Xcel Energy 2015 Annual Report Download - page 151
Download and view the complete annual report
Please find page 151 of the 2015 Xcel Energy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.133
Environmental Contingencies
Xcel Energy has been or is currently involved with the cleanup of contamination from certain hazardous substances at several sites. In
many situations, the subsidiary involved believes it will recover some portion of these costs through insurance claims. Additionally,
where applicable, the subsidiary involved is pursuing, or intends to pursue, recovery from other PRPs and through the regulated rate
process. New and changing federal and state environmental mandates can also create added financial liabilities for Xcel Energy,
which are normally recovered through the regulated rate process. To the extent any costs are not recovered through the options listed
above, Xcel Energy would be required to recognize an expense.
Site Remediation — Various federal and state environmental laws impose liability, without regard to the legality of the original
conduct, where hazardous substances or other regulated materials have been released to the environment. Xcel Energy Inc.’s
subsidiaries may sometimes pay all or a portion of the cost to remediate sites where past activities of their predecessors or other parties
have caused environmental contamination. Environmental contingencies could arise from various situations, including sites of former
MGPs operated by Xcel Energy Inc.’s subsidiaries or their predecessors, or other entities; and third-party sites, such as landfills, for
which one or more of Xcel Energy Inc.’s subsidiaries are alleged to be a PRP that sent wastes to that site.
MGP Sites
Ashland MGP Site — NSP-Wisconsin has been named a PRP for contamination at a site in Ashland, Wis. The Ashland/Northern
States Power Lakefront Superfund Site (the Site) includes property owned by NSP-Wisconsin, previously operated by a MGP facility
(the Upper Bluff), and two other properties: an adjacent city lakeshore park area (Kreher Park); and an area of Lake Superior’s
Chequamegon Bay adjoining the park (the Sediments).
In 2010, the EPA issued its Record of Decision (ROD), including their preferred remedy for the Sediments which is a hybrid remedy
involving both dry excavation and wet conventional dredging methodologies (the Hybrid Remedy). A wet conventional dredging only
remedy (the Wet Dredge), contingent upon the completion of a successful Wet Dredge pilot study, is another possibility.
In 2012, under a settlement agreement, NSP-Wisconsin agreed to perform the remediation of the Phase I Project Area (which includes
the Upper Bluff and Kreher Park areas of the Site). Fieldwork began in 2012 and continues. Excavation and containment remedies
are complete. A long-term groundwater pump and treatment program is now underway. The final design was approved by the EPA in
late 2015. The current cost estimate for the cleanup of the Phase I Project Area is approximately $65 million, of which approximately
$47 million has already been spent.
Negotiations are ongoing between the EPA and NSP-Wisconsin regarding who will pay for or perform the cleanup of the Sediments
and which remedy will be implemented. The EPA’s ROD includes estimates that the cost of the Hybrid Remedy is between $63
million and $77 million, with a potential deviation in such estimated costs of up to 50 percent higher to 30 percent lower. NSP-
Wisconsin believes the Hybrid Remedy is not safe or feasible to implement. In 2015, NSP-Wisconsin constructed a breakwater at the
site to serve as wave attenuation and containment for a wet dredge pilot study and full scale sediment remedy at the site. The wet
dredge pilot study is anticipated to commence in spring 2016.
As a result of litigation and settlements approved by the U.S. District Court for the Western District of Wisconsin in 2015, three other
PRPs have contributed $15.9 million to the remediation of the site. Settlements in principle were also reached with the City of
Ashland and the County of Ashland in January 2016, and NSP-Wisconsin anticipates that its litigation efforts against other PRPs are
complete.
At Dec. 31, 2015 and 2014, NSP-Wisconsin had recorded a liability of $94.4 million and $107.6 million, respectively, for the Site
based upon potential remediation and design costs together with estimated outside legal and consultant costs; of which $17.0 million
and $28.9 million, respectively, was considered a current liability. NSP-Wisconsin’s potential liability, the actual cost of remediation
and the time frame over which the amounts may be paid are subject to change. NSP-Wisconsin also continues to work to identify and
access state and federal funds to apply to the ultimate remediation cost of the entire site. Unresolved issues or factors that could result
in higher or lower NSP-Wisconsin remediation costs for the Site include the cleanup approach implemented for the Sediments, which
party implements the cleanup, the timing of when the cleanup is implemented and whether federal or state funding may be directed to
help offset remediation costs at the Site.
NSP-Wisconsin has deferred the estimated site remediation costs as a regulatory asset. The PSCW has consistently authorized NSP-
Wisconsin rate recovery for all remediation costs incurred at the Site. In a December 2012 decision, the PSCW agreed to allow NSP-
Wisconsin to pre-collect certain costs, to amortize costs over a ten-year period, and to apply a three percent carrying cost to the
unamortized regulatory asset. In December 2015, the PSCW approved NSP-Wisconsin’s 2016 rate case request for an increase to the
annual recovery for MGP clean-up costs from $4.7 million to $7.6 million.