Allegheny Power 2014 Annual Report Download - page 30

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15
Source of Change in Purchased Power Increase
(Decrease)
(In millions)
Purchases from non-affiliates:
Change due to increased unit costs $ 127
Change due to decreased volumes (134)
(7)
Purchases from affiliates:
Change due to increased unit costs 39
Change due to increased volumes 2
41
Capacity expense 58
Increase in costs deferred (15)
Increase in Purchased Power Costs $ 77
• Other operating expenses increased $308 million primarily due to:
• Higher transmission expenses of $130 million primarily due to PJM transmission costs associated with higher
congestion rates at MP as a result of market conditions related to extreme weather events in January 2014 and
higher PJM transmission costs resulting from the October 2013 Harrison/Pleasants asset transfer. The differences
between current transmission revenues and transmission costs incurred are deferred for future recovery, resulting
in no material impact on current period earnings.
• Higher distribution operating and maintenance expenses of $75 million resulting from higher maintenance
activities and storm related restoration expenses, including $26 million of storm expenses deferred for future
recovery.
• Higher vegetation management expenses in West Virginia of $33 million, which were deferred for future recovery
per authorization of the WVPSC.
• Higher retirement benefit costs of $33 million primarily reflecting higher net periodic benefit costs before the
pension and OPEB mark-to-market adjustments discussed below.
• Increased regulated generation operating and maintenance expenses of $23 million, reflecting increased costs
associated with the October 2013 Harrison/Pleasant asset transfer and a planned outage at Fort Martin.
• Pension and OPEB mark-to-market adjustments increased $655 million, primarily reflecting a lower discount rate and
revisions to mortality assumptions extending the expected life in key demographics used to measure related obligations
in 2014.
• Depreciation expense increased $52 million due to a higher asset base, including $22 million at MP associated with the
October 2013 Harrison/Pleasants asset transfer.
• Net regulatory asset amortization decreased $528 million primarily due to:
• Impairment charges on regulatory assets of $305 million associated with the recovery of marginal transmission
losses at ME and PN ($254 million) and the recovery of RECs for the Ohio Companies ($51 million) that occurred
in 2013,
• Decreased energy efficiency amortization reflecting a rate decrease associated with certain programs for the
Pennsylvania Companies ($67 million),
• Lower default generation service and NUG cost recovery in Pennsylvania ($48 million),
• Increased deferral of West Virginia vegetation management expenses ($33 million) and customer refunds
associated with the gain on the Pleasants plant resulting from the October 2013 Harrison/Pleasants asset transfer
($36 million), and
• Higher storm cost deferrals ($26 million).
• General taxes decreased $4 million primarily due to lower revenue-related taxes, partially offset by higher property taxes
and an increase in the West Virginia business and occupation tax as a result of the October 2013 Harrison/Pleasants
asset transfer.