Asset Retirement Obligation (Notes)

12 Months Ended

Dec. 31, 2020

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligation Disclosure [Text Block]

ASSET RETIREMENT OBLIGATIONS

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

	2020		2019
Balance at January 1	$	428	$	415
Additional liabilities incurred	42		19
Liabilities settled	(20)		(12)
Accretion expense	22		21
Change in estimated cash flows	3		58
Sale of plants	(13)		(71)
Other	—		(2)
Balance at December 31	$	462	$	428

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, 2020, the Company increased the asset retirement obligations and corresponding assets at Chile and Hawaii, by $17 million and $12 million, respectively, and decreased the asset retirement obligation at DPL by $13 million. The increase at Chile is mostly due to the initial recognition of the ARO at Planta Solar II. The increase at Hawaii reflects the shortened useful life of the coal plant resulting from the passage of Senate Bill 2629, which prohibits issuing or renewing permits for coal power plants after December 31,

2022 and calls for ceasing all coal burning for electricity generation by that date. The decrease at DPL is attributable to the sale of the Hutchings facility in December 2020.

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.