Asset Retirement Obligation (Notes)

12 Months Ended

Dec. 31, 2019

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligation Disclosure [Text Block]

4. ASSET RETIREMENT OBLIGATIONS

The following table presents amounts recognized related to asset retirement obligations for the periods indicated (in millions):

	2019			2018
Balance at January 1	$	415		$	368
Additional liabilities incurred	19			19
Liabilities settled	(12		)	(14		)
Accretion expense	21			18
Change in estimated cash flows	58			24
Sale of plants	(71		)	—
Other	(2		)	—
Balance at December 31	$	428		$	415

The Company's asset retirement obligations include active ash landfills, water treatment basins and the removal or dismantlement of certain plants and equipment. The Company uses the cost approach to determine the initial value of ARO liabilities, which is estimated by discounting expected cash outflows to their present value using market-based rates at the initial recording of the liabilities. Cash outflows are based on the approximate future disposal costs as determined by market information, historical information or other management estimates. Subsequent downward revisions of ARO liabilities are discounted using the market-based rates that existed when the liability was initially recognized. These inputs to the fair value of the ARO liabilities are considered Level 3 inputs under the fair value hierarchy.

During the year ended December 31, 2019, the Company increased the asset retirement obligation and corresponding asset at IPL by $75 million and decreased the asset retirement obligation at DPL by $87 million. The increase at IPL reflects an increase to estimated ash pond closure costs, including groundwater remediation as required by the EPA under the Resource Conservation and Recovery Act. The decrease at DPL was attributable to a revision of the estimated liabilities resulting from the retirement of the Stuart and Killen facilities, and their subsequent transfer in December 2019.

During the year ended December 31, 2018, the $24 million increase in estimated cash flows was primarily attributable to an increase of $55 million in estimated ash pond closure costs and revised closure dates associated with an EPA rule regulating CCR at IPL and an increase in coal pile remediation costs at DPL. These were partially offset by a decrease of $32 million due to reductions in estimated closure costs associated with ash ponds and landfills at DPL resulting in a reduction to Cost of Sales on the Consolidated Statements of Operations.