Allegheny Power 2014 Annual Report Download - page 32

Download and view the complete annual report

Please find page 32 of the 2014 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 159

  • 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

17
transfers, and higher capacity revenues from higher auction prices. Additionally, operating results were impacted by a $78 million
after-tax gain on the sale of certain hydro facilities in February 2014.
Revenues —
Total revenues decreased $209 million in 2014, compared to 2013, primarily due to decreased sales volumes in the Direct and
Governmental Aggregation sales channels, partially offset by higher volume in the Structured Sales channel. Revenues were also
impacted by higher unit prices as a result of increased channel pricing and ancillary pass through revenues associated with PJM
expenses incurred in January 2014 as well as higher capacity revenues, as described below.
The decrease in total revenues resulted from the following sources:
For the Years Ended
December 31, Increase
(Decrease)Revenues by Type of Service 2014 2013
(In millions)
Contract Sales:
Direct $ 2,359 $ 2,913 $ (554)
Governmental Aggregation 1,184 1,185 (1)
Mass Market 452 448 4
POLR 902 858 44
Structured Sales 522 421 101
Total Contract Sales 5,419 5,825 (406)
Wholesale 461 343 118
Transmission 220 144 76
Other 189 186 3
Total Revenues $ 6,289 $ 6,498 $ (209)
For the Years Ended
December 31, Increase
(Decrease)
MWH Sales by Channel 2014 2013
(In thousands)
Contract Sales:
Direct 44,012 56,145 (21.6)%
Governmental Aggregation 19,569 20,859 (6.2)%
Mass Market 6,773 6,761 0.2 %
POLR 15,708 15,758 (0.3)%
Structured Sales 12,814 9,047 41.6 %
Total Contract Sales 98,876 108,570 (8.9)%
Wholesale 680 1,250 (45.6)%
Total MWH Sales 99,556 109,820 (9.3)%
As discussed above, in 2014, CES began to reduce its exposure to weather-sensitive loads and eliminate load obligations that do
not adequately cover risk premiums. As part of this, CES eliminated future selling efforts in certain sales channels, such as Mass
Market, medium commercial-industrial and select large commercial-industrial (Direct), to focus on a selective mix of retail sales
channels, wholesale sales that hedge generation more effectively, and maintain a small open position to take advantage of market
upside opportunities resulting from volatility similar to that experienced in the first quarter of 2014 as further discussed below.
Support for current customers in the channels to be exited will remain through their respective contract terms.