Standard & Poor's Ratings Services has always incorporated asset retirement obligations (ARO) into its ratings analysis. With the recent implementation of the FASB's Statement No. 143, "Accounting for Asset Retirement Obligations" (SFAS 143), there has been substantially improved quantification and disclosure of these liabilities, thus facilitating this analysis. AROs are legal commitments to incur certain restoration and removal costs while disposing of, dismantling, or decommissioning long-lived assets. This article will discuss the analytical treatment resulting from the implementation of the new accounting standard on regulated U.S.-based electric utilities with rate-based nuclear power plants, as well as on U.S.-based companies with nonregulated or merchant ownership of nuclear power plants. For regulated utilities with nuclear plants in rate base Standard & Poor's
