National Grid 2012 Annual Report Download - page 59

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58
Note 10. Commitments and Contingencies
Lease Obligations
The Company has various operating leases which include leases for buildings, office equipment, vehicles and power
operating equipment which is utilized by both the Company and its affiliates. A portion of the lease expense is allocated
to affiliated entities that benefit from its use by the Company’ s service companies. Total rental expense for operating
leases included in operations and maintenance expense in the accompanying consolidated statements of income was $89
million for the year ended March 31, 2012.
A summary of future minimum lease payments due each year subsequent to March 31, 2012 are as follows:
(in millions of dollars)
Years Ended March 31,
2013 85$
2014 82
2015 79
2016 76
2017 73
Thereafter 349
Total 744$
Asset Retirement Obligations
The Company has various asset retirement obligations primarily associated with its gas distribution and electric
generation activities. Generally, the Company’ s largest asset retirement obligations relate to: (i) legal requirements to cut
(disconnect from the gas distribution system), purge (clean of natural gas and PCB contaminants) and cap gas mains
within its gas distribution and transmission system when mains are retired in place; or dispose of sections of gas main
when removed from the pipeline system; (ii) cleaning and removal requirements associated with storage tanks containing
waste oil and other waste contaminants; and (iii) legal requirements to remove asbestos upon major renovation or
demolition of structures and facilities.
The electric generation subsidiary of the Company has a legal obligation to remediate/demolish certain facilities
following their retirement during the summer of 2012. Pursuant to the existence of this legal obligation, the Company
recorded an asset retirement obligation of $44.6 million as of September 30, 2011.
The following table represents the changes in the asset retirement obligations for the years ended March 31, 2012 and
March 31, 2011:
March 31,
2012 2011
Balance as of beginning of year 69$ 68$
Electric generation retirement obligation 45 -
Accretion expense 54
Liabilities settled (2) (3)
Liabilities incurred in the current year 2-
Balance as of end of year 119$ 69$
(in millions of dollars)