Allegheny Power 2013 Annual Report Download - page 43

Download and view the complete annual report

Please find page 43 of the 2013 Allegheny Power annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 176

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176

28
initiatives. In the industrial sector, MWH deliveries decreased 1.4%, reflecting slight decreases in deliveries to steel, petroleum and
automotive customers.
The following table summarizes the price and volume factors contributing to the $897 million decrease in generation revenues for
the pre-merger companies in 2012 compared to 2011:
Source of Change in Generation Revenues Decrease
(In millions)
Retail:
Effect of decrease in sales volumes $ (587)
Change in prices (139)
(726)
Wholesale:
Effect of decrease in sales volumes (120)
Change in prices (51)
(171)
Decrease in Generation Revenues $ (897)
The decrease in retail generation sales volume was primarily due to increased customer shopping in the Utilities' service territories
in 2012, compared with 2011. This increased customer shopping, which does not impact earnings for the Regulated Distribution
segment, is expected to continue. Total generation provided by alternative suppliers as a percentage of total MWH deliveries
increased to 79% from 76% for the Ohio Companies, 64% from 52% for ME's, PN's and Penn's service areas and 50% from 44%
for JCP&L. The decrease in retail generation prices resulted from the impact of lower auction prices on power supply prices in 2012
compared to 2011, partially offset by a full year of Ohio's RER Rider (recovers deferred costs relating to electric heating discounts).
The decrease in wholesale generation revenues of $171 million in 2012 resulted from the expiration and termination of NUG contracts
in August 2011 and April 2012, lower capacity revenues and lower PJM market prices.
Transmission revenues increased $81 million primarily due to the implementation of Ohio's NMB transmission rider in June of 2011,
which recovers network integration transmission service costs as describer further below.
The Allegheny companies added $157 million to revenues in 2012, including $136 million for distribution services and $43 million
from generation sales, partially offset by a decrease of $19 million of transmission revenues and $3 million of other revenues.
Operating Expenses —
Total operating expenses decreased by $936 million in 2012. Excluding the Allegheny Utilities, total operating expenses decreased
by $897 million due to the following:
• Purchased power costs, excluding the Allegheny Utilities, were $890 million lower in 2012 primarily due to a decrease in
volumes required from increased customer shopping, the impact of milder weather and lower unit power supply costs
during 2012 compared to 2011 as a result of lower auction prices.
Source of Change in Purchased Power
Increase
(Decrease)
(In millions)
Purchases from non-affiliates:
Change due to decreased unit costs $ (149)
Change due to decreased volumes (490)
(639)
Purchases from affiliates:
Change due to decreased unit costs (65)
Change due to decreased volumes (257)
(322)
Decrease in costs deferred 71
Decrease in Purchased Power Costs $ (890)