Vectren 2008 Annual Report Download - page 72

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70
$41.8 million in 2007, and $39.7 million in 2006. Expense associated with excise and utility receipts taxes are
recorded as a component of Taxes other than income taxes.
E. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
F. Inventories
Inventories consist of the following:
(In millions) 2008 2007
Gas in storage – at average cost 40.4$ 76.8$
Gas in storage – at LIFO cost 22.2 16.7
Total Gas in storage 62.6 93.5
Materials & supplies 33.4 33.0
Fuel (coal & oil) for electric generation 31.7 30.6
Other 3.3 3.8
Total inventories 131.0$ 160.9$
At December 31,
Based on the average cost of gas purchased during December, the cost of replacing gas in storage carried at LIFO
cost exceeded LIFO cost at December 31, 2008, and 2007, by approximately $35 million and $73 million,
respectively. Gas in storage of the Indiana regulated operations is stated at LIFO. All other inventories are carried
at average cost.
G. Utility Plant & Depreciation
Utility plant is stated at historical cost, including AFUDC. Depreciation rates are established through regulatory
proceedings and are applied to all in-service utility plant. The original cost of utility plant, together with
depreciation rates expressed as a percentage of original cost, follows:
(In millions)
Original Cost
Depreciation
Rates as a
Percent of
Original Cost Original Cost
Depreciation
Rates as a
Percent of
Original Cost
Gas utility plant 2,157.6$ 3.5% 2,077.5$ 3.6%
Electric utility plant 1,884.3 3.3% 1,815.8 3.3%
Common utility plant 47.9 2.9% 45.5 2.8%
Construction work in progress 245.5 - 124.1 -
Total original cost 4,335.3$ 4,062.9$
2008 2007
At December 31,
SIGECO and Alcoa Generating Corporation (AGC), a subsidiary of ALCOA, own the 300 MW Unit 4 at the
Warrick Power Plant as tenants in common. SIGECO's share of the cost of this unit at December 31, 2008 is $63.5
million with accumulated depreciation totaling $48.9 million. The construction work-in-progress balance
associated with SIGECO’s ownership interest totaled $111.5 million at December 31, 2008. AGC and SIGECO
also share equally in the cost of operation and output of the unit. SIGECO's share of operating costs is included in
Other operating expenses in the Consolidated Statements of Income.
Maintenance and repairs, including the cost of removal of minor items of property and planned major maintenance
projects, are charged to expense as incurred. When property that represents a retirement unit is replaced or
removed, the remaining historical value of such property is charged to Utility plant, with an offsetting charge to