Progress Energy 2004 Annual Report Download - page 73

In the tables above, plant investment and accumulated
depreciation are not reduced by the regulatory
disallowances related to the Shearon Harris Nuclear
Plant (Harris Plant).
D. Asset Retirement Obligations
At December 31, 2004 and 2003, the asset retirement costs
related to nuclear decommissioning of irradiated plant, net
of accumulated depreciation, totaled $277 million and
$354 million, respectively. Funds set aside in the Company’s
nuclear decommissioning trust funds for the nuclear
decommissioning liability totaled $1.044 billion and
$938 million at December 31, 2004 and 2003, respectively.
Net nuclear decommissioning trust unrealized gains are
included in regulatory liabilities (See Note 8A).
Decommissioning cost provisions, which are included in
depreciation and amortization expense, were $31 million in
each of 2004, 2003 and 2002. Management believes that
decommissioning costs that have been and will be
recovered through rates by PEC and PEF will be sufficient
to provide for the costs of decommissioning. The
Company’s expenses recognized for the disposal or
removal of utility assets that are not SFAS No. 143 asset
removal obligations, which are included in depreciation
and amortization expense, were $160 million, $158 million
and $149 million in 2004, 2003 and 2002, respectively.
The utilities recognize removal, nonirradiated
decommissioning and dismantlement costs in regulatory
liabilities on the Consolidated Balance Sheets (See Note
8A). At December 31, 2004, such costs consist of removal
costs of $1.606 billion, removal costs for nonirradiated
areas at nuclear facilities of $131 million and amounts
previously collected for dismantlement of fossil
generation plants of $144 million. At December 31, 2003,
such costs consist of removal costs of $1.846 billion,
removal costs for nonirradiated areas at nuclear facilities
of $129 million and amounts previously collected for
dismantlement of fossil generation plants of $143 million.
During 2004, PEC reduced its estimated removal costs to
take into account the estimates used in the depreciation
studies implemented during 2004 (See Note 6A). This
resulted in a downward revision in the PEC estimated
removal costs and equal increase in accumulated
depreciation of approximately $345 million.
PEC’s most recent site-specific estimates of
decommissioning costs were developed in 2004, using
2004 cost factors, and are based on prompt
dismantlement decommissioning, which reflects the
cost of removal of all radioactive and other structures
currently at the site, with such removal occurring after
operating license expiration. These estimates, in 2004
dollars, are $294 million for Robinson Unit No. 2,
$290 million for Brunswick Unit No. 1, $313 million for
Brunswick Unit No. 2 and $359 million for the Harris
Plant. The estimates are subject to change based on a
variety of factors including, but not limited to, cost
escalation, changes in technology applicable to nuclear
decommissioning and changes in federal, state or local
regulations. The cost estimates exclude the portion
attributable to North Carolina Eastern Municipal Power
71
Progress Energy Annual Report 2004
2004
Subsidiary Facility
Company
Ownership
Interest
Plant
Investment
Accumulated
Depreciation
Construction
Work in
Progress
PEC Mayo Plant 83.83% $516 $249 $1
PEC Harris Plant 83.83% 3,185 1,387 13
PEC Brunswick Plant 81.67% 1,624 888 28
PEC Roxboro Unit 4 87.06% 323 147 1
PEF Crystal River Unit 3 91.78% 889 443 9
PEF Intercession City Unit P11 66.67% 22 7 8
2003
Subsidiary Facility
Company
Ownership
Interest
Plant
Investment
Accumulated
Depreciation
Construction
Work in
Progress
PEC Mayo Plant 83.83% $464 $242 $50
PEC Harris Plant 83.83% 3,248 1,424 7
PEC Brunswick Plant 81.67% 1,611 885 21
PEC Roxboro Unit 4 87.06% 323 139 1
PEF Crystal River Unit 3 91.78% 875 442 46
PEF Intercession City Unit P11 66.67% 22 6 6