Asset Retirement Obligations

During the nine months ended June 30, 2018, TVA's total asset retirement obligation ("ARO") liability increased $98 million as a result of revisions in estimates and periodic accretion, partially offset by settlement projects that were conducted during this period. The revisions in estimate are primarily related to changes in strategy of asset retirements at certain TVA facilities. The nuclear and non-nuclear accretion expenses were deferred as regulatory assets. During the nine months ended June 30, 2018, $108 million of the related non-nuclear regulatory assets were amortized into expense as these amounts were collected in rates. See Note 6. TVA maintains investment trusts to help fund its decommissioning obligations. See Note 14 — Investment Funds and Note 17 — Contingencies — Decommissioning Costs for a discussion of the trusts' objectives and the current balances of the trusts.



Asset Retirement Obligation Activity⁽¹⁾
	Nuclear		Non-Nuclear			Total
Balance at September 30, 2017	$	2,859	$	1,445		$	4,304
Settlements	—		(69		)	(69		)
Revisions in estimate	—		44			44
Additional obligations	—		1			1
Accretion (recorded as regulatory asset)	97		25			122
Balance at June 30, 2018	$	2,956	$	1,446		$	4,402

Note

(1) The current portion of ARO in the amount of $153 million and $128 million is included in Accounts payable and accrued liabilities at June 30, 2018, and September 30, 2017, respectively.

The 2015 Environmental Protection Agency ("EPA") CCR rule required TVA to conduct additional engineering and analysis, as well as implement a comprehensive groundwater monitoring program. As a result of this groundwater monitoring program, TVA reported to the Tennessee Department of Environment and Conservation ("TDEC") in May 2017 elevated levels of arsenic, lead, and fluoride in water samples taken at a few shallow-aquifer groundwater monitoring wells around the east coal ash impoundment at Allen Fossil Plant. TVA, under the oversight of TDEC, has been conducting a remedial investigation into the nature and extent of the contamination. In July 2017, TVA received a Remedial Site Investigation request from TDEC, outlining the objectives of the investigation and requiring TVA to provide a work plan. A Remedial Investigation Report summarizing the results of the investigation was submitted to TDEC in March 2018, and TDEC provided subsequent comments on the report to be addressed by TVA.

On July 20, 2018, TVA submitted responses to the comments on the Remedial Investigation Report, an initial Remedial Design Report, and a Groundwater Pre-design Work Plan to TDEC. In the aforementioned responses submitted to TDEC, it was stated that TVA is required to complete a National Environmental Policy Act ("NEPA") review that analyzes various alternatives prior to making a final decision on closure. TVA further stated that, as part of the NEPA review process, TVA would identify closure by removal as the preferred alternative for the Allen Fossil Plant east impoundment. Based upon this updated preferred closure methodology, the estimate for the associated asset retirement obligation for the Allen Fossil Plant east impoundment is expected to increase approximately $300 million in the fourth quarter of 2018.

TVA is expected to begin a NEPA review process at Allen Fossil Plant in October 2018 to analyze closure alternatives to support a final TVA decision on the appropriate closure methodology. Further adjustments to TVA’s asset retirement obligation may be required pending the outcome of the NEPA review and as cost estimates are refined.