Xcel Energy 2002 Annual Report Download - page 72

We revise our estimates as facts become known but, at Dec. 31, 2002, our liability for the cost of remediating sites, including NRG,
for which an estimate was possible was $49 million, of which $11 million was considered to be a current liability. Some of the cost of
remediation may be recovered from:
– insurance coverage;
– other parties that have contributed to the contamination; and
– customers.
Neither the total remediation cost nor the final method of cost allocation among all PRPs of the unremediated sites has been determined.
We have recorded estimates of our share of future costs for these sites. We are not aware of any other parties’ inability to pay, nor do we
know if responsibility for any of the sites is in dispute.
Approximately $15 million of the long-term liability and $4 million of the current liability relate to a U.S. Department of Energy
assessment to NSP-Minnesota and PSCo for decommissioning a federal uranium enrichment facility. These environmental liabilities
do not include accruals recorded and collected from customers in rates for future nuclear fuel disposal costs or decommissioning costs
related to NSP-Minnesota’s nuclear generating plants. See Note 19 to the Consolidated Financial Statements for further discussion of
nuclear obligations.
Ashland MGP Site NSP-Wisconsin was named as one of three PRPs for creosote and coal tar contamination at a site in Ashland, Wis.
The Ashland site includes property owned by NSP-Wisconsin and two other properties: an adjacent city lakeshore park area and a small
area of Lake Superior’s Chequemegon Bay adjoining the park.
The Wisconsin Department of Natural Resources (WDNR) and NSP-Wisconsin have each developed several estimates of the ultimate
cost to remediate the Ashland site. The estimates vary significantly, between $4 million and $93 million, because different methods of
remediation and different results are assumed in each. The Environmental Protection Agency (EPA) and WDNR have not yet selected
the method of remediation to use at the site. Until the EPA and the WDNR select a remediation strategy for all operable units at the
site and determine the level of responsibility of each PRP, we are not able to accurately determine our share of the ultimate cost of
remediating the Ashland site.
In the interim, NSP-Wisconsin has recorded a liability of $19 million for its estimate of its share of the cost of remediating the portion
of the Ashland site that it owns, using information available to date and reasonably effective remedial methods. NSP-Wisconsin has
deferred, as a regulatory asset, the remediation costs accrued for the Ashland site because we expect that the Public Service Commission
of Wisconsin (PSCW) will continue to allow NSP-Wisconsin to recover payments for environmental remediation from its customers.
The PSCW has consistently authorized recovery in NSP-Wisconsin rates of all remediation costs incurred at the Ashland site, and has
authorized recovery of similar remediation costs for other Wisconsin utilities.
As an interim action, Xcel Energy proposed, and the EPA and WDNR have approved, a coal tar removal/groundwater treatment system
for one operable unit at the site for which NSP-Wisconsin has accepted responsibility. The groundwater treatment system began operating
in the fall of 2000. In 2002, NSP-Wisconsin installed additional monitoring wells in the deep aquifer to better characterize the extent
and degree of contaminants in that aquifer while the coal tar removal system is operational. In 2002, a second interim response action
was also implemented. As approved by the WDNR, this interim response action involved the removal and capping of a seep area in a
city park. Surface soils in the area of the seep were contaminated with tar residues. The interim action also included the diversion and
ongoing treatment of groundwater that contributed to the formation of the seep.
On Sept. 5, 2002, the Ashland site was placed on the National Priorities List (NPL). The NPL is intended primarily to guide the EPA
in determining which sites require further investigation. Resolution of Ashland remediation issues is not expected until 2004 or 2005.
NSP-Wisconsin continues to work with the WDNR to access state and federal funds to apply to the ultimate remediation cost of the
entire site.
Other MGP Sites NSP-Minnesota has investigated and remediated MGP sites in Minnesota and North Dakota. The MPUC allowed
NSP-Minnesota to defer, rather than immediately expense, certain remediation costs of four active remediation sites in 1994. This deferral
accounting treatment may be used to accumulate costs that regulators might allow us to recover from our customers. The costs are
deferred as a regulatory asset until recovery is approved, and then the regulatory asset is expensed over the same period as the regulators
have allowed us to collect the related revenue from our customers. In September 1998, the MPUC allowed the recovery of a portion of
these MGP site remediation costs in natural gas rates. Accordingly, NSP-Minnesota has been amortizing the related deferred remediation
costs to expense. In 2001, the North Dakota Public Service Commission allowed the recovery of part of the cost of remediating another
former MGP site in Grand Forks, N.D. The $2.9-million recovered cost of remediating that site was accumulated in a regulatory asset
that is now being expensed evenly over eight years. NSP-Minnesota may request recovery of costs to remediate other sites following the
completion of preliminary investigations.
page 86 xcel energy inc. and subsidiaries
notes to consolidated financial statements