Xcel Energy 2011 Annual Report Download - page 142

132
NSP-Minnesota NOV — In June 2011, NSP-Minnesota received an NOV from the EPA alleging violations of the NSR
requirements of the CAA at the Sherco plant and Black Dog plant in Minnesota. The NOV specifically alleges that various
maintenance, repair and replacement projects undertaken at the plants in the mid 2000s should have required a permit under the
NSR process. NSP-Minnesota believes it has acted in full compliance with the CAA and NSR process. NSP-Minnesota also
believes that the projects identified in the NOV fit within the routine maintenance, repair and replacement exemption contained
within the NSR regulations or are otherwise not subject to the NSR requirements. NSP-Minnesota disagrees with the assertions
contained in the NOV and intends to vigorously defend its position. It is not known whether any costs would be incurred as a
result of this NOV.
Asset Retirement Obligations
Recorded AROs — AROs have been recorded for plant related to nuclear production, steam production, wind production, electric
transmission and distribution, natural gas transmission and distribution and office buildings. The steam production obligation
includes asbestos, ash-containment facilities, radiation sources and decommissioning. The asbestos recognition associated with
the steam production includes certain plants at NSP-Minnesota, PSCo and SPS. NSP-Minnesota also recorded asbestos
recognition for its general office building. This asbestos abatement removal obligation originated in 1973 with the CAA, which
applied to the demolition of buildings or removal of equipment containing asbestos that can become airborne on removal. AROs
also have been recorded for NSP-Minnesota, PSCo and SPS steam production related to ash-containment facilities such as bottom
ash ponds, evaporation ponds and solid waste landfills. The origination dates on the ARO recognition for ash-containment
facilities at steam plants was the in-service dates of the various facilities. Additional AROs have been recorded for NSP-
Minnesota and PSCo steam production plant related to radiation sources in equipment used to monitor the flow of coal, lime and
other materials through feeders.
Xcel Energy recognized an ARO for the retirement costs of natural gas mains at NSP-Minnesota, NSP-Wisconsin and PSCo. In
addition, an ARO was recognized for the removal of electric transmission and distribution equipment at NSP-Minnesota, NSP-
Wisconsin, PSCo and SPS, which consists of many small potential obligations associated with PCBs, mineral oil, storage tanks,
treated poles, lithium batteries, mercury and street lighting lamps. These electric and natural gas assets have many in-service dates
for which it is difficult to assign the obligation to a particular year. Therefore, the obligation was measured using an average
service life.
For the nuclear assets, the ARO associated with the decommissioning of the NSP-Minnesota nuclear generating plants,
Monticello and Prairie Island, originated with the in-service date of the facility. See Note 14 for further discussion of nuclear
obligations.
A reconciliation of the beginning and ending aggregate carrying amounts of Xcel Energy’s AROs is shown in the table below for
the years ended Dec. 31, 2011 and Dec. 31, 2010:
(Thousands of Dollars)
Beginning
Balance
Jan. 1, 2011
Liabilities
Recognized
Liabilities
Settled Accretion
Revisions
to Prior
Estimates
Ending
Balance
Dec. 31, 2011
Electric plant
Steam production asbestos
.................
$ 93,629
$
-
$
(514)
$
5,958
$
(44,731)
$
54,342
Steam production ash containment
..........
19,688 - -
919
20,551 41,158
Steam production radiation sources
.........
166 - -
12
(39) 139
Nuclear production decommissioning
.......
809,474 - -
57,641
615,626(a) 1,482,741
Wind production
..........................
38,553 - -
1,962
- 40,515
Electric transmission and distribution
........
5,727 - -
290
24,687 30,704
Natural gas plant
Gas transmission and distribution
...........
996 - -
63
- 1,059
Common and other property
Common general plant asbestos
.............
1,077 - -
58
- 1,135
Total liability
............................
$ 969,310
$
-
$
(514)
$
66,903
$
616,094
$
1,651,793
(a) The increase is primarily due to the completion of NSP-Minnesota’s triennial nuclear decommissioning study, which reflects an increase in the estimated
cost of retirement, increase in the escalation rates for each nuclear unit and a decrease in the discount rate used to calculate the net present value of the future
cash flows.
The fair value of NSP-Minnesota’s legally restricted assets, for purposes of settling the nuclear ARO, was $1.3 billion as of
Dec. 31, 2011, including external nuclear decommissioning investment funds and internally funded amounts.