Vectren 2013 Annual Report Download - page 114

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regulatory thresholds.
In the Indiana Gas service territory, the existence, location, and certain general characteristics of 26 gas manufacturing and
storage sites have been identified for which the Company may have some remedial responsibility. A remedial investigation/
feasibility study (RI/FS) was completed at one of the sites under an agreed order between Indiana Gas and the IDEM, and a
Record of Decision was issued by the IDEM in January 2000. The remaining sites have been submitted to the IDEM's Voluntary
Remediation Program (VRP). The Company has identified its involvement in five manufactured gas plant sites in SIGECO’s
service territory, all of which are currently enrolled in the IDEM’s VRP. The Company is currently conducting some level of
remedial activities, including groundwater monitoring at certain sites.
The Company has accrued the estimated costs for further investigation, remediation, groundwater monitoring, and related costs
for the sites. While the total costs that may be incurred in connection with addressing these sites cannot be determined at this
time, the Company has recorded cumulative costs that it has incurred or reasonably expects to incur totaling approximately
$43.4 million ($23.2 million at Indiana Gas and $20.2 million at SIGECO). The estimated accrued costs are limited to the
Company’s share of the remediation efforts and are therefore net of exposures of other potentially responsible parties (PRP).
With respect to insurance coverage, Indiana Gas has received approximately $20.8 million from all known insurance carriers
under insurance policies in effect when these plants were in operation. Likewise, SIGECO has settlement agreements with all
known insurance carriers and has received to date approximately $14.3 million of the expected $15.8 million in insurance
recoveries.
The costs the Company expects to incur are estimated by management using assumptions based on actual costs incurred, the
timing of expected future payments, and inflation factors, among others. While the Company’s utilities have recorded all costs
which they presently expect to incur in connection with activities at these sites, it is possible that future events may require
remedial activities which are not presently foreseen and those costs may not be subject to PRP or insurance recovery. As of
December 31, 2013 and 2012, approximately $5.7 million and $4.6 million, respectively, of accrued, but not yet spent, costs are
included in Other Liabilities related to the Indiana Gas and SIGECO sites.
20. Fair Value Measurements
The carrying values and estimated fair values using primarily Level 2 assumptions of the Company's other financial instruments
follow:
At December 31,
2013 2012
(In millions) Carrying
Amount Est. Fair Value Carrying Amount Est. Fair Value
Long-term debt $ 1,807.1 $ 1,895.2 $ 1,659.8 $ 1,873.3
Short-term borrowings & notes payable 68.6 68.6 278.8 278.8
Cash & cash equivalents 21.5 21.5 19.5 19.5
For the balance sheets presented, the Company had no material assets or liabilities marked to fair value.
Certain methods and assumptions must be used to estimate the fair value of financial instruments. The fair value of the
Company's long-term debt was estimated based on the quoted market prices for the same or similar issues or on the current
rates offered to the Company for instruments with similar characteristics. Because of the maturity dates and variable interest
rates of short-term borrowings and cash & cash equivalents, those carrying amounts approximate fair value. Because of the
inherent difficulty of estimating interest rate and other market risks, the methods used to estimate fair value may not always be
indicative of actual realizable value, and different methodologies could produce different fair value estimates at the reporting
date.