NOTE 10 – ASSET RETIREMENT OBLIGATIONS

We account for current obligations associated with the future retirement of tangible long‑lived assets in accordance with the accounting guidance relating to asset retirement and environmental obligations. This guidance requires that legal obligations associated with the retirement of long‑lived assets be recognized at fair value at the time the liability is incurred and capitalized as part of the related long‑lived asset. Over time, the liability is adjusted to its present value by recognizing accretion expense and the capitalized cost of the long‑lived asset is depreciated over the estimated useful life of that asset. In the absence of quoted market prices, we determine fair value by using present value techniques in which estimates of future cash flows associated with retirement activities are discounted using a credit adjusted risk‑free rate and market risk premium. Upon settlement of an asset retirement obligation, we will apply payment against the estimated liability and incur a gain or loss if the actual retirement costs differ from the estimated recorded liability.

Coal mines: We have asset retirement obligations for the final reclamation costs and post‑reclamation monitoring related to the Colowyo Mine, the New Horizon Mine, and the Fort Union Mine. The New Horizon Mine started final reclamation in June 2017.

Generation: We, including through our undivided interest in jointly owned facilities, have asset retirement obligations related to equipment, dams, ponds, wells and underground storage tanks at the generating stations.

Aggregate carrying amounts of asset retirement obligations are as follows (dollars in thousands):


	Nine Months Ended
		September 30,
		2019
Asset retirement obligations at beginning of period		$	56,772
Liabilities incurred			9,900
Liabilities settled			(543)
Accretion expense			1,869
Change in cash flow estimate			286
Total asset retirement obligations at end of period		$	68,284
Less current asset retirement obligations at end of period			(2,294)
Long-term asset retirement obligations at end of period		$	65,990

The additional environmental reclamation obligation liability of $9.9 million was due to anticipated revision to the New Horizon mine reclamation plan to accommodate an alternative post mine land use as necessary for final mine reclamation. We continue to evaluate the New Horizon mine post reclamation obligation and will make adjustments to the obligation as needed.

We also have asset retirement obligations with indeterminate settlement dates. These are made up primarily of obligations attached to transmission and other easements that are considered by us to be operated in perpetuity and therefore the measurement of the obligation is not possible. A liability will be recognized in the period in which sufficient information exists to estimate a range of potential settlement dates as is needed to employ a present value technique to estimate fair value.

The asset retirement obligations are determined in accordance with the accounting guidance and are different than the amount of any guarantees, or self-bonds for, reclamation obligations that are based upon state requirements.