Asset Retirement Obligations

During the nine months ended June 30, 2019, TVA's total asset retirement obligations ("ARO") liability increased $853 million as a result of recording an ARO for the Gallatin CCR facilities, additions to obligations, revisions in estimates and periodic accretion, partially offset by settlement activity from ongoing ARO projects at TVA facilities. The nuclear and non-nuclear accretion amounts were deferred as regulatory assets. During the nine months ended June 30, 2019, $108 million of the related non-nuclear regulatory assets were amortized into expense as these amounts were collected in rates. See Note 7. TVA maintains investment trusts to help fund its decommissioning obligations. See Note 15 — Investment Funds and Note 19 — 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, 2018	$	2,989		$	1,790		$	4,779
Settlements	(2		)	(56		)	(58		)
Revisions in estimate	—			89			89
Additional obligation	18			—			18
Gallatin CCR	—			667			667
Accretion (recorded as regulatory asset)	102			35			137
Balance at June 30, 2019	$	3,107		$	2,525		$	5,632

Note

(1) The current portion of ARO in the amount of $164 million and $115 million is included in Accounts payable and accrued liabilities at June 30, 2019, and September 30, 2018, respectively.

The revisions in non-nuclear estimates increased $89 million for the nine months ended June 30, 2019. As a result of recent experience in completing settlements at certain facilities, costs for asbestos abatement activities across TVA's fossil fleet increased $114 million. TVA also approved a change in the preferred closure method for the Allen West Impoundment from closure-in-place to closure-by-removal, which resulted in a cost increase of $33 million. Partially offsetting these increases was a $57 million decrease in costs for Paradise closure projects.

Additionally, as a result of the decision in TVA’s favor by the Sixth Circuit in the lawsuit brought by TSRA and TCWN, as well as the June 2019 consent decree filed in the case brought by TDEC, Gallatin discounted cash flows related to CCR closure and post-closure costs of $667 million have been recorded as Asset retirement obligations. The obligation is based upon the assumptions outlined in the consent decree, including a new lined facility will be permitted and constructed on the Gallatin site and existing CCR materials in the existing wet ash disposal impoundments at Gallatin will be moved to this new facility over a 20 year period. See Note 9 for additional details.