Allegheny Power 2011 Annual Report Download - page 139

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124
FirstEnergy
FES
OE
CEI
JCP&L
Met-Ed
Penelec
2011
—%
0.53%
—%
—%
0.51%
0.51%
0.51%
2010
0.68%
0.60%
0.51%
1.92%
—%
0.51%
0.51%
14. ASSET RETIREMENT OBLIGATIONS
FirstEnergy has recognized applicable legal obligations for AROs and their associated cost primarily for nuclear power plant
decommissioning, reclamation of sludge disposal ponds, closure of coal ash disposal sites, underground and above-ground storage
tanks, wastewater treatment lagoons and transformers containing PCBs. In addition, FirstEnergy has recognized conditional
retirement obligations, primarily for asbestos remediation.
The ARO liabilities for FES, OE and TE primarily relate to the decommissioning of the Beaver Valley, Davis-Besse and Perry nuclear
generating facilities (OE for its leasehold interest in Beaver Valley Unit 2 and Perry and TE for its leasehold interest in Beaver Valley
Unit 2). The ARO liabilities for JCP&L, Met-Ed and Penelec primarily relate to the decommissioning of the TMI-2 nuclear generating
facility. FES and the applicable Utilities use an expected cash flow approach to measure the fair value of their nuclear
decommissioning AROs.
FirstEnergy, FES and certain Utilities maintain NDTs that are legally restricted for purposes of settling the nuclear decommissioning
ARO. The fair values of the decommissioning trust assets as of December 31, 2011 and 2010 were as follows:
FirstEnergy
FES
OE
TE
JCP&L
Met-Ed
Penelec
2011
(In millions)
$ 2,112
1,223
137
83
193
310
166
2010
$ 1,973
1,146
127
76
182
289
153
Accounting standards for conditional retirement obligations associated with tangible long-lived assets require recognition of the fair
value of a liability for an ARO in the period in which it is incurred if a reasonable estimate can made, even though there may be
uncertainty about timing or method of settlement. When settlement is conditional on a future event occurring, it is reflected in the
measurement of the liability, not in the recognition of the liability.
The following table summarizes the changes to the ARO balances during 2011 and 2010.
ARO Reconciliation
Balance, January 1, 2010
Liabilities settled
Accretion
Revisions in estimated cash flows(1)
Balance, December 31, 2010
Liabilities assumed from Allegheny merger
Liabilities settled(2)
Accretion
Revisions in estimated cash flows(4)
Balance, December 31, 2011
FirstEnergy(3)
(In millions)
$ 1,425
(11)
93
(100)
1,407
60
(15)
97
(52)
$ 1,497
FES
$ 921
—
59
(88)
892
—
(1)
59
(46)
$ 904
OE
$ 86
(10)
5
(7)
74
—
(2)
5
(6)
$ 71
CEI
$ 2
—
—
—
2
—
—
1
—
$ 3
TE
$ 32
—
2
(5)
29
—
—
2
—
$ 31
JCP&L
$ 102
—
6
—
108
—
—
7
—
$ 115
Met-Ed
$ 180
—
13
—
193
—
—
13
—
$ 206
Penelec
$ 92
—
6
—
98
—
—
7
—
$ 105
(1) During the second quarter of 2010, studies were completed to reassess the estimated cost of decommissioning the Beaver Valley nuclear
generating facilities. The cost studies resulted in a revision to the estimated cash flows associated with the ARO liabilities and reduced the
discounted liabilities as shown.