Allegheny Power 2011 Annual Report Download - page 33

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18
Source of Change in Purchased Power
Pre-merger companies:
Purchases from non-affiliates:
Change due to decreased unit costs
Change due to increased volumes
Purchases from FES:
Change due to increased unit costs
Change due to decreased volumes
Total pre-merger companies
Purchases by Allegheny companies
Net Decrease in Purchased Power Costs
Increase
(Decrease)
(In millions)
$ (826)
515
(311)
165
(1,601)
(1,436)
(1,747)
1,146
$ (601)
• Other operating expenses decreased $37 million, primarily due to the following:
Storm restoration maintenance and removal expenses increased $126 million primarily related to restoration
associated with Hurricane Irene and an October 2011 East Coast snowstorm, primarily impacting the JCP&L and
Met-Ed service territories. Approximately $120 million of the total costs were deferred for future recovery from
customers.
Energy efficiency program costs, which are also recovered through rates, increased by $92 million.
A provision for excess and obsolete material of $13 million was recognized in 2011 due to revised inventory
practices adopted in conjunction with the Allegheny merger.
The absence of a $7 million favorable JCP&L labor settlement that occurred in 2010.
Transmission expenses decreased $285 million primarily due to reduced congestion costs for Met-Ed and Penelec
in 2011.
• Pensions and OPEB mark-to-market adjustment charges increased $132 million as a result of higher net actuarial losses.
• Depreciation expense increased $24 million primarily due to property additions since 2010.
• Net amortization of regulatory assets decreased $368 million primarily due to reduced net PJM transmission and transition
cost recovery, the absence of a $35 million regulatory asset impairment recognized in 2010 associated with the filing of
the Ohio Companies' ESP on March 23, 2010, and the deferral of recoverable costs from Hurricane Irene and the 2011
East Coast snowstorm, partially offset by increased energy efficiency cost recovery.
• General Taxes increased $10 million due to the absence of a favorable property tax settlement recognized in 2010.
• Impairments of long-lived assets totaling $87 million in 2011 resulted from the pending shutdown of three coal-fired plants
in West Virginia.