Allegheny Power 2011 Annual Report Download - page 26

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Higher gross receipts taxes associated with increased competitive retail sales in Pennsylvania; and
Increased depreciation expenses from capital projects that were placed in service during 2011.
On January 5, 2012, we made a $600 million voluntary contribution to our pension plan bringing its funding level to 90% on an
accumulated benefit obligation basis.
Capital Expenditures Outlook
Our capital expenditures in 2012 are estimated to be $2.1 billion (excluding nuclear fuel), a decrease of approximately $393 million
from 2011. In addition to internal sources to fund capital requirements for 2012 and beyond, FirstEnergy expects to rely on external
sources of funds.
Capital expenditures for our Regulated Distribution segment are forecast to decrease by $63 million in 2012 from $1.1 billion in
2011. The expected decrease primarily reflects the absence of storm restoration costs related to Hurricane Irene and the October
2011 snowstorm. For our Regulated Independent Transmission segment, capital expenditures are expected to decrease to $105
million in 2012 from $190 million in 2011. The decrease reflects the completion of TrAIL's 500-kV transmission line in 2011.
Expenditures for Ohio and Pennsylvania energy efficiency and advanced metering initiatives are expected to be primarily recovered
from distribution customers and federal stimulus funding. Other capital investments in our transmission and distribution infrastructure
are planned to satisfy transmission capacity and reliability requirements, connect new load delivery and wholesale generation points,
and achieve cost-effective improvements in the reliability of our service.
For our Competitive Energy Services segment, capital expenditures are expected to increase by $32 million to $803 million in 2012.
The main drivers of the increase include steam generator replacement projects at Davis-Besse and Beaver Valley Unit 2 and turbine
rotor replacement projects at Perry and Beaver Valley Unit 2. Other planned generation investments provide for maintenance of
critical generation assets, delivering operational improvements to enhance reliability, supporting environmental compliance, and
advancing our generation to market strategy.
For 2013, we anticipate baseline capital expenditures of approximately $2.0 billion, which exclude any potential additional strategic
opportunities, future mandated spending, energy efficiency or environmental spending relating to MATS. Planned capital initiatives
are intended to promote reliability, improve operations, and support current environmental and energy efficiency directives.
Environmental Outlook
We continually strive to enhance environmental protection and remain good stewards of our natural resources. We devote significant
resources to environmental compliance efforts, and our employees share a commitment to, and accountability for, environmental
performance. Our corporate focus on continuous improvement is integral to our environmental programs.
We have spent more than $10 billion on environmental protection efforts since the initial passage of the Clean Air and Water Acts
in the 1970s, and these investments demonstrate our continuing commitment to the environment. Recent investments of $3.0 billion
at our Hatfield, Fort Martin and Sammis Plants, further reduced emissions of SO2 by over 95%, and NOx by at least 64% at these
facilities. Since 1990, we have reduced emissions of NOx by more than 76%, SO2 by more than 86%, and mercury by approximately
56%.
We have taken aggressive steps over the past two decades that have increased our generating capacity without adding to overall
CO2 emissions. For example, since 1990, we have reconfigured our fleet by retiring 1,312 MWs and committing to retire in the near
future 3,349 MWs of older, coal-based generation and adding more than 1,800 MWs of non-emitting capacity. Through these and
other actions, we have increased our generating capacity by nearly 15% over the same period while avoiding over 370 million metric
tons of CO2 emissions.
We have taken a leadership role in pursuing new ventures to test and develop new technologies that may achieve additional
reductions in CO2 emissions. These include:
Sales of over 1 million MWH per year of wind generation.
CO2 sequestration testing to gain a better understanding of the potential for geological storage of CO2.
Supporting afforestation - growing forests on non-forested land - and other efforts designed to remove CO2 from the environment.
Reducing emissions of SF6 (sulfur hexafluoride) by nearly 15 metric tons, resulting in an equivalent reduction of nearly 315,000
metric tons of CO2, through the EPA's SF6 Emissions Reduction Partnership for Electric Power Systems.
Supporting research to develop and evaluate cost effective sorbent materials for CO2 capture including work by EPRI and The