Xcel Energy 2014 Annual Report Download - page 160

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Asset Retirement Obligations
Recorded AROs — AROs have been recorded for property related to the following: electric production (nuclear, steam, wind, other
and hydro), electric distribution and transmission, natural gas production, natural gas transmission and distribution, and general
property. The electric production obligations include asbestos, ash-containment facilities, radiation sources, storage tanks, control
panels and decommissioning. The asbestos recognition associated with the electric production includes certain plants at NSP-
Minnesota, NSP-Wisconsin, 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, NSP-
Wisconsin, 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 were the in-service
dates of the various facilities. NSP-Minnesota and PSCo have also recorded AROs for the retirement and removal of assets at certain
wind production facilities for which the land is leased and removal is required by contract, with the origination dates being the in-
service date of the various facilities.
Xcel Energy has recognized an ARO for the retirement costs of natural gas mains and lines at NSP-Minnesota, NSP-Wisconsin and
PSCo and an ARO for the retirement of above ground gas gathering, extraction and wells related to gas storage facilities at 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. The electric and common general AROs include small obligations
related to storage tanks, radiation sources and office buildings. These assets have numerous 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.
In December 2014, the EPA issued a pre-publication version of a final rule imposing requirements for activities involving coal ash
waste. The ruling, once effective, will not result in the creation of a new legal obligation and Xcel Energy’s estimated cash flows for
the closure of coal ash landfills and impoundments are not expected to significantly increase as a result of the ruling.
For the nuclear assets, the ARO associated with the decommissioning of the NSP-Minnesota nuclear generating plants, Monticello and
PI, originated with the in-service date of the facility. See Note 14 for further discussion of nuclear obligations.
A reconciliation of Xcel Energy’s AROs for the years ended Dec. 31, 2014 and 2013 is as follows:
(Thousands of Dollars)
Beginning
Balance
Jan. 1, 2014 Liabilities Recognized Accretion Cash Flow Revisions
Ending
Balance
Dec. 31, 2014 (a)
Electric plant
Nuclear production decommissioning . . . . . . . . . . . . . . . . . . . $1,628,298 $ — $ 86,284 $ 323,365 $ 2,037,947
Steam and other production ash containment . . . . . . . . . . . . . 79,353 — 3,354 44,893 127,600
Steam and other production asbestos . . . . . . . . . . . . . . . . . . . . 50,827 747 2,972 15,152 69,698
Wind production. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,464 — 1,676 (880) 38,260
Electric distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,186 — 444 (37) 12,593
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,551 705 137 212 4,605
Natural gas plant
Gas transmission and distribution . . . . . . . . . . . . . . . . . . . . . . 1,198 20,935 76 127,755 149,964
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575 2,865 24 461 3,925
Common and other property
Common general plant asbestos. . . . . . . . . . . . . . . . . . . . . . . . 480 — 25 — 505
Common miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,458 — 53 23 1,534
Total liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,815,390 $ 25,252 $ 95,045 $ 510,944 $ 2,446,631
(a) There were no ARO liabilities settled during the year ended Dec. 31, 2014.
The aggregate fair value of NSP-Minnesota’s legally restricted assets, for purposes of funding future nuclear decommissioning, was
$1.7 billion as of Dec. 31, 2014, consisting of external investment funds.