Regulatory Assets and Liabilities

12 Months Ended

Dec. 31, 2011

Regulatory Assets and Liabilities [Abstract]

4. Regulatory Assets and Liabilities

Our regulatory asset and liability balances are recoverable or reimbursable over various periods. Below are the details of our regulatory assets and liabilities at December 31:


	2011		2010
	(In millions)
Current regulatory assets⁽¹⁾	$	7	$	3

Non-current regulatory assets
Taxes on capitalized funds used during construction		50		38
Postretirement benefits		—		2
Other		5		6

Total non-current regulatory assets⁽¹⁾		55		46

Total regulatory assets	$	62	$	49

Current regulatory liabilities
Environmental	$	40	$	78

Total current regulatory liabilities		40		78

Non-current regulatory liabilities
Environmental		6		44
Postretirement benefits		—		35
Other ⁽²⁾		5		11

Total non-current regulatory liabilities		11		90

Total regulatory liabilities	$	51	$	168

(1)	Included in other current and long-term assets on our balance sheets.

(2)

As part of our rate case settlement in December 2011, we were required to eliminate our regulatory liability associated with certain deferred taxes. We reflected this adjustment as a net increase to our operating revenues of approximately $11 million. For a further discussion of our rate case, see Note 7.

The significant regulatory assets and liabilities include:

Taxes on Capitalized Funds Used During Construction. Represents the regulatory asset balance established to offset the deferred tax for the equity component of AFUDC. Taxes on capitalized funds used during construction and the offsetting deferred income taxes are included in the rate base and are recovered over the depreciable lives of the long-lived asset to which they relate.

Postretirement Benefits. These balances represented unrecognized gains and losses or changes in actuarial assumptions related to our postretirement benefit plan and differences in the postretirement benefit related amounts expensed and the amounts recovered in rates. As part of our rate case settlement in December 2011, we were required to reduce these balances. As such, we reclassified $4 million (net of income taxes of $2 million) to accumulated other comprehensive income which represented the unrecognized gain on our postretirement benefit plan at the time of the settlement. In addition, we recorded an increase to our operating revenues of approximately $29 million related to the remaining other postretirement benefit related costs. For a further discussion of our rate case, see Note 7.

Environmental. Includes amounts collected, substantially in excess of certain polychlorinated biphenyls (PCB) environmental remediation costs incurred to date, through a surcharge to our customers under a settlement approved by the FERC in November of 1995. This environmental liability is not deducted from the rate base on which we are allowed to earn a return. For a further discussion of the PCB matter, see Note 7.

TENNESSEE GAS PIPELINE COMPANY, L.L.C. 10-K