Vectren 2008 Annual Report Download - page 81

Download and view the complete annual report

Please find page 81 of the 2008 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 123

  • 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

79
Prior to this transaction, Miller was 100 percent owned by Reliant Services, LLC (Reliant). Reliant, a 50 percent
owned strategic alliance with an affiliate of Duke Energy Corporation, is accounted for using the equity method of
accounting, and previously provided facilities locating and meter reading services to the Company’s utilities. In
2007, fees paid to Reliant were less than $0.1 million. For the years ended December 31, 2006, fees paid to Reliant
for locating and meter reading services as well as for Miller’s construction-related services totaled $20.6 million.
Amounts charged are market based. Amounts owed to Reliant totaled less than $0.1 million at December 31, 2007
and are included in Accounts payable to affiliated companies in the Consolidated Balance Sheets. Reliant exited
the meter reading and facilities locating businesses in 2006.
8. Income Taxes
Significant components of the net deferred tax liability follow:
(In millions) 2008 2007
Noncurrent deferred tax liabilities (assets):
Depreciation & cost recovery timing differences 372.6$ 309.3$
Leveraged leases 15.1 19.3
Regulatory assets recoverable through future rates 27.8 25.3
Demand side management programs - 7.9
Other comprehensive income (15.0) 7.2
Alternative minimum tax carryforward - (3.4)
Employee benefit obligations (36.2) (34.5)
Net operating loss & other carryforwards (2.1) (4.1)
Regulatory liabilities to be settled through future rates (15.7) (10.4)
Other – net 6.9 1.5
Net noncurrent deferred tax liability 353.4 318.1
Current deferred tax (assets)/liabilities:
Deferred fuel costs-net 2.6 (1.2)
Demand side management programs 8.8 -
Alternative minimum tax carryforward (11.2) (29.6)
Other – net (8.4) 0.9
Net current deferred tax (asset)/liability (8.2) (29.9)
Net deferred tax liability 345.2$ 288.2$
At December 31,
At December 31, 2008 and 2007, investment tax credits totaling $6.9 million and $8.2 million, respectively, are
included in Deferred credits and other liabilities. These investment tax credits are amortized over the lives of the
related investments. At December 31, 2008, the Company has alternative minimum tax carryforwards of $11.2
million, which do not expire. In addition, the Company has $2.1 million in net operating loss carryforwards that
relate to the acquisition of Miller, which will expire in 5 to 20 years.
The liability method of accounting is used for income taxes under which deferred income taxes are recognized to
reflect the tax effect of temporary differences between the book and tax bases of assets and liabilities at currently
enacted income tax rates.