Property, Plant and Equipment

6 Months Ended

Jun. 30, 2021

13. PROPERTY, PLANT AND EQUIPMENT

The disclosure in this note applies to AEP and APCo.

Asset Retirement Obligations

The Registrants record ARO in accordance with the accounting guidance for “Asset Retirement and Environmental Obligations” for legal obligations for asbestos removal and for the retirement of certain ash disposal facilities, wind farms, solar farms and certain coal mining facilities. The discussion below summarizes significant changes to the Registrants ARO recorded in 2021 and should be read in conjunction with the Property, Plant and Equipment note within the 2020 Annual Report.

In 2020, Virginia’s Governor signed House Bill 443 (HB 443) requiring APCo to close certain ash disposal units at the retired Glen Lyn Station by removal of all coal combustion material. In June 2020, APCo recorded a revision to increase estimated Glen Lyn Station ash disposal ARO liabilities by $199 million due to the enactment of HB 443. In June 2021, management completed fully designed and costed project plans for the Glen Lyn Station site and increased ash disposal ARO liabilities by an additional $79 million. HB 443 provides for the recovery of all costs associated with closure by removal through the Virginia environmental rate adjustment clause. APCo is permitted to record carrying costs on the unrecovered balance of closure costs at a weighted-average cost of capital approved by the Virginia SCC.

The following is a reconciliation of the aggregate carrying amounts of ARO for AEP and APCo:


Company	ARO as of December 31, 2020		Accretion Expense		Liabilities Incurred		Liabilities Settled		Revisions in Cash Flow Estimates		ARO as of June 30, 2021
	(in millions)
AEP (a)(b)(c)(d)	$	2,516.7	$	51.1	$	7.6	$	(18.1)	$	66.4	$	2,623.7
APCo (a)(d)	313.1		6.1		—		(3.7)		78.6		394.1

(a)Includes ARO related to ash disposal facilities.

(b)Includes ARO related to nuclear decommissioning costs for the Cook Plant of $1.83 billion and $1.80 billion as of June 30, 2021 and December 31, 2020, respectively.

(c)Includes ARO related to Sabine and DHLC.

(d)Includes ARO related to asbestos removal.