PROPERTY, PLANT AND EQUIPMENT



Property, Plant and Equipment
As of December 31	2017			2016
Millions
Regulated Operations
Property, Plant and Equipment in Service		$4,523.7			$4,437.0
Construction Work in Progress	121.6			84.2
Accumulated Depreciation	(1,520.5		)	(1,426.1		)
Regulated Operations – Net	3,124.8			3,095.1
ALLETE Clean Energy
Property, Plant and Equipment in Service	482.5			472.3
Construction Work in Progress	144.9			101.0
Accumulated Depreciation	(60.8		)	(41.0		)
ALLETE Clean Energy – Net	566.6			532.3
U.S. Water Services
Property, Plant and Equipment in Service	24.8			19.5
Accumulated Depreciation	(10.4		)	(6.9		)
U.S. Water Services – Net	14.4			12.6
Corporate and Other (a)
Property, Plant and Equipment in Service	204.7			179.8
Construction Work in Progress	5.0			2.8
Accumulated Depreciation	(93.1		)	(81.4		)
Corporate and Other – Net	116.6			101.2
Property, Plant and Equipment – Net		$3,822.4			$3,741.2


(a)	Primarily includes BNI Energy and a small amount of non-rate base generation.

Depreciation is computed using the straight-line method over the estimated useful lives of the various classes of assets.



Estimated Useful Lives of Property, Plant and Equipment
Regulated Operations		ALLETE Clean Energy (a)	5 to 35 years
Generation	5 to 50 years	U.S. Water Services	3 to 39 years
Transmission	44 to 67 years	Corporate and Other	3 to 50 years
Distribution	18 to 65 years


(a)	ALLETE Clean Energy’s Property, Plant and Equipment consists primarily of WTGs with estimated useful lives ranging from 30 years to 35 years.

Asset Retirement Obligations. We recognize, at fair value, obligations associated with the retirement of certain tangible, long‑lived assets that result from the acquisition, construction, development or normal operation of the asset. Asset retirement obligations (AROs) relate primarily to the decommissioning of our coal-fired and wind energy facilities, and land reclamation at BNI Energy. AROs are included in Other Non-Current Liabilities on the Consolidated Balance Sheet. The associated retirement costs are capitalized as part of the related long-lived asset and depreciated over the useful life of the asset. Removal costs associated with certain distribution and transmission assets have not been recognized, as these facilities have indeterminate useful lives.

Conditional asset retirement obligations have been identified for treated wood poles and remaining polychlorinated biphenyl and asbestos-containing assets; however, removal liabilities have not been recognized because they are considered immaterial to our Consolidated Financial Statements.

Long-standing ratemaking practices approved by applicable state and federal regulatory authorities have allowed provisions for future plant removal costs in depreciation rates. These plant removal cost recoveries are classified either as AROs or as a regulatory liability for non-AROs. To the extent annual accruals for plant removal costs differ from accruals under approved depreciation rates, a regulatory asset has been established in accordance with GAAP for AROs. (See Note 4. Regulatory Matters.)

NOTE 2. PROPERTY, PLANT AND EQUIPMENT (Continued)



Asset Retirement Obligations
Millions
Obligation as of December 31, 2015		$131.4
Accretion	8.0
Liabilities Settled	(6.5		)
Revisions in Estimated Cash Flows	3.7
Obligation as of December 31, 2016	136.6
Accretion	7.6
Liabilities Settled	(5.9		)
Revisions in Estimated Cash Flows	(15.6		)
Obligation as of December 31, 2017		$122.7