National Grid 2014 Annual Report Download - page 129

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Strategic Report Corporate Governance Financial Statements Additional Information
23. Provisions continued
Environmental provision
The environmental provision represents the estimated restoration and remediation costs relating to a number of sites owned and managed
by subsidiary undertakings, together with certain US sites that National Grid no longer owns. The environmental provision is as follows:
2014 2013
Discounted
£m
Undiscounted
£m
Real
discount
rate
Discounted
£m
Undiscounted
£m
Real
discount
rate
UK sites1286 367 2% 302 397 2%
US sites2786 891 2% 896 1,014 2%
1,072 1,258 1,19 8 1,411
1. The remediation expenditure in the UK relates to old gas manufacturing sites and also to electricity transmission sites. Cash flows are expected to be incurred between 2014 and 2067.
Anumber of uncertainties affect the calculation of the provision, including the impact of regulation, accuracy of the site surveys, unexpected contaminants, transportation costs, the
impactof alternative technologies and changes in the discount rate. This provision incorporates our best estimate of the financial effect of these uncertainties, but future material changes
in any of the assumptions could have a material impact on the calculation of the provision. The undiscounted amount is the undiscounted best estimate of the liability having regard to
theseuncertainties.
2. The remediation expenditure in the US is expected to be incurred between 2014 and 2059. The uncertainties regarding the calculation of this provision are similar to those considered in
respect of UK sites. However, unlike the UK, with the exception of immaterial amounts of such costs, this expenditure is expected to be largely recoverable from ratepayers under the terms
of various rate agreements in the US.
Decommissioning provision
The decommissioning provision primarily represents both £55m (2013: £69m) of expenditure relating to asset retirement obligations
expected to be incurred until 2058, and £72m (2013: £nil) of expenditure relating to the demolition of gas holders expected to be incurred
until 2022. It also includes the net present value of the estimated expenditure (discounted at a real rate of 2%) expected to be incurred
until 2038 in respect of the decommissioning of certain US nuclear generating units that National Grid no longer owns.
Restructuring provision
The restructuring provision principally relates to business reorganisation costs in the UK and the US and is expected to be incurred
until2021.
Emissions provision
The provision for emission costs is expected to be settled using emission allowances granted.
Other provisions
Included within other provisions at 31 March 2014 are amounts provided in respect of onerous lease commitments and rates payable
onsurplus properties of £117m (2013: £165m) with expenditure expected to be incurred until 2018.
Other provisions also include £160m (2013: £174m) of estimated liabilities in respect of past events insured by insurance subsidiary
undertakings, including employer liability claims. In accordance with insurance industry practice, these estimates are based on
experience from previous years and there is, therefore, no identifiable payment date. It also includes £13m (2013: £13m) in respect
ofobligations associated with investments in joint ventures.
127