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54 National Grid Gas plc Annual Report and Accounts 2010/11
21. Provisions
Total
Environmental Restructuring Emissions Other provisions
£m £m £m £m £m
A
t 1 April 2009 56 43 2 48 149
A
dditions 14 30 4 11 59
Release of unused amounts - - - (2) (2)
Unwinding of discoun
t
2---2
Utilised (2) (25) - (9) (36)
A
t 31 March 2010 70 48 6 48 172
A
dditions 5 33 7 16 61
Release of unused amounts - - (6) (5) (11)
Unwinding of discoun
t
3---3
Utilised (7) (14) - (4) (25)
At 31 March 2011 71 67 7 55 200
2011 2010
£m £m
Current 79 62
Non-current 121 110
200 172
Environmental provision
Restructuring provision
Emissions provision
Other provisions
Other provisions at 31 March 2011 include £5m (2010: £6m) in respect of property transfer costs related to the sales of four UK gas
distribution networks and £22m (2010: £21m) in respect of employer liability claims. The payment dates for the property transfer costs are
uncertain, but should largely be over the next two years. In accordance with insurance industry practice, the estimates for employer liability
claims are based on experience from previous years and, therefore, there is no identifiable payment date associated with these items.
The environmental provision represents the net present value of the estimated statutory decontamination costs of old gas manufacturing sites
owned by the Company (discounted using a real rate of 2.0%). The anticipated timing of the cash flows for statutory decontamination cannot
be predicted with certainty, but they are expected to be incurred over the next 50 years.
A number of uncertainties affect the calculation of the provision for 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.
The provision incorporates our best estimate of the financial effect of these uncertainties, 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 at 31 March 2011 was £112m (2010: £110m), being the best undiscounted estimate of the liability
having regard to these uncertainties.
The provision for emission costs is expected to be settled using emission allowances granted or purchased.
At 31 March 2011, £26m of the total restructuring provision (2010: £26m) related to the restructuring of our Liquefied Natural Gas (LNG)
storage facilities, and £14m consisted of provisions for the disposal of surplus leasehold interests and rates payable on surplus properties
(2010: £5m). The expected payment dates for property restructuring costs remain uncertain. The remainder of the restructuring provision
related to business reorganisation costs, to be paid over the next two years.