Allegheny Power 2015 Annual Report Download - page 45

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29
OtherExpense—
Otherexpenseincreased$64millionin2014primarilyduetohigherinterestexpenseatMPresultingfromnewdebtissuancesof
$580millionassociatedwiththefinancingoftheOctober2013Harrison/Pleasantsassettransfer,anewdebtissuanceof$500million
inAugust2013atJCP&Landlowercapitalizedfinancingcostsrelatedprimarilytoadecreaseintherateusedforborrowedfunds.
IncomeTaxes—
RegulatedDistribution'seffectivetaxratewas32.8%and37.5%for2014and2013,respectively.Thedecreaseintheeffectivetax
rateprimarilyresultedfromchangesinstateapportionmentfactors,anincreaseinstateflowthroughincometaxbenefitsandother
realizedtaxbenefits.
RegulatedTransmission—2014Comparedwith2013
Netincomeincreased$9millionin2014comparedto2013.HigherTransmissionrevenuesassociatedwithincreasedcapital
investmentsandhighercapitalizedfinancingcostswerepartiallyoffsetbyhigheroperatingexpensesandinterestexpense.
Revenues—
Totalrevenuesincreased$38millionprincipallyduetohigherrevenueatATSIandTrAIL,reflectingrecoveryofincrementaloperating
expensesandahigherratebaseasincludedintheirannualratefilingseffectiveJune2013andJune2014.
Revenuesbytransmissionassetownerareshowninthefollowingtable:
FortheYearsEnded
December31,
RevenuesbyTransmissionAssetOwner
2014
2013
Increase
(Decrease)
(Inmillions)
ATSI
$
242
$
209
$
33
TrAIL
214
207
7
PATH
13
20
(7
)
Utilities
300
295
5
TotalRevenues
$
769
$
731
$
38
OperatingExpenses—
Totaloperatingexpensesincreased$40millionprincipallyduetohigherpropertytaxes,depreciationandotheroperatingexpenses.
OtherExpenses—
Totalotherexpensesdecreased$3millionprincipallyduetohighercapitalizedfinancingcostsof$41millionrelatedtoincreased
constructionworkinprogressbalancesassociatedwiththeEnergizingtheFutureinvestmentplan,partiallyoffsetbyincreased
interestexpenseresultingfromnewdebtissuancesof$1.0billionatFETand$400millionatATSI,theproceedsofwhich,inpart,
paidoffshorttermborrowings.
IncomeTaxes—
RegulatedTransmission'seffectivetaxratewas35.2%and37.6%for2014and2013,respectively.Thedecreaseintheeffectivetax
rateprimarilyresultedfromanincreaseinAFUDCequityflowthrough.
CES—2014Comparedwith2013
Operatingresultsdecreased$113millionin2014,comparedto2013.Lowerimpairmentchargesof$473millionassociatedwiththe
deactivationoftheHatfieldandMitchellgeneratingunitsandalowerlossondebtredemptionsof$141millionwerepartiallyoffset
withhigherPensionandOPEBmarktomarketadjustmentsof$434million.Excludingtheimpactofthesecharges,yearoveryear
earningswereimpactedbylowersalesvolumes,reflectingCES'sellingeffortsdiscussedbelowandanincreaseinpurchasedpower
andtransmissioncostsincurredtoservecontractsalesduetomarketconditionsassociatedwiththeextremeweathereventsin
January2014.Partiallyoffsettingtheseitemswereloweroperatingexpensesduetolowerretailrelatedcosts,lowergenerationcosts
resultingfromplantdeactivationsandassettransfers,andhighercapacityrevenuesfromhigherauctionprices.Additionally,operating
resultswereimpactedbya$78millionaftertaxgainonthesaleofcertainhydrofacilitiesinFebruary2014.