Vectren 2008 Annual Report Download - page 77

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75
Summarized Financial Information
Year Ended December 31,
(in millions) 2008 2007 2006
Summarized Statement of Income information:
Revenues 2,883.6$ 2,267.1$ 2,505.5$
Operating income 63.7 61.5 55.0
ProLiance's earnings 64.7 67.2 57.9
As of December 31,
(In millions) 2008 2007
Summarized balance sheet information:
Current assets 661.5$ 684.3$
Noncurrent assets 104.2 45.2
Current liabilities 514.0 436.9
Noncurrent liabilities 3.6 4.3
Equity 248.1 288.3
Vectren records its 61 percent share of ProLiance’s earnings after income taxes and an interest expense allocation.
Transactions with ProLiance
Purchases from ProLiance for resale and for injections into storage for the years ended December 31, 2008, 2007,
and 2006, totaled $940.1 million, $792.4 million, and $777.0 million, respectively. Amounts owed to ProLiance at
December 31, 2008, and 2007, for those purchases were $75.1 million and $81.5 million, respectively, and are
included in Accounts payable to affiliated companies in the Consolidated Balance Sheets. Amounts charged by
ProLiance for gas supply services are established by supply agreements with each utility.
Vectren received regulatory approval on April 25, 2006, from the IURC for ProLiance to provide natural gas supply
services to the Company’s Indiana utilities through March 2011. ProLiance has not provided gas supply/portfolio
administration services to VEDO since October 31, 2005.
Regulatory Matter
ProLiance self reported to the Federal Energy Regulatory Commission (FERC) in October 2007 possible non-
compliance with the FERC’s capacity release policies. ProLiance has taken corrective actions to assure that current
and future transactions are compliant. ProLiance is committed to full regulatory compliance and is cooperating
fully with the FERC regarding these issues. ProLiance believes that it has adequately reserved for this matter.
Although the outcome of any legal or regulatory proceedings resulting from these matters cannot be predicted, the
final resolution of these matters is not expected to have a material impact on the Company’s consolidated operating
results, financial position or cash flows.
Investment in Liberty Gas Storage
Liberty Gas Storage, LLC (Liberty) is a joint venture between a subsidiary of ProLiance and a subsidiary of Sempra
Energy (SE). ProLiance is the minority member with a 25 percent interest, which it accounts for using the equity
method. Liberty holds a long-term lease of storage and mineral rights associated with existing salt dome storage
caverns in southern Louisiana, near Sulphur, Louisiana. Liberty also owns a second site near Hackberry, Louisiana
with three additional existing salt dome storage caverns. The members anticipated it would provide high
deliverability storage services via the salt dome caverns at both locations and, once developed under current plans,
there would be approximately 35 billion cubic feet of working gas capacity at the two sites. ProLiance has a long
term contract for approximately 5 Bcf of working gas capacity. The total project investment at the Sulphur site
through December 31, 2008 is approximately $200 million. ProLiance’s portion of the investment is estimated at
approximately $50 million.
On October 27, 2008, SE confirmed to ProLiance that the completion of this phase of Liberty’s development at the
Sulphur site has been delayed by subsurface and well-completion problems. Corrective measures are ongoing and