Vectren 2012 Annual Report Download - page 40

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38
Electric Utility Margin (Electric utility revenues less Cost of fuel & purchased power)
Electric utility margin and volumes sold by customer type follows:
Year Ended December 31,
(In millions) 2012 2011 2010
Electric utility revenues $ 594.9 $ 635.9 $ 608.0
Cost of fuel & purchased power 192.0 240.4 235.0
Total electric utility margin $ 402.9 $ 395.5 $ 373.0
Margin attributed to:
Residential & commercial customers $ 258.5 $ 255.8 $ 241.2
Industrial customers 103.4 101.6 97.1
Municipals & other customers 8.9 8.5 8.5
Subtotal: Retail $ 370.8 $ 365.9 $ 346.8
Wholesale margin 32.1 29.6 26.2
Total electric utility margin $ 402.9 $ 395.5 $ 373.0
Electric volumes sold in GWh attributed to:
Residential & commercial customers 2,731.7 2,827.2 2,964.0
Industrial customers 2,710.5 2,744.8 2,630.3
Municipals & other 22.6 22.8 22.6
Total retail & firm wholesale volumes sold 5,464.8 5,594.8 5,616.9
Retail
Electric retail utility margins were $370.8 million for the year ended December 31, 2012 and, compared to 2011, increased by
$4.9 million. The impact year over year of new retail base rates that were effective May 3, 2011 was an increase in margin of
approximately $10.0 million. Offsetting a portion of the increase was a decline in small customer usage that lowered margin by
$2.6 million in 2012 as a result of energy conservation, net of an approved lost margin recovery mechanism. Weather also
impacted margin and, compared to normal temperatures, increased results $2.7 million and $3.0 million, in 2012 and 2011,
respectively. Due in part to the favorable weather in both periods, the Company provided refunds to customers in 2012 totaling
$2.6 million pursuant to the statutory earnings test. Indiana regulation includes a statutory mechanism that can limit a utility's
rolling twelve month net operating income to that authorized in its last general rate order, as adjusted for previous net operating
income levels that were below authorized levels. Should weather or other factors continue to increase net operating income in
future periods, the full benefit of those favorable impacts on the Company's electric utility may continue to be limited by the
statutory earnings test. Finally, though volumes sold to large customers during 2012 decreased, the impact on margin was small
as certain large customers have rate structures that include both a daily peak usage component, as well as a volumetric
component.
In 2011, electric retail utility margins increased $19.1 million compared to 2010. The impact of new base rates increased margin
$23.7 million. Management estimates the impact of weather, which was warmer than normal but cooler compared to the prior
year, to have decreased residential and commercial margin $7.4 million. Margin increased $2.4 million year over year due to
increased MISO operating costs that are recovered in margin. In 2010, management estimates that cooling weather 134
percent of normal increased margin compared to normal by $10.4 million.