National Grid 2013 Annual Report Download - page 59

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58
distribution system), purge (clean of natural gas and PCB contaminants) and cap gas mains within its gas distribution and
transmission system when mains are retired in place; or dispose of sections of gas main when removed from the pipeline
system; (ii) cleaning and removal requirements associated with storage tanks containing waste oil and other waste
contaminants; and (iii) legal requirements to remove asbestos upon major renovation or demolition of structures and
facilities.
On December 17, 2010, LIPA requested information associated with its contractual rights under its PSA with the
Company to reduce (“Ramp Down”) the amount of capacity purchased from the Company. The PSA gives LIPA the
right to Ramp Down specified generating units at certain points during the term of the agreement. Per the terms of the
PSA, in the event of a Ramp Down: (a) LIPA would pay the Company a percentage of the present value of the remaining
capacity charges related to agreed-upon ramped down generating unit(s) due through the end of the previous PSA
termination date, May 27, 2013 and (b) the Company would then reduce the future monthly capacity charges for the
unit(s) billed to LIPA.
On June 23, 2011, National Grid Generation and LIPA entered into an amendment to the existing purchase and sale
agreement with LIPA (the “Ramp Down Amendment”), pursuant to which the parties agreed to ramp down electric
generating units located at the Glenwood and Far Rockaway New York generating facilities (“the Facilities”). The Ramp
Down Amendment was approved by the New York State Comptroller and the New York State Attorney General (“AG”);
and has been accepted by the FERC. Under the Ramp Down Amendment, the Ramp Down of Glenwood and Far
Rockaway was deemed to have occurred for purpose of calculating the economic impact (the net of items (a) and (b)
above) on May 27, 2011. Notwithstanding, the Company continued to provide capacity, energy, and ancillary services
from Glenwood and Far Rockaway to LIPA until such time as the units became eligible for retirement, pending
completion of certain transmission projects in the area currently served by these facilities. The electric generation
subsidiary of the Company has a legal obligation to remediate/demolish after these Facilities became eligible for
retirement in June 2012. Pursuant to the existence of this legal obligation, the Company recorded an asset retirement
obligation of $45 million during the year ended March 31, 2012.
he following table represents the changes in the asset retirement obligations for the years ended March 31, 2013 and
March 31, 2012:
March 31,
2013 2012
Balance as of beginning of year 119$ 69$
Electric generation retirement obligation -45
Accretion expense 55
Liabilities settled (19) (2)
Liabilities incurred in the current year -2
Balance as of end of year 105$ 119$
(in millions of dollars)