Vectren 2008 Annual Report Download - page 71

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VECTREN CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Nature of Operations
Vectren Corporation (the Company or Vectren), an Indiana corporation, is an energy holding company
headquartered in Evansville, Indiana. The Company’s wholly owned subsidiary, Vectren Utility Holdings, Inc.
(Utility Holdings), serves as the intermediate holding company for three operating public utilities: Indiana Gas
Company, Inc. (Indiana Gas or Vectren North), Southern Indiana Gas and Electric Company (SIGECO or Vectren
South), and the Ohio operations (VEDO or Vectren Ohio). Utility Holdings also has other assets that provide
information technology and other services to the three utilities. Utility Holdings’ consolidated operations are
collectively referred to as the Utility Group. Both Vectren and Utility Holdings are holding companies as defined
by the Energy Policy Act of 2005 (Energy Act). Vectren was incorporated under the laws of Indiana on June 10,
1999.
Indiana Gas provides energy delivery services to over 568,000 natural gas customers located in central and southern
Indiana. SIGECO provides energy delivery services to over 141,000 electric customers and approximately 111,000
gas customers located near Evansville in southwestern Indiana. SIGECO also owns and operates electric
generation to serve its electric customers and optimizes those assets in the wholesale power market. Indiana Gas
and SIGECO generally do business as Vectren Energy Delivery of Indiana. The Ohio operations provide energy
delivery services to approximately 317,000 natural gas customers located near Dayton in west central Ohio. The
Ohio operations are owned as a tenancy in common by Vectren Energy Delivery of Ohio, Inc. (VEDO), a wholly
owned subsidiary of Utility Holdings (53 percent ownership), and Indiana Gas (47 percent ownership). The Ohio
operations generally do business as Vectren Energy Delivery of Ohio.
The Company, through Vectren Enterprises, Inc. (Enterprises), is involved in nonutility activities in three primary
business areas: Energy Marketing and Services, Coal Mining and Energy Infrastructure Services. Energy
Marketing and Services markets and supplies natural gas and provides energy management services. Coal Mining
mines and sells coal. Energy Infrastructure Services provides underground construction and repair services and
performance contracting and renewable energy services. Enterprises also has other legacy businesses that have
invested in energy-related opportunities and services, real estate, and leveraged leases, among other investments.
These operations are collectively referred to as the Nonutility Group. Enterprises supports the Company’s
regulated utilities pursuant to service contracts by providing natural gas supply services, coal, and infrastructure
services.
2. Summary of Significant Accounting Policies
A. Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned and majority
owned subsidiaries, after elimination of significant intercompany transactions.
B. Cash & Cash Equivalents
All highly liquid investments with an original maturity of three months or less at the date of purchase are
considered cash equivalents.
C. Revenues
Most revenues are recorded as products and services are delivered to customers. However, some nonutility
revenues are recognized using the percentage of completion method with such percentage based on project cost. To
more closely match revenues and expenses, the Company records revenues for all gas and electricity delivered to
customers but not billed at the end of the accounting period.
D. Excise and Utility Receipts Taxes
Excise taxes and a portion of utility receipts taxes are included in rates charged to customers. Accordingly, the
Company records these taxes received as a component of operating revenues, which totaled $45.0 million in 2008,