Asset Retirement Obligation

12 Months Ended

Dec. 31, 2017

Asset Retirement Obligation [Abstract]

26. ASSET RETIREMENT OBLIGATIONS

AROs mostly relate to the reclamation of land at the thermal, hydro and combustion turbine sites; and the disposal of polychlorinated biphenyls in transmission and distribution equipment and a pipeline site. Certain hydro, transmission and distribution assets may have additional AROs that cannot be measured as these assets are expected to be used for an indefinite period and, as a result, a reasonable estimate of the fair value of any related ARO cannot be made.

The change in ARO for the years ended December 31 is as follows:

millions of Canadian dollars	2017		2016
Balance, January 1	$	170	$	109
Additions (1)		2		48
Additions due to acquisition		-		9
Liabilities settled		(3)		(2)
Accretion included in depreciation expense		6		7
Accretion deferred to regulatory asset (included in property, plant and equipment)		-		(2)
Other		1		1
Change in foreign exchange rate		(4)		-
Balance, December 31	$	172	$	170
(1) Tampa Electric produces ash and other by-products, collectively known as CCRs, at its Big Bend and Polk power stations. The 2016 additions to ARO are to achieve compliance with the EPA’s CCR rule, which contains design and operating standards for CCR management units. In 2016, the FPSC approved Tampa Electric’s proposed CCR compliance program for cost recovery through the ECRC. However, additional petitions will be submitted for recovery of future project expense based on engineering studies currently being performed.

As at December 31, 2017 and 2016, some of the Company’s transmission and distribution assets may have additional conditional ARO which are not recognized in the consolidated financial statements as the fair value of these obligations could not be reasonably estimated, given there is insufficient information to do so. Management will continue to monitor these obligations and a liability will be recognized in the period in which an amount becomes determinable.