Vectren 2013 Annual Report Download - page 11

Download and view the complete annual report

Please find page 11 of the 2013 Vectren annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 140

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

9
PART I
ITEM 1. BUSINESS
Description of the Business
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 570,000 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 sells excess power into the MISO. Indiana Gas and SIGECO generally do business as Vectren
Energy Delivery of Indiana. VEDO provides energy delivery services to over 312,000 natural gas customers located near
Dayton in west central Ohio.
The Company, through Vectren Enterprises, Inc. (Enterprises), is involved in nonutility activities in three primary business
areas: Infrastructure Services, Energy Services, and Coal Mining. Infrastructure Services provides underground pipeline
construction and repair services. Energy Services provides performance contracting and renewable energy services. Coal
Mining owns, and through its contract miners, mines and then sells coal. Enterprises also has other legacy businesses that
have invested in energy-related opportunities and services, real estate, and a leveraged lease, among other investments. Prior
to June 18, 2013, the Company, through Enterprises, was involved in nonutility activities in its Energy Marketing business area.
Energy Marketing marketed and supplied natural gas and provided energy management services through ProLiance Holdings,
LLC (ProLiance) and Vectren Source (Source). Pursuant to service contracts, Energy Marketing provided the Company's
regulated utilities natural gas supply services. All of the above are collectively referred to as the Nonutility Group. Enterprises
supports the Company's regulated utilities by providing infrastructure services and coal.
Narrative Description of the Business
The Company segregates its operations into three groups: the Utility Group, the Nonutility Group, and Corporate and Other. At
December 31, 2013, the Company had $5.1 billion in total assets, with $4.1 billion (80 percent) attributed to the Utility Group,
and $1.0 billion (20 percent) attributed to the Nonutility Group. Net income for the year ended December 31, 2013, was $136.6
million, or $1.66 per share of common stock, with net income of $141.8 million attributed to the Utility Group, a loss of $4.5
million attributed to the Nonutility Group, and a loss of $0.7 million attributed to Corporate and Other. Net income for the year
ended December 31, 2012, was $159.0 million, or $1.94 per share of common stock. For further information regarding the
activities and assets of operating segments within these Groups, refer to Note 21 in the Company’s Consolidated Financial
Statements included in Item 8. Following is a more detailed description of the Utility Group and Nonutility Group.