Vectren 2010 Annual Report Download - page 29

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27
will continue to evaluate the impact as these rules become available and whether any exemption will apply to the Company’s
and ProLiance’s use of derivative instruments.
Vectren’s subsidiaries have performance and warranty obligations, some of which are guaranteed by Vectren.
In the normal course of business, subsidiaries of Vectren issue performance bonds and other forms of assurance that commit
them to timely install infrastructure, operate facilities, pay vendors or subcontractors, and/or support warranty obligations.
Vectren Corporation, as the parent company, will from time to time guarantee its subsidiaries’ commitments. These guarantees
do not represent incremental consolidated obligations; rather, they represent parental guarantees of subsidiary obligations in
order to allow those subsidiaries the flexibility to conduct business without posting other forms of collateral. The Company has
not been called upon to satisfy any obligations pursuant to these parental guarantees.
From time to time, Vectren is subject to material litigation and regulatory proceedings.
From time to time, the Company, as well as its equity investees such as ProLiance, may be subject to material litigation and
regulatory proceedings including matters involving compliance with state and federal laws, regulations or other matters. There
can be no assurance that the outcome of these matters will not have a material adverse effect on Vectren’s business,
prospects, results of operations, or financial condition.
The investment performance of pension plan holdings and other factors impacting pension plan costs could impact
Vectren’s liquidity and results of operations.
The costs associated with the Company’s retirement plans are dependent on a number of factors, such as the rates of return on
plan assets; discount rates; the level of interest rates used to measure funding levels; changes in actuarial assumptions; future
government regulation; and Company contributions. In addition, the Company could be required to provide for significant
funding of these defined benefit pension plans. Such cash funding obligations could have a material impact on liquidity by
reducing cash flows for other purposes and could negatively affect results of operations.
Catastrophic events could adversely affect Vectren’s facilities and operations.
Catastrophic events such as fires, earthquakes, explosions, floods, ice storms, tornados, terrorist acts or other similar
occurrences could adversely affect Vectren’s facilities, operations, financial condition and results of operations.
Workforce risks could affect Vectren’s financial results.
The Company is subject to various workforce risks, including but not limited to, the risk that it will be unable to attract and retain
qualified personnel; that it will be unable to effectively transfer the knowledge and expertise of an aging workforce to new
personnel as those workers retire; that it will be unable to react to a pandemic illness; and that it will be unable to reach
collective bargaining arrangements with the unions that represent certain of its workers, which could result in work stoppages.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES Gas Utility Services
Indiana Gas owns and operates four active gas storage fields located in Indiana covering 58,100 acres of land with an
estimated ready delivery from storage capability of 6.0 BCF of gas with maximum peak day delivery capabilities of 151,000 MCF
per day. Indiana Gas also owns and operates three liquefied petroleum (propane) air-gas manufacturing plants located in
Indiana with the ability to store 1.5 million gallons of propane and manufacture for delivery 33,000 MCF of manufactured gas per
day. In addition to its company owned storage and propane capabilities, Indiana Gas has contracted with ProLiance for 16.7
BCF of interstate natural gas pipeline storage service with a maximum peak day delivery capability of 252,600 MMBTU per day.
Indiana Gas’ gas delivery system includes 13,000 miles of distribution and transmission mains, all of which are in Indiana except
for pipeline facilities extending from points in northern Kentucky to points in southern Indiana so that gas may be transported to
Indiana and sold or transported by Indiana Gas to ultimate customers in Indiana.
SIGECO owns and operates three active underground gas storage fields located in Indiana covering 6,100 acres of land with an
estimated ready delivery from storage capability of 6.3 BCF of gas with maximum peak day delivery capabilities of 108,500 MCF