Xcel Energy 2005 Annual Report Download - page 76

and Prairie Island, originates with the in-service date of the facility. Monticello began operation in 1971. Prairie Island units 1 and 2 began
operation in 1973 and 1974, respectively. See Note 15 to the Consolidated Financial Statements for further discussion of nuclear obligations.
A reconciliation of the beginning and ending aggregate carrying amounts of Xcel Energy’s asset retirement obligations is shown in the table
below for the 12 months ended Dec. 31, 2005 and 2004:
Beginning Revisions Ending
Balance Liabilities Liabilities to Prior Balance
(Thousands of dollars) Jan. 1, 2005 Recognized Settled Accretion Estimates Dec. 31, 2005
Electric Utility Plant
Steam production asbestos $ – $ 5,917 $ – $ 28,406 $ – $ 34,323
Steam production ash containment – 4,916 – 16,018 – 20,934
Steam production retirement 3,002 – – 150 – 3,152
Nuclear production decommissioning 1,088,087 – – 70,736 26,145 1,184,968
Electric transmission and distribution – 2,350–––2,350
Gas Utility Plant
Gas transmission and distribution – 43,245–––43,245
Common Utility and Other Property
Common general plant asbestos – 575 – 2,459 – 3,034
Total liability $1,091,089 $57,003 $ – $117,769 $26,145 $1,292,006
Beginning Revisions Ending
Balance Liabilities Liabilities to Prior Balance
(Thousands of dollars) Jan. 1, 2004 Recognized Settled Accretion Estimates Dec. 31, 2004
Electric Utility Plant
Steam production retirement $ 2,860 $ – $ – $ 142 $ – $ 3,002
Nuclear production decommissioning 1,021,669 – – 66,418 – 1,088,087
Total liability $1,024,529 $ – $ – $ 66,560 $ – $1,091,089
The fair value of NSP-Minnesota assets legally restricted for purposes of settling the nuclear asset retirement obligations is $1.1 billion as of
Dec. 31, 2005, including external nuclear decommissioning investment funds and internally funded amounts.
Cumulative Effect of FIN No. 47 In March 2005, the FASB issued FIN No. 47. The interpretation clarified the term “ conditional asset retirement
obligation” as used in SFAS No. 143. The recording of the obligation for regulated operations has no income statement impact due to the deferral
of the adjustments through the establishment of a regulatory asset pursuant to SFAS No. 71. If Xcel Energy had implemented FIN No. 47 at
Jan. 1, 2004, the liability for asset retirement obligations would have increased by $52.2 million. The same liability at Dec. 31, 2004, would
have increased by $55.2 million. A summary of the accounting for the initial adoption of FIN No. 47, as of Dec. 31, 2005, is as follows:
Plant Regulatory Long-Term
(Thousands of dollars) Assets Assets Liabilities
Reflect retirement obligation when liability incurred $ 57,003 $ – $ 57,003
Record accretion of liability to adoption date – 46,883 46,883
Record depreciation of plant to adoption date (8,283) 8,283 –
Net impact of FASB Interpretation No. 47 $48,720 $55,166 $103,886
Indeterminate Asset Retirement Obligations PSCo has underground gas storage facilities that have special closure requirements for
which the final removal date cannot be determined.
Removal Costs Xcel Energy accrues an obligation for plant removal costs for other generation, transmission and distribution facilities of its
utility subsidiaries. Generally, the accrual of future non-ARO removal obligations is not required. However, long-standing ratemaking practices
approved by applicable state and federal regulatory commissions have allowed provisions for such costs in historical depreciation rates.
These removal costs have accumulated over a number of years based on varying rates as authorized by the appropriate regulatory entities.
Given the long periods over which the amounts were accrued and the changing of rates through time, the utility subsidiaries have estimated the
amount of removal costs accumulated through historic depreciation expense based on current factors used in the existing depreciation rates.
Accordingly, the recorded amounts of estimated future removal costs are considered Regulatory Liabilities under SFAS No. 71. Removal costs
by entity are as follows at Dec. 31:
(Millions of dollars) 2005 2004
NSP-Minnesota $334 $323
NSP-Wisconsin 86 81
PSCo 377 383
SPS 98 104
Total Xcel Energy $895 $891
74 XCEL ENERGY 2005 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS