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Regulatory assets and liabilities - HECO (Hawaiian Electric Company and Subsidiaries) | 12 Months Ended
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Dec. 31, 2011
Hawaiian Electric Company and Subsidiaries |
Regulatory assets and liabilities |
6. Regulatory assets and liabilities In accordance with ASC Topic 980, “Regulated Operations,” the Company’s financial statements reflect assets, liabilities, revenues and expenses based on current cost-based rate-making regulations. Continued accounting under ASC Topic 980 generally requires that rates are established by an independent, third-party regulator; rates are designed to recover the costs of providing service; and it is reasonable to assume that rates can be charged to and collected from customers. Management believes its operations currently satisfy the ASC Topic 980 criteria. If events or circumstances should change so that those criteria are no longer satisfied, the Company expects that the regulatory assets would be charged to expense and the regulatory liabilities would be credited to income or refunded to ratepayers immediately. In the event of unforeseen regulatory actions or other circumstances, management believes that a material adverse effect on the Company’s financial condition, results of operations and/or liquidity may result if regulatory assets have to be charged to expense or if regulatory liabilities are required to be refunded to ratepayers immediately. Regulatory assets represent deferred costs expected to be fully recovered through rates over PUC-authorized periods. Generally, HECO and its subsidiaries do not earn a return on their regulatory assets; however, they have been allowed to recover interest on certain regulatory assets and to include certain regulatory assets in rate base. Regulatory liabilities represent amounts included in rates and collected from ratepayers for costs expected to be incurred in the future. For example, the regulatory liability for cost of removal in excess of salvage value represents amounts that have been collected from ratepayers for costs that are expected to be incurred in the future to retire utility plant. Generally, HECO and its subsidiaries include regulatory liabilities in rate base or are required to apply interest to certain regulatory liabilities. Noted in parentheses are the original PUC authorized amortization or recovery periods and the remaining amortization or recovery periods as of December 31, 2011, if different. Regulatory assets were as follows:
December 31 |  | 2011 | 2010
(in thousands) |  |  |  |  |
Retirement benefit plans (balance primarily varies with plans’ funded statuses) |  | $523,640 |  | $356,591 |
Income taxes, net (1 to 48 years) |  | 83,386 |  | 82,615 |
Decoupling revenue balancing account (1 year) |  | 20,780 |  | – |
Unamortized expense and premiums on retired debt and equity issuances (14 to 30 years; 1 to 17 years remaining) |  | 12,267 |  | 13,589 |
Vacation earned, but not yet taken (1 year) |  | 8,161 |  | 7,349 |
Postretirement benefits other than pensions (18 years; 1 year remaining) |  | 1,861 |  | 3,579 |
Other (1 to 50 years; 1 to 48 years remaining) |  | 19,294 |  | 14,607 |
|  | $669,389 |  | $478,330 |
Regulatory liabilities were as follows:
December 31 |  | 2011 | 2010
(in thousands) |  |  |  |  |
Cost of removal in excess of salvage value (1 to 60 years) |  | $294,817 |  | $277,341 |
Retirement benefit plans (5 years beginning with respective utility’s |  | 20,000 |  | 18,617 |
next rate case; primarily 5 years remaining) |  |  |  |  |
Other (5 years; 1 to 5 years remaining) |  | 649 |  | 839 |
|  | $315,466 |  | $296,797 |
The regulatory asset and liability relating to retirement benefit plans was created as a result of pension and OPEB tracking mechanisms adopted by the PUC in rate case decisions for HECO, MECO and HELCO in 2007 (see Note 10).

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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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