Asset Retirement Obligations

9 Months Ended

Sep. 30, 2015

Asset Retirement Obligation Disclosure [Abstract]

In the first quarter of 2015, an updated decommissioning study was completed for the Four Corners coal-fired plant, which resulted in an increase to the asset retirement obligation ("ARO") in the amount of $18 million.

In the second quarter of 2015, there was a revision in estimated cash flows for the Four Corners decommissioning, which resulted in an increase to the ARO in the amount of $6 million. In addition, APS recognized an ARO for Cholla as a result of new CCR environmental rules that were published in the Federal Register in the second quarter of 2015. See Note 8 for additional information related to the CCR environmental rules. This resulted in an increase to the ARO in the amount of $39 million, an increase in plant in service of $23 million and a reduction of the regulatory liability of $16 million.

The following schedule shows the change in our asset retirement obligations for the nine months ended September 30, 2015 (dollars in millions):



Asset retirement obligations at January 1, 2015	$	391
Changes attributable to:
Accretion expense	19
Settlements	(27		)
Estimated cash flow revisions	24
Newly incurred liabilities	42
Asset retirement obligations at September 30, 2015	$	449

Decommissioning activities for Four Corners Units 1-3 began in January 2014; thus, $27 million of the total asset retirement obligation of $449 million at September 30, 2015, is classified as a current liability on the balance sheet.

In accordance with regulatory accounting, APS accrues removal costs for its regulated utility assets, even if there is no legal obligation for removal. See detail of regulatory liabilities in Note 3.