Vectren 2013 Annual Report Download - page 88

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86
& Storage, and will connect area liquefied natural gas regasification terminals to an interstate natural gas transmission system
and storage facilities.
In late 2008, the project at the North site was halted due to subsurface and well-completion problems, which resulted in the joint
venture recording a $132 million impairment charge. The Company, through ProLiance, recorded its share of the charge in
2009. As a result of the issues encountered at the North site, Liberty requested and the FERC approved the separation of the
North site from the South site. Approximately 12 Bcf of the storage at the South site, which comprises three of the four FERC
certified caverns, is fully tested but additional work is required to connect the caverns to the pipeline system. As of
December 31, 2013 and December 31, 2012, ProLiance’s investment in the joint venture was $35.4 million and $35.5 million,
respectively.
The joint venture received a demand for Arbitration from Williams Midstream Natural Gas Liquids, Inc. (“Williams”) on February
8, 2011 related to a Sublease Agreement (“Sublease”) between the joint venture and Williams at the North site. Williams alleges
that the joint venture was negligent in its attempt to convert certain salt caverns to natural gas storage and thereby damaged the
caverns. Williams alleges damages of $56.7 million. The joint venture intends to vigorously defend itself and has asserted
counterclaims substantially in excess of the amounts asserted by Williams. As such, as of December 31, 2013, ProLiance has
no material reserve recorded related to this matter and this litigation has not materially impacted ProLiance's results of
operations or statement of financial position.
Transactions with ProLiance
Purchases from ProLiance for resale and for injections into storage for the years ended December 31, 2013, 2012, and 2011,
totaled $200.5 million, $274.5 million, and $378.7 million, respectively. The Company purchases from ProLiance all occurred
prior to June 18, 2013 when ProLiance exited the natural gas marketing business. The amounts owed to ProLiance at
December 31, 2012, for those purchases was $29.7 million and is included in Accounts payable to affiliated companies in the
Consolidated Balance Sheets.
8. Nonutility Real Estate & Other Legacy Holdings
Within the nonutility group, there are legacy investments involved in real estate, a leveraged lease, and other ventures. As of
December 31, 2013 and 2012, total remaining legacy investments included in the Other Businesses portfolio total $26.5 million
and $28.7 million, respectively. Further separation of that 2013 investment by type of investment follows:
December 31, 2013
Value Included In
(In millions) Carrying
Value Other Nonutility
Investments
Investments in
Unconsolidated
Affiliates
Commercial real estate investments $ 8.0 $ 8.0 $ —
Leveraged lease 14.4 14.4 —
Other investments 4.1 1.3 2.8
$ 26.5 $ 23.7 $ 2.8
Commercial Real Estate Charge
During the fourth quarter of 2011, the Company obtained new evidence confirming further weakness in markets where the
Company holds legacy real estate investments. The Company holds real estate investments such as an office building and
affordable housing projects. The evaluation of the evidence resulted in a $15.4 million charge in 2011. Of the $15.4 million
charge, $8.8 million is reflected in Other-net, $3.6 million is reflected in Equity in (losses) of unconsolidated affiliates, and $3.0
million is reflected in Other operating expenses.