Xcel Energy 2015 Annual Report Download - page 155
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Following a lawsuit alleging that the EPA had not completed its area designations in the time required by the CAA and under a consent
decree the EPA is requiring states to evaluate areas in three phases. The first phase includes areas near PSCo’s Pawnee plant and SPS’
Tolk and Harrington plants. The Pawnee plant recently installed an SO2 scrubber and the Tolk and Harrington Plants utilize low sulfur
coal to reduce SO2 emissions. The Colorado Department of Health and Environment along with the Texas Commission on
Environmental Quality (TCEQ) made recommendations for unclassified and nonattainment areas to the EPA in September 2015. The
EPA’s final decision is expected by summer 2016.
If an area is designated nonattainment, the respective states will need to evaluate all SO2 sources in the area. The state would then
submit an implementation plan for the respective areas which would be due in 18 months, designed to achieve the NAAQS within five
years. The TCEQ could require additional SO2 controls on one or more of the units at Tolk and Harrington. It is anticipated the areas
near the remaining Xcel Energy power plants would be evaluated in the next designation phase, ending December 2017. Xcel Energy
cannot evaluate the impacts of this ruling until the designation of nonattainment areas is made and any required state plans are
developed. Xcel Energy believes that, should SO2 control systems be required for a plant, compliance costs will be recoverable
through regulatory mechanisms and therefore does not expect a material impact on results of operations, financial position or cash
flows.
Revisions to the NAAQS for Ozone — In October 2015, the EPA revised the NAAQS for ozone by lowering the eight-hour standard
from 75 parts per billion (ppb) to 70 ppb. In areas where Xcel Energy operates, current monitored air quality concentrations comply with
the new standard in the Twin Cities Metropolitan Area in Minnesota and meet the 70 ppb level in the Texas panhandle. In documents
issued with the new standard, the EPA projects that both areas will meet the new standard. Current monitored air quality concentrations
in areas of Wisconsin, where Xcel Energy operates, are also below the new standard. The Denver Metropolitan Area is currently not
meeting the prior ozone standard and will therefore not meet the new, more stringent, standard. If not in attainment, impacted areas
would study the sources of nonattainment and make emission reduction plans to attain the new standards. These plans would be due to
the EPA in 2020. In conjunction with the CACJA, Xcel Energy has or plans to shut down coal-fired plants in the Denver area, has installed
NOx controls on Pawnee and Hayden Unit 1 and will finish installing NOx controls on Hayden Unit 2 in late 2016. The final designation
of nonattainment areas will be made in late 2017 based on air quality data years 2014 through 2016. Xcel Energy cannot evaluate the
impacts of this ruling in Colorado until the designation of nonattainment areas is made and any required state plan has been developed.
Xcel Energy believes that, should NOx control systems be required for a plant, compliance costs will be recoverable through regulatory
mechanisms and therefore does not expect a material impact on results of operations, financial position or cash flows.
NSP-Minnesota NOV — In 2011, NSP-Minnesota received an NOV from the EPA alleging violations of the New Source Review
(NSR) requirements of the CAA at the Sherco plant and Black Dog plant in Minnesota. The NOV alleges that various maintenance,
repair and replacement projects 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 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 electric production includes certain plants at NSP-Minnesota,
NSP-Wisconsin, PSCo and SPS. NSP-Minnesota also recognized asbestos obligations for its general office building. 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. 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.
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,
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.
In April 2015, the EPA published the final rule regulating the management and disposal of coal combustion byproducts (e.g., coal ash)
as a nonhazardous waste to the Federal Register. The rule became effective in October 2015. The estimated costs to comply with the
final rule were incorporated into the cash flow revisions in 2015.