Allegheny Power 2014 Annual Report Download - page 28

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13
Regulated Distribution — 2014 Compared with 2013
Regulated Distribution's net income decreased $36 million in 2014 compared to 2013. Regulated Distribution's Pension and OPEB
mark-to-market adjustment increased $655 million which was partially offset by a reduction in regulatory asset impairment charges
of $305 million and an impairment on long-lived assets of $322 million incurred in 2013. Excluding the impact of these charges,
year over year earnings were impacted by higher distribution operating and maintenance costs, including the impact of higher
benefit costs, higher depreciation and property taxes, and higher interest expense from debt issuances. These items were partially
offset by slightly higher distribution deliveries, higher earnings associated with the October 2013 Harrison/Pleasants asset transfer,
and a lower effective tax rate.
Revenues —
The $382 million increase in total revenues resulted from the following sources:
For the Years Ended
December 31, Increase
Revenues by Type of Service 2014 2013 (Decrease)
(In millions)
Distribution services $ 3,694 $ 3,762 $ (68)
Generation sales:
Retail 4,043 3,959 84
Wholesale 661 330 331
Total generation sales 4,704 4,289 415
Transmission 500 448 52
Other 204 221 (17)
Total Revenues $ 9,102 $ 8,720 $ 382
The decrease in distribution services revenue is primarily related to a decrease in revenues from the ME and PN NUG riders as a
result of the expiration of certain NUG contracts in 2013 and a rider rate decrease associated with the recovery of energy efficiency
and other customer program costs for the Pennsylvania Companies. This was partially offset by higher electric distribution MWH
deliveries of 1.1% as described below, rate increases for the Ohio Companies associated with energy efficiency performance shared
savings and the DCR, and higher revenues for the Pennsylvania Companies associated with the recovery of Smart Meter program
costs. Certain Ohio energy efficiency programs permit the Ohio Companies to bill and collect shared savings revenues if energy
efficiency programs meet or exceed the state mandates. Additionally, the DCR provides for cost of service and rate base recovery
associated with incremental distribution plant investments in Ohio. Distribution deliveries by customer class are summarized in the
following table:
For the Years Ended
December 31,
Electric Distribution MWH Deliveries 2014 2013 Increase
(In thousands)
Residential 54,766 54,479 0.5%
Commercial 42,988 42,582 1.0%
Industrial 51,213 50,243 1.9%
Other 586 584 0.3%
Total Electric Distribution MWH Deliveries 149,553 147,888 1.1%
Higher deliveries to residential customers primarily reflect increased weather-related usage resulting from heating degree days that
were 7% above 2013, and 9% above normal, partially offset by cooling degree days that were 15% below 2013, and 12% below
normal. Increased deliveries to commercial customers reflect improving economic conditions across FirstEnergy's service territories.
In the industrial sector, increased sales to steel, automotive and shale gas customers were partially offset by lower sales to chemical
and paper customers. Distribution deliveries in 2015 are expected to increase to approximately 151 million MWHs primarily reflecting
an increase in the industrial sector resulting from shale gas related activity and remain flat in both the commercial and residential
sectors as compared to 2014 levels.