Vectren 2012 Annual Report Download - page 76

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VECTREN CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Nature of Operations
Vectren Corporation (the Company or Vectren), an Indiana corporation, is an energy holding company headquartered in
Evansville, Indiana. The Company’s wholly owned subsidiary, Vectren Utility Holdings, Inc. (Utility Holdings), serves as the
intermediate holding company for three public utilities: Indiana Gas Company, Inc. (Indiana Gas or Vectren North), Southern
Indiana Gas and Electric Company (SIGECO or Vectren South), and Vectren Energy Delivery of Ohio, Inc. (VEDO). Utility
Holdings also has other assets that provide information technology and other services to the three utilities. Utility Holdings’
consolidated operations are collectively referred to as the Utility Group. Both Vectren and Utility Holdings are holding
companies as defined by the Energy Policy Act of 2005 (Energy Act). Vectren was incorporated under the laws of Indiana on
June 10, 1999.
Indiana Gas provides energy delivery services to approximately 566,000 natural gas customers located in central and southern
Indiana. SIGECO provides energy delivery services to approximately 142,000 electric customers and approximately 110,000
gas customers located near Evansville in southwestern Indiana. SIGECO also owns and operates electric generation assets to
serve its electric customers and optimizes those assets in the wholesale power market. Indiana Gas and SIGECO generally do
business as Vectren Energy Delivery of Indiana. VEDO provides energy delivery services to over 310,000 natural gas
customers located near Dayton in west central Ohio.
The Company, through Vectren Enterprises, Inc. (Enterprises), is involved in nonutility activities in four primary business
areas: Infrastructure Services, Energy Services, Coal Mining, and Energy Marketing. Infrastructure Services provides
underground construction and repair services. Energy Services provides performance contracting and renewable energy
services. Coal Mining owns coal mines and sells coal. Energy Marketing markets and supplies natural gas and provides energy
management services. Enterprises also has other legacy businesses that have invested in energy-related opportunities and
services, real estate, and a leveraged lease, among other investments. All of the above are collectively referred to as the
Nonutility Group. Pursuant to service contracts, the Nonutility Group provides the Company's regulated utilities natural gas
supply services, coal, and infrastructure services.
2. Summary of Significant Accounting Policies
In applying its accounting policies, the Company makes judgments, assumptions, and estimates that affect the amounts
reported in these consolidated financial statements and related footnotes. Examples of transactions for which estimation
techniques are used include valuing pension and postretirement benefit obligations, deferred tax obligations, unbilled revenue,
uncollectible accounts, regulatory assets and liabilities, reclamation liabilities, and derivatives and other financial
instruments. Estimates also impact the depreciation of utility and nonutility plant and the testing of goodwill and other assets for
impairment. Recorded estimates are revised when better information becomes available or when actual amounts can be
determined. Actual results could differ from current estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, after elimination
of intercompany transactions.
Subsequent Events Review
Management performs a review of subsequent events for any events occurring after the balance sheet date but prior to the date
the financial statements are issued.
Cash & Cash Equivalents
All highly liquid investments with an original maturity of three months or less at the date of purchase are considered cash
equivalents. Cash and cash equivalents are stated at cost plus accrued interest to approximate fair value.