Asset Retirement Obligations

12 Months Ended

Dec. 31, 2017

Asset Retirement Obligation Disclosure [Abstract]

In 2017, APS received a new decommissioning study for the Navajo Plant. This resulted in an increase to the ARO in the amount of $22 million, an increase in regulatory asset of $2 million and a reduction of the regulatory liability of $20 million.

In 2016, APS recognized an ARO for the Ocotillo steam units as a condition of the air permit (issued in 2016) to allow the construction and operation of five new turbine units. This resulted in an increase to the ARO in the amount of $10 million. In addition, 4CA acquired El Paso's share of Four Corners Units 4 and 5 and the associated ARO. This resulted in an increase to the ARO in the amount of $9 million. In addition, Four Corners spent $16 million in actual decommissioning costs. Finally, in 2016, APS received a new decommissioning study for the Palo Verde Generating Station. This resulted in an increase to the ARO in the amount of $151 million, an increase in plant in service of $131 million, and a reduction of the regulatory liability of $20 million.

The following table shows the change in our asset retirement obligations for 2017 and 2016 (dollars in thousands):



	2017		2016
Asset retirement obligations at the beginning of year	$	624,475	$	443,576
Changes attributable to:
Accretion expense	33,104		26,656
Settlements	—		(15,732		)
Estimated cash flow revisions	21,950		151,046
Newly incurred or acquired obligations	—		18,929
Asset retirement obligations at the end of year	$	679,529	$	624,475

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.