Xcel Energy 2007 Annual Report Download - page 127

Manufactured Gas Plant Sites
Ashland Manufactured Gas Plant Site — NSP-Wisconsin was named a PRP for creosote and coal tar contamination at
a site in Ashland, Wis. The Ashland/Northern States Power Lakefront Superfund Site (Ashland site) includes property
owned by NSP-Wisconsin, which was previously an MGP facility and two other properties: an adjacent city lakeshore
park area, on which an unaffiliated third party previously operated a sawmill and an area of Lake Superior’s
Chequemegon Bay adjoining the park.
In September 2002, the Ashland site was placed on the National Priorities List. A determination of the scope and cost
of the remediation of the Ashland site is not currently expected until late 2008 following the submission of the
feasibility study in October 2007. NSP-Wisconsin continues to work with the Wisconsin Department of Natural
Resources (WDNR) to access state and federal funds to apply to the ultimate remediation cost of the entire site. In
November 2005, the Environmental Protection Agency (EPA) Superfund Innovative Technology Evaluation Program
(SITE) Program accepted the Ashland site into its program. As part of the SITE program, NSP-Wisconsin proposed
and the EPA accepted a site demonstration of an in situ, chemical oxidation technique to treat upland ground water
and contaminated soil. The fieldwork for the demonstration study was completed in February 2007 and the EPA is
scheduled to complete its assessment in early 2008. In 2007, NSP-Wisconsin spent $1.5 million in the development of
the work plan, the operation of the existing interim response action and other matters related to the site. In June 2007,
the EPA modified its remedial investigation report to establish final remedial action objectives (RAOs) and preliminary
remediation goals (PRGs) for the Ashland site. The RAOs and PRGs could potentially impact the development and
evaluation of remedial options for ultimate site cleanup. In September 2007, the EPA approved the series of reports
included in the remedial investigation (RI) report. The draft feasibility study, which develops and assesses the
alternatives for cleaning up the site, was prepared by NSP-Wisconsin and was submitted to the EPA in October 2007.
The range of remediation costs set forth in the draft feasibility study is between $35.8 million and $125.5 million. In
February 2008, the EPA provided written comments on the October 2007 draft feasibility study submitted by NSP-
Wisconsin. NSP-Wisconsin has until April 2, 2008 to submit a revised draft feasibility study based upon the EPA’s
comments.
In October 2004, the WDNR filed a lawsuit in Wisconsin state court for reimbursement of past oversight costs
incurred at the Ashland site between 1994 and March 2003 in the approximate amount of $1.4 million. The lawsuit
has been stayed. NSP-Wisconsin has recorded an estimate of its potential liability. All costs paid to the WDNR are
expected to be recoverable in rates.
In addition to potential liability for remediation and WDNR oversight costs, NSP-Wisconsin may also have liability for
natural resource damages (NRD) at the Ashland site. NSP-Wisconsin has indicated to the relevant natural resource
trustees its interest in engaging in discussions concerning the assessment of natural resources injuries and in proposing
various restoration projects in an effort to fully and finally resolve all NRD claims. NSP-Wisconsin is not able to
estimate its potential exposure for NRD at the site, but has recorded an estimate of its potential liability based upon
the minimum of its estimated range of potential exposure.
Until the EPA and the WDNR select a remediation strategy for the entire site and determine NSP-Wisconsin’s level of
responsibility, NSP-Wisconsin’s liability for the actual cost of remediating the Ashland site is not determinable. Since
NSP-Wisconsin cannot currently estimate the cost of remediating the Ashland site, that portion of the recorded liability
related to remediation is based upon the minimum of the estimated range of remediation costs, contained in the draft
feasibility study. NSP-Wisconsin has recorded a liability of $43.8 million for its potential liability related to the Ashland
site, including potential liability for remediation of the Ashland site, WDNR, oversight costs and NRD, outside legal
and consultant costs and work plan costs.
NSP-Wisconsin has deferred, as a regulatory asset, the costs accrued for the Ashland site based on an expectation that
the PSCW will continue to allow NSP-Wisconsin to recover payments for MGP-related 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.
External MGP remediation costs are subject to deferral in the Wisconsin retail jurisdiction and are reviewed for
prudence as part of the Wisconsin biennial retail rate case process.
In addition, in 2003, the Wisconsin Supreme Court rendered a ruling that reopens the possibility that NSP-Wisconsin
may be able to recover a portion of the remediation costs from its insurance carriers. Any insurance proceeds received
by NSP-Wisconsin will operate as a credit to ratepayers.
Fort Collins Manufactured Gas Plant Site — Prior to 1926, the Poudre Valley Gas Co. operated an MGP in Fort
Collins, Colo., not far from the Cache la Poudre River. In 1926, after acquiring the assets of the Poudre Valley
Gas Co., PSCo shut down the MGP site and has subsequently sold most of the property. In 2002, an oily substance
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