National Grid 2016 Annual Report Download - page 141

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:
2016 2015
Discounted
£m
Undiscounted
£m
Real
discount
rate
Discounted
£m
Undiscounted
£m
Real
discount
rate
UK sites 280 348 2% 286 367 2%
US sites 889 1,031 2% 878 999 2%
1,16 9 1,379 1,16 4 1,366
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 2016 and 2060. A number of estimation 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 changes in
any of the assumptions could materially impact the calculation of the provision. The undiscounted amount is the undiscounted best estimate
ofthe liability having regard to these uncertainties.
The remediation expenditure in the US is expected to be incurred between 2016 and 2071. The uncertainties regarding the calculation of this
provision are similar to those considered in respect of UK sites. 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 represents £66m (2015: £51m) of expenditure relating to asset retirement obligations estimated to be incurred
until 2095, and £37m (2015: £64m) of expenditure relating to the demolition of gas holders estimated to be incurred until 2020. It also includes
the net present value of the estimated expenditure (discounted at a real rate of 2%) expected to be incurred until 2033 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 is expected to be incurred until 2023.
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 2016 are amounts provided in respect of onerous lease commitments and rates payable
onsurplus properties of £100m (2015: £117m) with expenditure expected to be incurred until 2039.
Other provisions also include £190m (2015: £182m) 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. Other provisions also include £13m (2015: £13m) in respect of
obligations associated with investments in joint ventures.
Financial Statements
139National Grid Annual Report and Accounts 2015/16 Financial Statements