National Grid 2008 Annual Report Download - page 667

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 37227
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-15.1, Doc: 16, Page: 140
Description: EXHIBIT 15.1
0/6336.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/336/6*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 37227
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-15.1, Doc: 16, Page: 140 Description: EXHIBIT 15.1
0/6336.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/336/6*
Table of Contents
148
Notes to the consolidated financial statements continued
National Grid plc
24. Provisions
Provisions have been analysed as current and non-current as follows:
Decommissioning provision
The decommissioning provision of £87m at 31 March 2008 (2007: £70m) primarily represented the net present value of the
estimated expenditure (discounted at a nominal rate of 6%) expected to be incurred in respect of the decommissioning of
certain nuclear generating units. It also included £33m (2007: £9m) relatin
g
to other asset retirement obli
g
ations. Expenditure is
expected to be incurred between financial years 2009 and 2061.
Environmental provision
The environmental provision represents the estimated restoration and remediation costs relating to a number of sites owned
and managed by subsidiary undertakings. The environmental provision is comprised as follows:
Emissions provision
The provision for emission costs is expected to be settled using emissions allowances granted.
Restructuring provision
At 31 March 2008, £32m of the total restructuring provision (2007: £31m) consisted of provisions for the disposal of surplus
leasehold interests and rates payable on surplus properties. The remainder of the restructuring provision related to business
reorganisation costs in the UK, to be paid between financial years 2009 and 2010.
Total
Decommissioning Environmental Emissions Restructuring Other provisions
£m £m £m £m £m £m
At 1 A
p
ril 2006 127 429 23 75 117 771
Exchan
g
e ad
j
ustments
(
12
)
(
27
)
–
–
–
(
39
)
Acquisition of subsidiary undertakings 1 7 – – – 8
Additions
–
14 13 14 1 42
Unused amounts reversed
(
13
)
(
11
)
(
23
)
(
1
)
(
2
)
(
50
)
Reclassification to workin
g
ca
p
ital
–
(
4
)
–
–
–
(
4
)
Reclassification to assets of businesses held for
sale
(
12
)
–
–
–
(
15
)
(
27
)
Unwindin
g
of discount 4 15
–
–
2 21
Utilised
(
25
)
(
51
)
(
12
)
(
32
)
(
8
)
(
128
)
At 31 March 2007 70 372 1 56 95 594
Exchan
g
e ad
j
ustments
–
32
–
1 6
Ac
q
uisition of subsidiar
y
undertakin
g
s 23 338 125
–
157 643
Additions 5 124 5 25 17 176
Unused amounts reversed
(
4
)
(
14
)
(
1
)
–
(
5
)
(
24
)
Unwindin
g
of discount 6 27
–
–
8 41
Utilised
(
13
)
(
69
)
(
4
)
(
15
)
(
3
)
(
104
)
At 31 March 2008 87 781 128 66 270 1,332
2008 2007
£m £m
Current 389 167
Non-current 943 427
1,332 594
2008 2007
Discounted Undiscounted Discounted Undiscounted Nominal
£m £m £m £m discount rate
UK
g
as site decontamination
(
i
)
192 280 168 246 5.0%
US sites
(
ii
)
587 792 200 296 6.0%-6.5%
Other (iii) 2 2 4 4 n/a
781 1,074 372 546
(i) Represents the statutory decontamination costs of old gas manufacturing sites in the UK. The anticipated timing of the cash flows for statutory decontamination cannot be predicted with
certainty, but they are expected to be incurred over the financial years 2009 to 2058 with some 50% of the spend over the next five years.
There are a number of uncertainties that affect the calculation of the provision for UK gas site decontamination, including the impact of regulation, the accuracy of the site surveys,
unexpected contaminants, transportation costs, the impact of alternative technologies and changes in the discount rate. We have made our best estimate of the financial effect of these
uncertainties in the calculation of the provision, but future material changes in any of the assumptions could materially impact on the calculation of the provision and hence the income
statement.
The undiscounted amount of the provision is the undiscounted best estimate of the liability having regard to the uncertainties above.
(ii) The remediation expenditure in the US is expected to be incurred between financial years 2009 and 2059. The uncertainties regarding the calculation of this provision are similar to those
considered in respect of UK gas decontamination. However, unlike the UK, with the exception of immaterial amounts of such costs, this expenditure is expected to be recoverable from
rate payers under the terms of various rate agreements in the US.
In determining the undiscounted amount of the environmental provision relating to US sites we do not have sufficient information to calculate a range of outcomes, but it is expected that
any outcome of the liability would be recovered from rate payers (with the exception of immaterial amounts of site costs).
(iii) The remainder of the environmental provision relates to the expected cost of remediation of certain other sites in the UK. This is expected to be utilised within the next five years and there
is no material difference between the discounted and undiscounted amounts.