Asset Retirement Obligations (AROs)

PSEG, PSE&G and Power have recorded various AROs which represent legal obligations to remove or dispose of an asset or some component of an asset at retirement.

PSE&G has conditional AROs primarily for legal obligations related to the removal of treated wood poles and the requirement to seal natural gas pipelines at all sources of gas when the pipelines are no longer in service. PSE&G does not record an ARO for its protected steel and poly-based natural gas lines, as management believes that these categories of gas lines have an indeterminable life.

Power’s ARO liability primarily relates to the decommissioning of its nuclear power plants in accordance with NRC requirements. Power has an independent external trust that is intended to fund decommissioning of its nuclear facilities upon termination of operation. For additional information, see Note 8. Available-for-Sale Securities. Power also identified conditional AROs primarily related to Power’s fossil generation units and solar facilities, including liabilities for removal of asbestos, stored hazardous liquid material and underground storage tanks from industrial power sites, and demolition of certain plants, and the restoration of the sites at which they reside, when the plants are no longer in service. To estimate the fair value of its AROs, Power uses a probability weighted, discounted cash flow model which, on a unit by unit basis, considers multiple outcome scenarios that include significant estimates and assumptions, and are based on third party decommissioning cost estimates, cost escalation rates, inflation rates and discount rates.

The changes to the ARO liabilities for PSEG, PSE&G and Power during 2013 and 2014 are presented in the following table:




	PSEG			PSE&G			Power			Other
	Millions
ARO Liability as of January 1, 2013	$	627		$	250		$	374		$	3
Liabilities Settled	(5		)	(4		)	(1		)	—
Liabilities Incurred	17			13			4			—
Accretion Expense	23			—			23			—
Accretion Expense Deferred and Recovered in Rate Base (A)	15			15			—			—
ARO Liability as of December 31, 2013	$	677		$	274		$	400		$	3
Liabilities Settled	(2		)	(2		)	—			—
Liabilities Incurred	23			3			20			—
Accretion Expense	30			—			30			—
Accretion Expense Deferred and Recovered in Rate Base (A)	15			15			—			—
ARO Liability as of December 31, 2014	$	743		$	290		$	450		$	3


(A)	Not reflected as expense in Consolidated Statements of Operations

Asset Retirement Obligation [Line Items]

Asset Retirement Obligations (AROs)

PSEG, PSE&G and Power have recorded various AROs which represent legal obligations to remove or dispose of an asset or some component of an asset at retirement.

PSE&G has conditional AROs primarily for legal obligations related to the removal of treated wood poles and the requirement to seal natural gas pipelines at all sources of gas when the pipelines are no longer in service. PSE&G does not record an ARO for its protected steel and poly-based natural gas lines, as management believes that these categories of gas lines have an indeterminable life.

Power’s ARO liability primarily relates to the decommissioning of its nuclear power plants in accordance with NRC requirements. Power has an independent external trust that is intended to fund decommissioning of its nuclear facilities upon termination of operation. For additional information, see Note 8. Available-for-Sale Securities. Power also identified conditional AROs primarily related to Power’s fossil generation units and solar facilities, including liabilities for removal of asbestos, stored hazardous liquid material and underground storage tanks from industrial power sites, and demolition of certain plants, and the restoration of the sites at which they reside, when the plants are no longer in service. To estimate the fair value of its AROs, Power uses a probability weighted, discounted cash flow model which, on a unit by unit basis, considers multiple outcome scenarios that include significant estimates and assumptions, and are based on third party decommissioning cost estimates, cost escalation rates, inflation rates and discount rates.

The changes to the ARO liabilities for PSEG, PSE&G and Power during 2013 and 2014 are presented in the following table:




	PSEG			PSE&G			Power			Other
	Millions
ARO Liability as of January 1, 2013	$	627		$	250		$	374		$	3
Liabilities Settled	(5		)	(4		)	(1		)	—
Liabilities Incurred	17			13			4			—
Accretion Expense	23			—			23			—
Accretion Expense Deferred and Recovered in Rate Base (A)	15			15			—			—
ARO Liability as of December 31, 2013	$	677		$	274		$	400		$	3
Liabilities Settled	(2		)	(2		)	—			—
Liabilities Incurred	23			3			20			—
Accretion Expense	30			—			30			—
Accretion Expense Deferred and Recovered in Rate Base (A)	15			15			—			—
ARO Liability as of December 31, 2014	$	743		$	290		$	450		$	3


(A)	Not reflected as expense in Consolidated Statements of Operations