Asset Retirement Obligations

12 Months Ended

Jun. 30, 2016

Asset Retirement Obligation Disclosure [Abstract]

Legal obligations

As of June 30, 2016 and 2015, we have accrued liabilities and related assets, net of accumulated depreciation, relative to the legal obligation to retire certain natural gas wells, storage tanks, mains and services. For asset retirement obligations related to regulated assets, accretion of the liability and depreciation of the asset retirement costs are recorded as regulatory assets, pursuant to regulatory accounting standards, as we recover the cost of removing our regulated assets through our depreciation rates.

The following is a summary of our asset retirement obligations as shown on the accompanying Consolidated Balance Sheets:



($000)	2016		2015

Balance, beginning of year	3,796		3,261
Liabilities incurred	28		21
Liabilities settled	(266	)	(232	)
Accretion	271		246
Revisions in estimated cash flows	89		500
Balance, end of year	3,918		3,796

We have an additional asset retirement obligation related to the retirement of wells located at our underground natural gas storage facility. Since we expect to utilize the storage facility as long as we provide natural gas to our customers, we have determined the underlying asset has an indeterminate life. Therefore, we have not recorded a liability associated with the cost to retire the wells.

Non-legal obligations

In accordance with established regulatory practices, we accrue costs of removal on long-lived assets through depreciation expense to the extent recovery of such costs is granted by the Kentucky Public Service Commission even though such costs do not represent legal obligations. In accordance with regulatory accounting standards, $487,000 and $417,000 of such accrued cost of removal was recorded as a regulatory liability on the accompanying Consolidated Balance Sheets as of June 30, 2016 and 2015, respectively.