Allegheny Power 2010 Annual Report Download - page 35

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20
• The deferral of new regulatory assets decreased $136 million in 2010 due to CEI’s purchased power cost
deferrals that ended in early 2009.
• General taxes increased $12 million principally due to a benefit relating to Ohio KWH excise taxes that
was recognized in 2009 and applicable to prior years.
Other Expense –
Other expense increased $59 million in 2010 compared to 2009 primarily due to lower nuclear decommissioning trust
investment income ($37 million) and higher net interest expense associated with debt issuances by the Utilities during
2009 ($22 million).
Competitive Energy Services – 2010 Compared to 2009
Net income decreased to $258 million in 2010 compared to $517 million in 2009. The decrease in net income was
primarily due to $384 million of impairment charges ($240 million net of tax) in 2010. In addition, FES sold a 6.65%
participation interest in OVEC in 2010 compared to a 9% interest in 2009, accounting for $105 million of the reduction in
net income. Investment income from nuclear decommissioning trusts was also lower in 2010. These reductions were
partially offset by an increase in sales margins.
Revenues –
Total revenues increased $1,108 million in 2010 compared to the same period in 2009 primarily due to an increase in
direct and government aggregation sales and sales of RECs, partially offset by decreases in POLR sales to the Ohio
Companies, other wholesale sales and the reduced OVEC participation interest sale in 2010.
The increase in reported segment revenues resulted from the following sources:
Increase
Revenues by Type of Service 2010 2009 (Decrease)
(In millions)
Direct and Government Aggregation $ 2,494 $ 779 $ 1,715
POLR 2,436 2,863 (427)
Wholesale 550 632 (82)
Transmission 77 73 4
RECs 74 17 57
Sale of OVEC participation interest 85 252 (167)
Other 129 121 8
Total Revenues $ 5,845 $ 4,737 $ 1,108
The increase in direct and government aggregation revenues of $1.7 billion resulted from increased revenue from the
acquisition of new commercial and industrial customers as well as from new government aggregation contracts with
communities in Ohio that provide generation to 1.5 million residential and small commercial customers at the end of 2010
compared to approximately 600,000 customers at the end of 2009. Increases in direct sales were partially offset by lower
unit prices. Sales to residential and small commercial customers were also bolstered by summer weather in the delivery
area that was significantly warmer than in 2009.
The decrease in POLR revenues of $427 million was due to lower sales volumes and lower unit prices to the Ohio
Companies, partially offset by increased sales volumes and higher unit prices to the Pennsylvania Companies. The lower
sales volumes and unit prices to the Ohio Companies in 2010 reflected the results of the May 2009 CBP. The increased
revenues to the Pennsylvania Companies resulted from FES supplying Met-Ed and Penelec with volumes previously
supplied through a third-party contract and at prices that were slightly higher than in 2009.
Other wholesale revenues decreased $82 million due to reduced volumes, partially offset by higher prices. Lower sales
volumes in MISO were due to available capacity serving increased retail sales in Ohio partially offset by increased sales
under bilateral agreements in PJM.