Asset Retirement Obligations

12 Months Ended

Dec. 31, 2014

Asset Retirement Obligations [Abstract]

19. Asset Retirement Obligations

(PPL)

WPD has recorded conditional AROs required by U.K. law related to treated wood poles, gas-filled switchgear and fluid-filled cables.

(PPL and PPL Energy Supply)

PPL Energy Supply has recorded AROs to reflect various legal obligations associated with the retirement of long-lived assets, the most significant of which relates to the decommissioning of the Susquehanna nuclear plant. Assets in the NDT funds are legally restricted for the purpose of settling this ARO. See Notes 16 and 20 for additional information on the nuclear decommissioning trust funds. Other AROs recorded relate to various environmental requirements for coal piles, ash basins and other waste basin retirements.

PPL Energy Supply has recorded several conditional AROs, the most significant of which is related to the removal and disposal of asbestos-containing material. In addition to the AROs that were recorded for asbestos-containing material, PPL Energy Supply identified other asbestos-related obligations, but was unable to reasonably estimate their fair values. PPL Energy Supply management was unable to reasonably estimate a settlement date or range of settlement dates for the remediation of all of the asbestos-containing material at certain of the generation plants. If economic events or other circumstances change that enable PPL Energy Supply to reasonably estimate the fair value of these retirement obligations, they will be recorded at that time.

PPL Energy Supply also identified legal retirement obligations associated with the retirement of a reservoir that could not be reasonably estimated due to an indeterminable settlement date.

(PPL and PPL Electric)

PPL Electric has identified legal retirement obligations for the retirement of certain transmission assets that could not be reasonably estimated due to indeterminable settlement dates. These assets are located on rights-of-way that allow the grantor to require PPL Electric to relocate or remove the assets. Since this option is at the discretion of the grantor of the right-of-way, PPL Electric is unable to determine when these events may occur.

(PPL, LKE, LG&E and KU)

LG&E's and KU's AROs are primarily related to the final retirement of assets associated with generating units. LG&E also has AROs related to natural gas mains and wells. LG&E's and KU's transmission and distribution lines largely operate under perpetual property easement agreements which do not generally require restoration upon removal of the property. Therefore, no material AROs are recorded for transmission and distribution assets. As described in Notes 1 and 6, LG&E's and KU's accretion and depreciation expense are recorded as a regulatory asset, such that there is no earnings impact. In 2014, AROs were revalued primarily due to updates in the estimated cash flows for ash ponds based on updated cost estimates. In 2013, AROs were revalued primarily due to updates in the estimated cash flows for ash ponds and CCR surface impoundments based on updated cost estimates.

(All Registrants except PPL Electric)

The changes in the carrying amounts of AROs were as follows.

		PPL				PPL Energy Supply
		2014		2013		2014		2013

ARO at beginning of period		$	705	$	552	$	404	$	375
	Accretion		48		38		32		29
	Obligations incurred		14		6		13		6
	Changes in estimated cash flow or settlement date		9		123		(16)		1
	Effect of foreign currency exchange rates		(2)		1
	Obligations settled		(13)		(15)		(8)		(7)
ARO at end of period		$	761	$	705	$	425	$	404

			LKE				LG&E				KU
			2014		2013		2014		2013		2014		2013

ARO at beginning of period			$	252	$	131	$	74	$	62	$	178	$	69
	Accretion			14		7		4		3		10		4
	Obligations incurred			1								1
	Changes in estimated cash flow
		or settlement date		23		122		1		17		22		105
	Obligations settled			(5)		(8)		(5)		(8)
ARO at end of period			$	285	$	252	$	74	$	74	$	211	$	178

Substantially all of the ARO balances are classified as noncurrent at December 31, 2014 and 2013.

See Note 13 for information on CCRs regulation that could require the recording of additional AROs in 2015.