Allegheny Power 2011 Annual Report Download - page 43

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28
Revenues —
Total revenues increased by $19 million principally due to higher peak loads in 2010 compared to 2009.
Operating Expenses —
Total operating expenses decreased by $4 million principally due to decreased property taxes and decreased pensions and OPEB
costs primarily due to lower net actuarial losses.
Other Expense —
Other expense increased $2 million in 2010 due to higher interest expense associated with higher average debt levels in 2010
compared to 2009.
Competitive Energy Services — 2010 Compared to 2009
Net income decreased by $235 million in 2010 compared to 2009. The decrease in net income was primarily due to $382 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 $1.1 billion in 2010 compared to the same period in 2009 primarily due to an increase in direct and
governmental 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:
Revenues by Type of Service
Direct and Governmental Aggregation
POLR
Wholesale
Transmission
RECs
Sale of OVEC participation interest
Other
Total Revenues
2010
(In millions)
$ 2,493
2,589
397
77
74
85
161
$ 5,876
2009
$ 779
2,863
632
73
17
252
155
$ 4,771
Increase
(Decrease)
$ 1,714
(274)
(235)
4
57
(167)
6
$ 1,105
The increase in direct and governmental aggregation revenues of $1.7 billion resulted from increased revenue from the acquisition
of new commercial and industrial customers as well as from new governmental 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 $274 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 Met-Ed and Penelec. 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 Met-Ed and Penelec resulted
from FES supplying volumes previously supplied through a third-party contract, and at prices that were slightly higher than in 2009.
Other wholesale revenues decreased $235 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.