Allegheny Power 2010 Annual Report Download - page 43

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28
Source of Change in Affiliated Generation Revenues
Increase
(Decrease)
(In millions)
Retail:
Effect of 36.3% decrease in sales volumes $ (837)
Change in prices 645
(192)
Wholesale:
Effect of 14.7% increase in sales volumes 97
Change in prices (30)
67
Net Decrease in Affiliated Generation Revenues $ (125)
Transmission revenues decreased $77 million due primarily to reduced loads following the expiration of the government
aggregation programs in Ohio at the end of 2008 and to the inclusion of the transmission-related component in the retail
rates in mid-2009. In 2009 FGCO sold 9% of its participation interest in OVEC resulting in a $252 million ($158 million,
after tax) gain. Other revenue increased $28 million primarily due to income associated with NGC's acquisition of equity
interests in the Perry and Beaver Valley Unit 2 leases.
Expenses -
Total expenses increased $279 million in 2009 due to the following factors:
• Fossil Fuel costs decreased $198 million due primarily to lower generation volumes ($307 million)
partially offset by higher unit prices ($109 million). Nuclear Fuel costs increased $13 million as higher unit
prices ($26 million) were partially offset by lower generation ($13 million).
• Purchased power costs increased $217 million due to a mark-to-market adjustment ($205 million)
relating to purchased power contracts for delivery in 2010 and 2011 and higher unit prices ($33 million)
that resulted primarily from higher capacity costs, partially offset by lower volumes purchased ($21
million) due to FGCO's reduced participation interest in OVEC.
• Fossil operating costs decreased $24 million due primarily to a reduction in contractor, material and labor
costs and increased resources dedicated to capital projects, partially offset by higher employee benefits.
• Nuclear operating costs increased $45 million due to an additional refueling outage during the 2009
period and higher employee benefits, partially offset by lower labor costs.
• Transmission expense increased $121 million due to transmission services charges related to the load
serving entity obligations in MISO, increased net congestion and higher loss expenses in MISO and PJM.
• Other expense increased $78 million due primarily to increased intersegment billings for leasehold costs
from the Ohio Companies and higher pension costs.
• Depreciation expense increased $27 million due to NGC's increased ownership interest in Beaver Valley
Unit 2 and Perry.
Other Income (Expense) –
Total other income in 2009 was $15 million compared to total other expense in 2008 of $142 million, resulting primarily
from a $155 million increase from gains on the sale of nuclear decommissioning trust investments. During 2009, the
majority of the nuclear decommissioning trust holdings were converted to more closely align with the liability being
funded.
Other – 2009 Compared to 2008
Our financial results from other operating segments and reconciling items resulted in a $100 million increase in net
income in 2009 compared to 2008. The increase resulted primarily from $200 million of favorable tax settlements, offset
by debt redemption costs of $90 million and by the absence of the gain from the sale of telecommunication assets
($19 million, net of taxes) in 2008.