Vectren 2012 Annual Report Download - page 66

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64
can be reasonably expected to fully perform under the terms of the contract. Counter-party credit risk is monitored regularly and
positions are adjusted appropriately to manage risk. Further, tools such as netting arrangements and requests for collateral are
also used to manage credit risk. Market risk is the adverse effect on the value of a financial instrument that results from a
change in commodity prices or interest rates. The Company attempts to manage exposure to market risk associated with
commodity contracts and interest rates by establishing parameters and monitoring those parameters that limit the types and
degree of market risk that may be undertaken.
The Company’s customer receivables associated with utility operations are primarily derived from residential, commercial, and
industrial customers located in Indiana and west central Ohio. However, some exposure from nonutility operations extends
throughout the United States. The Company manages credit risk associated with its receivables by continually reviewing
creditworthiness and requests cash deposits or refunds cash deposits based on that review. Credit risk associated with certain
investments is also managed by a review of creditworthiness and receipt of collateral. In addition, credit risk is mitigated by
regulatory orders that allow recovery of all uncollectible accounts expense in Ohio and the gas cost portion of uncollectible
accounts expense in Indiana based on historical experience.