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Regulatory matters (Tables) | 12 Months Ended
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Dec. 31, 2018
Regulated Operations [Abstract] |
Regulatory Assets and Liabilities | At any given time, the Company can have several regulatory proceedings underway. The financial effects of these proceedings are reflected in the consolidated financial statements based on regulatory approval obtained to the extent that there is a financial impact during the applicable reporting period. The following regulatory proceedings were recently completed:
Utility | State | Regulatory Proceeding Type | Annual Revenue Increase $'000 | Effective Date
Empire Electric System | Missouri | Tax Reform docket | $(17,837) | Prospective decrease in annual revenue effective August 30, 2018 due to the reduction of the U.S. federal corporate income tax rate.
EnergyNorth Gas System | New Hampshire | General Rate Review | $10,711 | Effective May 1, 2018. The regulator also approved a one-time recoupment of $1,326 for the difference between the final rates and temporary rates granted on July 1, 2017. In November 2018, EnergyNorth received an order for rehearing clarifying the implementation of the decoupling mechanism that was approved and resolving the impacts of tax reform through the rehearing. The net result was a one-time decrease to the recoupment of $280.
Missouri Gas System | Missouri | General Rate Review | $4,600 | Effective July 1, 2018
Peach State Gas System | Georgia | GRAM | $2,367 | Effective February 1, 2019
New England Natural Gas System | Massachusetts | Gas System Enhancement Plan | $3,676 | Effective May 1, 2018
New England Gas System | Massachusetts | GRC | $8,300 | $7,800 effective March 1, 2016 $500 effective March 1, 2017
Calpeco Electric System | California | Post-Test Year Adjustment Mechanism | $2,175 | January 1, 2018
Midstates Gas System | Illinois | GRC | $2,200 | June 7, 2017
Various | Various | Various | $3,048 | Other rate reviews closed: Missouri Water ($1,015), and Litchfield Park Water & Sewer ($617), Park Water 2018 increase ($1,531), Georgia 2018 Gas Rate Adjustment Mechanism (-$115)
7. | Regulatory matters (continued)
Regulatory assets and liabilities consist of the following:
| 2018 |  | 2017
Regulatory assets |  |  |
Environmental remediation (a) | $ | 82,295 |  |  | $ | 82,711 |
Pension and post-employment benefits (b) | 125,959 |  |  | 105,712 |
Debt premium (c) | 48,847 |  |  | 57,406 |
Fuel and commodity costs adjustments (d) | 26,310 |  |  | 34,525 |
Rate adjustment mechanism (e) | 36,484 |  |  | 35,813 |
Clean Energy and other customer programs (f) | 22,269 |  |  | 20,582 |
Deferred construction costs (g) | 13,986 |  |  | 14,344 |
Asset retirement (h) | 21,048 |  |  | 16,080 |
Income taxes (i) | 34,822 |  |  | 36,546 |
Rate review costs (j) | 7,990 |  |  | 9,295 |
Other | 30,464 |  |  | 28,512 |
Total regulatory assets | $ | 450,474 |  |  | $ | 441,526 |
Less: current regulatory assets | (59,037 | ) |  | (66,567 | )
Non-current regulatory assets | $ | 391,437 |  |  | $ | 374,959 |
Regulatory liabilities |  |  |
Income taxes (i) | $ | 323,384 |  |  | $ | 321,138 |
Cost of removal (k) | 193,564 |  |  | 184,188 |
Rate base offset (l) | 10,900 |  |  | 13,214 |
Fuel and commodity costs adjustments (d) | 23,517 |  |  | 23,543 |
Deferred compensation received in relation to lost production (m) | 6,897 |  |  | 9,398 |
Deferred construction costs - fuel related (g) | 7,258 |  |  | 7,418 |
Pension and post-employment benefits (b) | 877 |  |  | 10,082 |
Other | 12,195 |  |  | 7,143 |
Total regulatory liabilities | $ | 578,592 |  |  | $ | 576,124 |
Less: current regulatory liabilities | (39,005 | ) |  | (37,687 | )
Non-current regulatory liabilities | $ | 539,587 |  |  | $ | 538,437 |
(a) | Environmental remediation
Actual expenditures incurred for the clean-up of certain former gas manufacturing facilities (note 12(b)) are recovered through rates over a period of 7 years and are subject to an annual cap.
(b) | Pension and post-employment benefits
As part of certain business acquisitions, the regulators authorized a regulatory asset or liability being set up for the amounts of pension and post-employment benefits that have not yet been recognized in net periodic cost and were presented as AOCI prior to the acquisition. The balance is recovered through rates over the future service years of the employees at the time the regulatory asset was set up (an average of 10 years) or consistent with the treatment of OCI under ASC 712 Compensation Non-retirement Post-employment Benefits and ASC 715 Compensation Retirement Benefits before the transfer to regulatory asset occurred. The annual movements in AOCI for Empire's pension and OPEB plans (note 10(a)) are also reclassified to regulatory accounts since it is probable the unfunded amount of these plans will be afforded rate recovery. Finally, the regulators have also approved tracking accounts for a number of the utilities. The amounts recorded in these accounts occur when actual expenses differs from those adopted and recovery or refunds are expected to occur in future periods.
7. | Regulatory matters (continued)
(c) | Debt premium
Debt premium on acquired debt is recovered as a component of the weighted average cost of debt.
(d) | Fuel and commodity costs adjustments
The revenue from the utilities includes a component which is designed to recover the cost of electricity and natural gas through rates charged to customers. To the extent actual costs of power or natural gas purchased differ from power or natural gas costs recoverable through current rates, that difference is not recorded on the consolidated statements of operations but rather is deferred and recorded as a regulatory asset or liability on the consolidated balance sheets. These differences are reflected in adjustments to rates and recorded as an adjustment to cost of electricity and natural gas in future periods, subject to regulatory review. Derivatives are often utilized to manage the price risk associated with natural gas purchasing activities in accordance with the expectations of state regulators. The gains and losses associated with these derivatives (note 23(b)(i)) are recoverable through the commodity costs adjustment.
(e) | Rate adjustment mechanism
Revenue for Calpeco Electric System, Park Water System, Peach State Gas System, New England Gas System, Midstates Natural Gas system, EnergyNorth Natural Gas System, and Granite State Electric System are subject to a revenue decoupling mechanism approved by their respective regulator which require charging approved annual delivery revenue on a systematic basis over the fiscal year. As a result, the difference between delivery revenue calculated based on metered consumption and approved delivery revenue is recorded as a regulatory asset or liability to reflect future recovery or refund, respectively, from customers. In addition, retroactive rate adjustments for services rendered but to be collected over a period not exceeding 24 months are accrued upon approval of the Final Order.
(f) | Clean Energy and other customer programs
The regulatory asset for Clean Energy and customer programs includes initiatives related to solar rebate applications processed and resulting rebate-related costs. The amount also includes other energy efficiency programs.
(g) | Deferred construction costs
Deferred construction costs reflect deferred construction costs and fuel related costs of specific generating facilities of Empire. These amounts are being recovered over the life of the plants.
(h) | Asset retirement
The costs of retirement of assets are expected to be recovered through rates as well as the on-going liability accretion and asset depreciation expense.
(i) | Income taxes
The income taxes regulatory assets and liabilities represent income taxes recoverable through future revenues required to fund flow-through deferred income tax liabilities and amounts owed to customers for deferred taxes collected at a higher rate than the current statutory rates. On June 1, 2018, the State of Missouri enacted legislation that, effective for tax years beginning on or after January 1, 2020, reduces the corporate income tax rate from 6.25% to 4%, among other legislative changes. A reduction of regulatory asset and an increase to regulatory liability was recorded for excess deferred taxes probable of being refunded to customers of $15,586. The Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. Among other provisions, the Act reduces the corporate income tax rate from 35% to 21%. A reduction of regulatory asset and an increase to regulatory liability was recorded in 2017 for excess deferred taxes probable of being refunded to customers of $327,947.
7. | Regulatory matters (continued)
(i) | Income taxes (continued)
As a result of the Tax Act enacted in 2017, regulators in the states where Liberty Utilities Group operates are contemplating the ratemaking implications of the reduction of federal tax rates from the legacy 35% tax rate and the new 21% federal statutory income tax rate effective January 2018. The Company is working with the regulators to identify the most appropriate way in each jurisdiction to address the impact of the Tax Act on cost of service based rates. As at December 31, 2018, the impact on regulated liability on account of ordered or probable orders related to the Tax Act was immaterial.
(j) | Rate review costs
The costs to file, prosecute and defend rate review applications are referred to as rate review costs. These costs are capitalized and amortized over the period of rate recovery granted by the regulator.
(k) | Cost of removal
The regulatory liability for cost of removal represents amounts that have been collected from ratepayers for costs that are expected to be incurred in the future to retire the utility plant.
(l) | Rate base offset
The regulators imposed a rate base offset that will reduce the revenue requirement at future rate proceedings. The rate base offset declines on a straight-line basis over a period of 10-16 years.
(m) | Deferred compensation received in relation to lost production
The regulatory liability for deferred compensation received from lost production represents Empire's refund from Southwest Power Administration for lost revenues at one of its generating facilities. These costs are being amortized over the period approved by state regulators.

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