Progress Energy 2010 Annual Report Download - page 108

104
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
state of North Carolina, the state of Florida, or potentially
responsible party (PRP) groups as described below in
greater detail. Various organic materials associated with
the production of manufactured gas, generally referred
to as coal tar, are regulated under federal and state laws.
PEC and PEF are each PRPs at several manufactured gas
plant (MGP) sites. We are also currently in the process of
assessing potential costs and exposures at other sites.
These costs are eligible for regulatory recovery through
either base rates or cost-recovery clauses (See Note 7).
Both PEC and PEF evaluate potential claims against other
PRPs and insurance carriers and plan to submit claims
for cost recovery where appropriate. The outcome of
potential and pending claims cannot be predicted. A
discussion of sites by legal entity follows.
The EPA and a number of states are considering additional
regulatory measures that may affect management,
treatment, marketing and disposal of coal combustion
residues, primarily ash, from each of the Utilities’ coal-
fired plants. Revised or new laws or regulations under
consideration may impose changes in solid waste
classifications or groundwater protection environmental
controls. On June 21, 2010, the EPA proposed two
options for new rules to regulate coal combustion
residues. The first option would create a comprehensive
program of federally enforceable requirements for coal
combustion residues management and disposal as
hazardous฀waste.฀The฀other฀option฀would฀have฀the฀EPA฀
set performance standards for coal combustion residues
management facilities and regulate disposal of coal
combustion฀residues฀ as฀ nonhazardous฀ waste.฀ The฀ EPA฀
did not identify a preferred option. Under both options,
the EPA may leave in place a regulatory exemption for
approved beneficial uses of coal combustion residues
that are recycled. A final rule is expected in late 2011
or 2012. Compliance plans and estimated costs to meet
the requirements of new regulations will be determined
when฀ any฀ new฀ regulations฀ are฀ finalized.฀ We฀ are฀ also฀
evaluating the effect on groundwater quality from past
and current operations, which may result in operational
changes and additional measures under existing
regulations. These issues are also under evaluation by
state agencies. Certain regulated chemicals have been
measured in wells near our ash ponds at levels above
groundwater quality standards. Additional monitoring
and investigation will be conducted. Detailed plans and
cost estimates will be determined if these evaluations
reveal that corrective actions are necessary. We cannot
predict the outcome of this matter.
We measure our liability for environmental sites based
on available evidence, including our experience in
investigating and remediating environmentally impaired
sites. The process often involves assessing and developing
cost-sharing arrangements with other PRPs. For all sites,
as฀ assessments฀ are฀ developed฀ and฀ analyzed,฀ we฀ will฀
accrue costs for the sites in O&M on the Consolidated
Income Statements to the extent our liability is probable
and the costs can be reasonably estimated. Because the
extent of environmental impact, allocation among PRPs
for all sites, remediation alternatives (which could involve
either minimal or significant efforts), and concurrence of
the regulatory authorities have not yet reached the stage
where a reasonable estimate of the remediation costs
can be made, we cannot determine the total costs that
may be incurred in connection with the remediation of all
sites at this time. It is probable that current estimates will
change and additional losses, which could be material,
may be incurred in the future.
The following tables contain information about accruals
for probable and estimable costs related to various
environmental sites, which were included in other current
liabilities and other liabilities and deferred credits on the
Consolidated Balance Sheets:
(in millions) MGP and Other Sites
Remediation
of Distribution
and Substation
Transformers Total
Balance, December 31, 2009 $22 $20 $42
Amount accrued for
environmental loss
contingencies(a) 8 13 21
Expenditures for environmental
loss contingencies(a) (10) (18) (28)
Balance, December 31, 2010(b) $20 $15 $35
Balance, December 31, 2008 $31 $22 $53
Amount accrued for
environmental loss
contingencies(a) 3 13 16
Expenditures for environmental
loss contingencies(a) (12) (15) (27)
Balance, December 31, 2009(b) $22 $20 $42
(a) Amounts accrued and expenditures are for the years ended
December 31. For the year ended December 31, 2008, we accrued
$8 million for the remediation of MGP and other sites and $17 million
for the remediation of distribution and substation transformers.
For the year ended December 31, 2008, we spent $8 million for
the remediation of MGP and other sites and $28 million for the
remediation of distribution and substation transformers.
(b) Expected to be paid out over one to 15 years.