Allegheny Power 2014 Annual Report Download - page 39

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24
Regulated Distribution — 2013 Compared with 2012
Net income decreased $39 million in 2013 compared to 2012. In 2013, the Regulated Distribution segment recognized an impairment
charge of $322 million related to the October 2013 Harrison/Pleasants asset transfer and impairment charges of $305 million on
regulatory assets associated with the recovery of marginal transmission losses for ME and PN and the recovery of RECs for the
Ohio Companies. These charges were partially offset by a lower Pension and OPEB mark-to-market adjustment of $541 million in
2013 as compared to 2012. Excluding these charges, year over year earnings were impacted by higher depreciation and property
taxes partially offset by distribution revenues associated with the Ohio Companies' DCR and higher distribution deliveries.
Revenues —
The $327 million decrease in total revenues resulted from the following sources:
For the Years Ended
December 31, Increase
Revenues by Type of Service 2013 2012 (Decrease)
(In millions)
Distribution services $ 3,762 $ 3,948 $ (186)
Generation sales:
Retail 3,959 4,104 (145)
Wholesale 330 347 (17)
Total generation sales 4,289 4,451 (162)
Transmission 448 450 (2)
Other 221 198 23
Total Revenues $ 8,720 $ 9,047 $ (327)
The decrease in distribution services revenue is primarily the result of a NJBPU-approved reduction to the JCP&L NUG Rider which
was effective March 1, 2012 and a decrease to the ME and PN NUG riders resulting from the expiration of certain NUG contracts
in 2012 and 2013. Additionally, lower recovery of energy efficiency expenses reflecting reduced costs was partially offset by an
increase in the Ohio Companies' DCR rider and slightly higher distribution deliveries. Distribution deliveries increased by 0.9% in
2013 compared to 2012. Distribution deliveries by customer class are summarized in the following table:
Year Ended December 31 Increase
Electric Distribution MWH Deliveries 2013 2012 (Decrease)
(In thousands)
Residential 54,479 53,993 0.9 %
Commercial 42,582 42,645 (0.1)%
Industrial 50,243 49,378 1.8 %
Other 584 585 (0.2)%
Total Electric Distribution MWH Deliveries $ 147,888 $ 146,601 0.9 %
Higher deliveries to residential customers primarily reflects increased weather-related usage resulting from heating degree days
that were 18% above 2012, and 2% above normal, partially offset by cooling degree days that were 15% below 2012, and 3%
above normal. Lower deliveries to the commercial sector primarily reflect increasing energy efficiency mandates and DR initiatives.
In the industrial sector, increased sales to steel, chemical, and shale gas customers were partially offset by lower sales to automotive
and paper customers. Additionally, FirstEnergy expects additional growth in the industrial sector beyond 2013 for potential shale
gas projects. As the gas fields are developed, the opportunity for additional manufacturing expansion could further support growth.