Asset Retirement Obilgations

12 Months Ended

Dec. 31, 2019

Asset Retirement Obligation [Abstract]

ASSET RETIREMENT OBLIGATIONS

AROs consist of the following (in millions):



	As of December 31,
	2019		2018
Trojan decommissioning activities	$	137	$	68
Utility plant	126		112
Non-utility property	16		17
Total asset retirement obligations	279		197
Less: current portion *	16		—
Noncurrent asset retirement obligations	$	263	$	197


*	Current portion of AROs are classified within Accrued expenses and other current liabilities in the consolidated balance sheets.

Trojan decommissioning activities represents the present value of future decommissioning costs for PGE’s 67.5% ownership interest in Trojan, which ceased operation in 1993. The remaining decommissioning activities primarily consist of the long-term operation and decommissioning of the ISFSI, an interim dry storage facility that is licensed by the Nuclear Regulatory Commission (NRC). The ISFSI will store the spent nuclear fuel at the former plant site until an off-site storage facility is available. Decommissioning of the ISFSI and final site restoration activities will begin once shipment of all the spent fuel to a USDOE facility is complete, which is not expected prior to 2059. In the third quarter of 2019, the NRC issued PGE a renewed license to operate the ISFSI through the first quarter of 2059. PGE updated its ARO to reflect the estimated costs through this date which increased the Trojan ARO by $69 million as of December 31, 2019. The Company also recorded accretion of $4 million and a reduction of $4 million due to settled liabilities.

Under a settlement agreement reached with the USDOE, the Company receives annual reimbursement from the USDOE for certain costs related to monitoring the ISFSI. Pursuant to this process, the USDOE reimbursed the co-owners $4 million in 2019 for costs incurred in 2018 and $4 million in 2018 for costs incurred in 2017 resulting from USDOE delays in accepting spent nuclear fuel.

Utility plant represents AROs that have been recognized for the Company’s thermal and wind generation sites, and distribution and transmission assets, the disposal of which is governed by environmental regulation. During 2019,

the Company recorded an overall increase in utility AROs of $14 million, with the change comprised of revisions in estimated cash flows of $13 million, accretion of $4 million, and a reduction of $3 million due to settled liabilities.

In 2019, the Company recorded an $11 million increase to its ARO related to Colstrip to revise the estimated cash flows associated with remediation of a number of settlement ponds that will require upgrading or closure to meet Montana Department of Environmental Quality regulatory requirements.

Non-utility property primarily represents AROs that have been recognized for portions of unregulated properties leased to third parties. Revisions to estimates for non-utility AROs are not subject to regulatory deferral. As such, additions in non-utility AROs are charged directly to the consolidated statement of income in the period in which the revisions are probable and reasonably estimable.

The following is a summary of the changes in the Company’s AROs (in millions):



	Years Ended December 31,
	2019			2018			2017
Balance as of beginning of year	$	197		$	167		$	161
Liabilities incurred	—			—			2
Liabilities settled	(9		)	(5		)	(3		)
Accretion expense	9			8			7
Revisions in estimated cash flows	82			27			—
Balance as of end of year	$	279		$	197		$	167

Pursuant to regulation, the amortization of utility plant AROs is included in depreciation expense and in customer prices. Any differences in the timing of recognition of costs for financial reporting and ratemaking purposes are deferred as a regulatory asset or regulatory liability. Recovery of Trojan decommissioning costs is included in PGE’s retail prices with an equal amount recorded in Depreciation and amortization expense.

PGE maintains a separate trust account, Nuclear decommissioning trust in the consolidated balance sheet, for funds collected from customers through prices to cover the cost of Trojan decommissioning activities.

The Oak Grove hydro facility and transmission and distribution plant located on public right-of-ways and on certain easements meet the requirements of a legal obligation and will require removal when the plant is no longer in service. An ARO liability is not currently measurable as management believes that these assets will be used in utility operations for the foreseeable future. Removal costs are charged to accumulated asset retirement removal costs, which is included in Regulatory liabilities on PGE’s consolidated balance sheets.