | 111 |  |  | To be determined
Other(3) | 239 |  |  | 78 |  |  | Various
Total noncurrent regulatory assets | 918 |  |  | 872 |  |  |
TOTAL REGULATORY ASSETS | $ | 1,664 |  |  | $ | 1,509 |  |  |
REGULATORY LIABILITIES |  |  |  |  |
Current regulatory liabilities: |  |  |  |  |
Brazil tariff reset adjustment(8) | $ | — |  |  | $ | 76 |  |  | Two years
Efficiency program costs(9) | 12 |  |  | 22 |  |  | Annually as part of the tariff adjustment
Brazil regulatory asset base adjustment(13) | 169 |  |  | 123 |  |  | Up to four tariff periods
Brazil tariff refunds:(1) |  |  |  |  |
Energy purchases/sales | 105 |  |  | 144 |  |  | Annually as part of the tariff adjustment
Transmission costs, regulatory fees and other | 120 |  |  | 174 |  |  | Annually as part of the tariff adjustment
Other(10) | 59 |  |  | 66 |  |  | Various
Total current regulatory liabilities | 465 |  |  | 605 |  |  |
Noncurrent regulatory liabilities: |  |  |  |  |
Asset retirement obligations(11) | 759 |  |  | 727 |  |  | Over life of assets
Brazil regulatory asset base adjustment(13) | 86 |  |  | 61 |  |  | Up to four tariff periods
Brazil special obligations(12) | 370 |  |  | 484 |  |  | To be determined
Brazil tariff refunds:(1) |  |  |  |  |
Energy purchases/sales | 30 |  |  | 128 |  |  | Annually as part of the tariff adjustment
Transmission costs, regulatory fees and other | 29 |  |  | 97 |  |  | Annually as part of the tariff adjustment
Efficiency program costs(9) | 5 |  |  | 11 |  |  | Annually as part of the tariff adjustment
Other(10) | 7 |  |  | 1 |  |  | Various
Total noncurrent regulatory liabilities | 1,286 |  |  | 1,509 |  |  |
TOTAL REGULATORY LIABILITIES | $ | 1,751 |  |  | $ | 2,114 |  |  |
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(1) | Recoverable or refundable per Brazilian National Electric Energy Agency ("ANEEL") regulations through the Annual Tariff Adjustment ("IRT"). These costs are generally non-controllable and primarily consist of purchased electricity, energy transmission, and sector costs that are considered volatile. The costs are passed through for a period of 12 months as part of the IRT. Any remaining balance is considered in the subsequent IRT, which results in a total of 24 months to recover or refund the costs. Favorable spot market sales are also subject to customer refunds through the IRT over the course of these time periods.
(2) | Deferred fuel costs incurred by our El Salvador subsidiaries associated with purchase of energy from the El Salvador spot market and 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 quarterly in the tariff reset period.
(3) | Includes assets with and without a rate of return. Other current regulatory assets that did not earn a rate of return were $8 million and $22 million, as of December 31, 2015 and 2014, respectively. Other noncurrent regulatory assets that did not earn a rate of return were $237 million and $73 million, as of December 31, 2015 and 2014, 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 Federal Energy Regulatory Commission ("FERC") and PUCO rules.
▪ | Unamortized carrying charges and certain other costs related to Petersburg unit 4 at IPL.
▪ | Deferred storm costs incurred primarily in 2008 to repair storm damage at DPL; recovery was approved via order from the PUCO on December 17, 2014 and began January 2015.
▪ | Additional Regulatory Asset Base ("RAB") from a favorable decision on tariff reset (administrative appeal) at Eletropaulo.
(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 probable, 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 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) | In July 2012, the Brazilian energy regulator (the "Regulator") approved 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 was retroactive to July 2011 and applied to customers' invoices from July 2012 to June 2015. From July 2011 through June 2012, Eletropaulo invoiced customers under the then-existing tariff rate, as required by the Regulator. As the new tariff rate was lower than the previous rate, Eletropaulo was required to reduce customer tariffs for the difference over the next year. Accordingly, from July 2011 through June 2012, Eletropaulo recognized a regulatory liability for the estimated future refunds, subsequently adjusted as of June 30, 2012 upon the finalization of the new tariff with the Regulator. The refund to customers was considered in the 2013 tariff adjustment, which contemplated an amortization of 67.55% from July 4, 2013. The remaining balance, representing 32.45%, was considered in the next annual tariff adjustment. There was no recorded current regulatory liability at Eletropaulo as of December 31, 2015.
(9) | Amounts received for costs expected to be incurred to improve the efficiency of our plants in Brazil as part of the IRT.
(10) | Other current and noncurrent regulatory liabilities primarily consist of liabilities owed to electricity generators due to variance in energy prices during rationing periods ("Free Energy"). Our Brazilian subsidiaries are authorized to refund this cost associated with monthly energy price variances between the wholesale energy market prices owed to the power generation plants producing Free Energy and the capped price reimbursed by the local distribution companies which are passed through to the final customers through energy tariffs. The balance excludes asset retirement obligations that were reclassified out of Other.
(11) | Obligations for removal costs which do not have an associated legal retirement obligation as defined by the accounting standards on asset retirement obligations.
(12) | 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. Settlement shall occur when the concession ends.
(13) | Represents adjustments to the RAB resulting from an administrative ruling in December 2013 compelling Eletropaulo to refund customers beginning July 2014.
The current regulatory assets and liabilities are recorded in Other current assets and Accrued and other liabilities, respectively, on the accompanying Consolidated Balance Sheets. The noncurrent regulatory assets and liabilities are recorded in Other noncurrent assets and Other noncurrent liabilities, respectively, in the accompanying Consolidated Balance Sheets. The following table summarizes regulatory assets and liabilities by reportable segment in millions as of the periods indicated:
December 31, | 2015 |  | 2014
| Regulatory Assets |  | Regulatory Liabilities |  | Regulatory Assets |  | Regulatory Liabilities
Brazil SBU | $ | 971 |  |  | $ | 932 |  |  | $ | 787 |  |  | $ | 1,347 |
US SBU | 650 |  |  | 819 |  |  | 631 |  |  | 767 |
MCAC SBU (El Salvador) | 43 |  |  | — |  |  | 91 |  |  | — |
Total | $ | 1,664 |  |  | $ | 1,751 |  |  | $ | 1,509 |  |  | $ | 2,114 |

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- Definition The entire disclosure for detailed information about regulatory assets and liabilities, including current and noncurrent assets created when regulatory agencies permit the deferral of costs to the balance sheet that would otherwise be required to appear on the company's income statement and would be charged against current expenses or revenues, as well as current and noncurrent liabilities created when regulatory agencies permit. + References No definition available. + Details
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