SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission file number 1-3553
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
-----------------------------------------------
(Exact name of registrant as specified in its charter)
INDIANA 35-0672570
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
20 N.W. Fourth Street, Evansville, Indiana 47741
--------------------------------------------------
(Address of principal executive offices and Zip Code)
(812) 465-5300
---------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Common Stock -
Without par value 15,754,826 May 10, 2001
- --------------------------- ---------------- ------------
Class Number of shares Date
2
TABLE OF CONTENTS
Item Page
Number Number
PART I. FINANCIAL INFORMATION
1 Financial Statements (Unaudited)
Southern Indiana Gas and Electric Company
Balance Sheets 3-4
Statements of Income 5
Statements of Cash Flows 6
Notes to Unaudited Financial Statements 7-12
2 Management's Discussion and Analysis of Results
of Operations and Financial Condition 13-18
3 Quantitative and Qualitative Disclosure About
Market Risk 18-19
PART II. OTHER INFORMATION
1 Legal Proceedings 20
6 Exhibits and Reports on Form 8-K 20
Signatures 21
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
BALANCE SHEETS
(Unaudited - Thousands)
March 31, December 31,
ASSETS 2001 2000 2000
---------- ---------- ---------- ------------
Utility Plant at original cost:
Electric $1,171,020 $1,142,496 $1,175,552
Gas 159,723 157,258 160,872
---------- ---------- ----------
1,330,743 1,299,754 1,336,424
Less: accumulated depre-
ciation and amortization 661,008 626,545 650,499
---------- ---------- ------------
669,735 673,209 685,925
Construction work in
progress 57,646 55,909 52,582
---------- ---------- ------------
Net utility plant 727,381 729,118 738,507
---------- ---------- ------------
Current Assets:
Cash and cash equivalents 3,687 2,147 1,613
Accounts receivable, less
reserves of $2,409, 2,262
and $2,639, respectively 56,571 34,743 49,554
Accounts receivable from
affiliated company 9,872 8,183 27,829
Accrued unbilled revenues 11,370 12,522 24,414
Inventories 27,399 31,657 31,055
Recoverable fuel and natural
gas costs 35,996 6,210 28,703
Other current assets 14 2,239 312
---------- ---------- ------------
Total current assets 144,909 97,701 163,480
---------- ---------- ------------
Other Investments and Property:
Environmental improvement
funds held by trustee 1,057 1,010 1,056
Nonutility property and
other, net 2,924 2,924 1,960
---------- ---------- ------------
Total other investments
and property 3,981 3,934 3,016
---------- ---------- ------------
Other Assets:
Regulatory assets 33,445 33,636 33,443
Deferred charges, net 27,815 14,012 12,868
---------- ---------- ------------
Total other assets 61,260 47,648 46,311
---------- ---------- ------------
TOTAL ASSETS $ 937,531 $ 878,401 $ 951,314
========== ========== ============
The accompanying notes are an integral part of these financial
statements.
4
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
BALANCE SHEETS
(Unaudited - Thousands)
SHAREHOLDER'S EQUITY AND March 31, December 31,
LIABILITIES 2001 2000 2000
--------- --------- ------------
Capitalization:
Common stock $ 78,258 $ 78,258 $ 78,258
Retained earnings 263,405 239,653 258,877
-------- --------- ---------
Total common shareholder's
equity 341,663 317,911 337,135
Cumulative nonredeemable
preferred stock 11,052 11,090 11,090
Cumulative redeemable
preferred stock 5,300 7,500 5,300
Cumulative special preferred
stock 460 576 576
Long-term debt, net of current
maturities 291,550 237,602 237,799
--------- --------- ------------
Total capitalization, net
of current maturities 650,025 574,679 591,900
--------- --------- ------------
Commitments and Contingencies
(Notes 6 and 7)
Current Liabilities:
Current maturities of adjust-
able rate bonds subject to
tender - 53,700 53,700
Short-term borrowings 14,828 10,318 40,154
Accounts payable to affiliated
company 31,266 6,468 11,486
Accounts payable 40,578 26,550 60,085
Dividends payable 142 103 144
Accrued taxes 23,246 18,757 9,956
Accrued interest 5,327 5,038 6,047
Refunds to customers 4,229 1,863 3,543
Deferred income taxes 10,271 1,483 11,295
Other accrued liabilities 5,225 19,201 14,278
--------- --------- ------------
Total current liabilities 135,112 143,481 210,688
--------- --------- ------------
Deferred Credits and Other
Liabilities:
Deferred income taxes 112,145 119,421 112,122
Unamortized investment tax
credits 15,606 17,015 15,944
Accrued postretirement
benefits other than pensions 14,554 12,889 14,054
Accrued pensions 6,668 8,862 6,310
Other 3,421 2,054 296
--------- --------- ------------
Total deferred credits and
other liabilities 152,394 160,241 148,726
--------- --------- ------------
TOTAL SHAREHOLDER'S EQUITY AND
LIABILITIES $ 937,531 $ 878,401 $ 951,314
========= ========= ============
The accompanying notes are an integral part of these financial
statements.
6
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
STATEMENTS OF INCOME
(Unaudited - Thousands)
Three Months Twelve Months
Ended March 31, Ended March 31,
2001 2000 2001 2000
-------- -------- --------- ---------
OPERATING REVENUES:
Electric revenues $ 88,209 $ 72,990 $ 351,628 $ 309,572
Gas revenues 51,950 29,227 132,007 67,741
-------- -------- --------- ---------
Total operating revenues 140,159 102,217 483,635 377,313
-------- -------- --------- ---------
COST OF OPERATING REVENUES:
Cost of fuel and
purchased power 31,137 21,678 121,552 94,494
Cost of gas 41,458 19,634 100,727 39,741
Total cost of operating
revenues 72,595 41,312 222,279 134,235
-------- -------- --------- ---------
Total margin 67,564 60,905 261,356 243,078
-------- -------- --------- ---------
OPERATING EXPENSES:
Operations and
maintenance 23,441 21,238 105,256 94,667
Merger and integration
costs 388 12,357 2,103 12,357
Depreciation and
amortization 11,084 11,490 42,808 45,140
Income taxes 9,041 4,237 29,636 23,334
Taxes other than income
taxes 3,626 3,233 13,651 12,951
-------- -------- --------- ---------
Total operating expenses 47,580 52,555 193,454 188,449
-------- -------- --------- ---------
OPERATING INCOME 19,984 8,350 67,902 54,629
OTHER INCOME-NET 859 699 4,834 3,416
-------- -------- --------- ---------
INCOME BEFORE INTEREST AND
PREFERRED STOCK DIVIDEND 20,843 9,049 72,736 58,045
INTEREST EXPENSE 5,256 4,783 20,367 19,518
-------- -------- --------- ---------
INCOME BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 15,587 4,266 52,369 38,527
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE-
NET OF TAX 3,938 - 3,938 -
-------- -------- --------- ---------
NET INCOME 19,525 4,266 56,307 38,527
PREFERRED STOCK DIVIDEND 238 268 987 1,076
-------- -------- --------- ---------
NET INCOME APPLICABLE TO
COMMON SHAREHOLDER $ 19,287 $ 3,998 $ 55,320 $ 37,451
======== ======== ========= =========
The accompanying notes are an integral part of these financial
statements.
6
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited - Thousands)
Three Months
Ended March 31,
CASH FLOWS FROM OPERATING ACTIVITIES 2001 2000
--------- ---------
Net income $ 19,525 $ 4,266
Adjustments to reconcile net income to cash
provided from operating activities -
Depreciation and amortization 11,084 11,490
Deferred income taxes and investment tax
credits (519) (2,430)
Allowance for funds used during
construction (329) -
Cumulative effect of accounting change (3,938) -
Unrealized gain on derivatives (5,498) -
Changes in assets and liabilities -
Receivables - net 23,984 (1,927)
Inventories 3,656 9,802
Recoverable fuel and natural gas costs (7,293) (625)
Regulatory assets (2) (843)
Accounts payable 273 (235)
Accrued taxes 8,849 9,961
Refunds to customers 686 (3,512)
Other assets and liabilities (4,488) 6,377
--------- ---------
Total adjustments 26,465 28,058
--------- ---------
Net cash flows from operating activities 45,990 32,324
--------- ---------
CASH FLOWS (REQUIRED FOR) FINANCING ACTIVITIES
Retirement of preferred stock (153) (117)
Proceeds from long-term debt - -
Net change in short-term borrowings (25,275) (6,412)
Dividends on common and preferred stock (8,842) (8,793)
Other - (72)
--------- ---------
Net cash flows (required for)
financing activities (34,270) (15,394)
--------- ---------
CASH FLOWS (REQUIRED FOR) INVESTING ACTIVITIES
Capital expenditures (8,595) (14,944)
Other (1,051) (288)
--------- ---------
Net cash flows (required for) investing
activities (9,646) (15,232)
--------- ---------
Net increase (decrease) in cash 2,074 1,698
Cash and cash equivalents at beginning of
period 1,613 449
--------- ---------
Cash and cash equivalents at end of period $ 3,687 $ 2,147
========= =========
Twelve Months
Ended March 31,
CASH FLOWS FROM OPERATING ACTIVITIES 2001 2000
--------- ---------
Net income $ 56,307 $ 38,527
Adjustments to reconcile net income to cash
provided from operating activities -
Depreciation and amortization 42,808 45,140
Deferred income taxes and investment tax
credits 1,924 1,123
Allowance for funds used during
construction (2,380) (296)
Cumulative effect of accounting change (3,938) -
Unrealized gain on derivatives (5,498) -
Changes in assets and liabilities -
Receivables - net (21,252) (8,162)
Inventories 4,258 10,246
Recoverable fuel and natural gas costs (29,785) (1,741)
Regulatory assets 1,425 (222)
Accounts payable 43,520 7,292
Accrued taxes 436 3,306
Refunds to customers 2,366 (1,610)
Other assets and liabilities (10,204) 5,869
--------- ---------
Total adjustments 23,680 60,945
--------- ---------
Net cash flows from operating activities 79,987 99,472
--------- ---------
CASH FLOWS (REQUIRED FOR) FINANCING ACTIVITIES
Retirement of preferred stock (2,352) (116)
Proceeds from long-term debt - 25,000
Net change in short-term borrowings (2,072) (72,483)
Dividends on common and preferred stock (29,705) (32,556)
Other 2,844 3,144
--------- ---------
Net cash flows (required for) from
financing activities (31,285) (77,011)
--------- ---------
CASH FLOWS (REQUIRED FOR) INVESTING ACTIVITIES
Capital expenditures (45,103) (61,681)
Other (2,059) (1,345)
--------- ---------
Net cash flows (required for) investing
activities (47,162) (63,026)
--------- ---------
Net increase (decrease) in cash 1,540 (40,565)
Cash and cash equivalents at beginning of
period 2,147 42,712
--------- --------
Cash and cash equivalents at end of period $ 3,687 $ 2,147
========= =========
The accompanying notes are an integral part of these financial
statements.
7
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. Organization and Nature of Operations
Southern Indiana Gas and Electric Company (SIGECO) operates as a
separate wholly owned subsidiary of Vectren Corporation (Vectren)
and provides generation, transmission, distribution and the sale
of electric power to Evansville, Indiana, and 74 other
communities, and the distribution and sale of natural gas to
Evansville, Indiana, and 64 communities in ten counties in
southwestern Indiana.
Vectren was organized on June 10, 1999 solely for the purpose of
effecting the merger of Indiana Energy, Inc. (Indiana Energy) and
SIGCORP, Inc. (SIGCORP), SIGECO's former parent company. On March
31, 2000, the merger of Indiana Energy with SIGCORP and into
Vectren was consummated with a tax- free exchange of shares that
has been accounted for as a pooling-of-interests. The merger did
not affect SIGECO's preferred stock or debt securities.
2. Basis of Presentation
The interim financial statements included in this report have
been prepared by SIGECO, without audit, as provided in the rules
and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting
principles generally accepted in the United States have been
omitted as provided in such rules and regulations. SIGECO
believes that the information in this report reflects all
adjustments necessary to fairly state the results of the interim
periods reported. These financial statements and related notes
should be read in conjunction with SIGECO's audited annual
financial statements for the year ended December 31, 2000 filed
on Form 10-K. Because of the seasonal nature of SIGECO's
operations, the results shown on a quarterly basis are not
necessarily indicative of annual results.
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
Certain reclassifications have been made to prior period
financial statements to conform with the current year
classification. These reclassifications have no impact on
previously reported net income.
3. Merger and Integration Costs
Merger and integration costs incurred for the three and twelve
months ended March 31, 2001 were $0.4 million and $2.1 million,
respectively. These costs relate primarily to transaction costs,
severance, and other merger and integration activities such as
signage and vehicle identification changes. Merger costs are
reflected in the financial statements of the subsidiaries in
which merger savings are expected to be realized. The accrual
remaining for such costs at March 31, 2001 was $0.4 million. The
continued merger integration activities will be substantially
completed in 2001.
4. Long - Term Debt
SIGECO has $53.7 million of adjustable rate pollution control
series first mortgage bonds which could, at the election of the
bondholder, be tendered to SIGECO when the interest rates are
reset. Prior to the latest reset on March 1, 2001, the interest
rates were reset annually, and the bonds subject to tender were
presented in the Balance Sheets as current liabilities.
Effective March 1, 2001, the bonds were reset for a five-year
period and have been classified as long-term debt. Resulting
from the reset, the interest rate on the $31.5 million Series A
bonds increased from 4.30 % to 4.75 %, and the interest rate on
the $22.2 million Series C bonds increased from 4.45 % to 5.00 %.
8
5. New Accounting Principle
In June 1998, the Financial Accounting Standards Board issued
SFAS No. 133 "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133), which requires that every derivative
instrument be recorded on the balance sheet as an asset or
liability measured at its fair value and that changes in the
derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met.
SFAS 133, as amended, is effective for fiscal years beginning
after June 15, 2000 and must be applied to derivative instruments
and certain derivative instruments embedded in hybrid contracts
that were issued, acquired or substantively modified after
December 31, 1998. SIGECO has completed the process of
identifying all derivative instruments, determining fair market
values of these derivatives, designating and documenting hedge
relationships, and evaluating the effectiveness of those hedge
relationships. As a result of the successful completion of this
process, SIGECO adopted SFAS 133 as of January 1, 2001.
SFAS 133 requires that as of the date of initial adoption, the
difference between the fair market value of derivative
instruments recorded on the balance sheet and the previous
carrying amount of those derivatives be reported in net income or
other comprehensive income, as appropriate, as the cumulative
effect of a change in accounting principle in accordance with APB
20, "Accounting Changes."
A limited number of SIGECO's contracts are defined as derivatives
under SFAS 133. These derivatives are forward physical contracts
for both the purchase and sale of electricity.
SIGECO uses derivative and non-derivative forward contracts in
its power marketing operations to effectively manage the
utilization of its generation capacity. Certain forward sales
contracts are used to sell the excess generation capacity of
SIGECO when demand conditions warrant this activity. These
contracts involve the normal sale of electricity and therefore do
not require fair value accounting under SFAS 133. Certain
forward purchase and sale contracts entered into as part of "buy-
sell" transactions with other utilities and power marketers are
derivatives but do not qualify for hedge accounting. The mark to
market impact of these derivatives upon adoption of SFAS 133 is
reflected as part of the transition adjustment recorded to
earnings on January 1, 2001. This cumulative impact is an
earnings gain of approximately $6.3 million ($3.9 million after
tax).
As of March 31, 2001, the fair value of power marketing
derivative contracts total $11.8 million and is included in
deferred charges, net in the Balance Sheets. The difference
between the current market value and the market value on the date
of adoption of $5.5 million is reflected in cost of fuel and
purchased power in the Statements of Income.
6. Contingencies
SIGECO is party to various legal proceedings arising in the
normal course of business. In the opinion of management, with
the exception of the litigation matter related to the Clean Air
Act (See Note 7), there are no legal proceedings pending against
SIGECO that are likely to have a material adverse effect on its
financial position or results of operations.
7. Environmental Matters
NOx SIP Call Matter
In October 1997, the United States Environmental Protection
Agency (USEPA) proposed a rulemaking that could require uniform
nitrogen oxide (NOx) emissions reductions of 85 % by utilities
and other large sources in a 22-state region spanning areas in
the Northeast, Midwest, Great Lakes, Mid-Atlantic and South.
This rule is referred to as the "NOx SIP call." The USEPA
provided each state a proposed budget of allowed NOx emissions, a
key ingredient of ozone, requiring a significant reduction of
such emissions. Under that budget, utilities may be required to
reduce NOx emissions to a rate of 0.15 lb/mmBtu below levels
already imposed by Phase I and Phase II of the Clean Air Act
Amendments of 1990 (the Act).
On October 27, 1998, USEPA issued a final rule "Finding of
Significant Contribution and Rulemaking for Certain States in the
Ozone Transport Assessment Group Region for Purposes of Reducing
Regional Transport of Ozone," (63 Fed. Reg. 57355). The final
rule requires that 23 states and jurisdictions must file revised
state implementation plans (SIPs) with the USEPA by no later than
September 30, 1999, which was essentially unchanged from its
October 1997, proposed rule. The USEPA has encouraged states to
target utility coal-fired boilers for the majority of the
reductions required, especially NOx emissions. Northeastern
states have claimed that ozone transport from midwestern states
(including Indiana) is the primary reason for their ozone
concentration problems. Although this premise is challenged by
others based on various air quality modeling studies, including
studies commissioned by the USEPA, the USEPA intends to
incorporate a regional control strategy to reduce ozone
transport. The USEPA's final ruling is being litigated in the
federal courts by approximately ten midwestern states, including
Indiana.
On March 3, 2000, the United States Circuit Court of Appeals for
the District of Columbia (D.C. Court of Appeals) upheld the
USEPA's October 27, 1998 final rule requiring 23 states and the
District of Columbia to file revised SIPs with the USEPA.
Numerous petitioners, including several states, filed petitions
for rehearing with the D.C. Court of Appeals. On June 22, 2000,
the D.C. Court of Appeals denied petition for rehearing en banc.
Following this decision, on August 30, 2000, the D.C. Court of
Appeals issued an extension of the SIP Call implementation
deadline to May 31, 2004. On September 20, 2000, petitioners
filed a Petition of Writ of Certiori with the United States
Supreme Court requesting review of the D.C. Court of Appeals
March 3, 2000 Order, which was denied. Therefore, SIGECO's
compliance date remains May 31, 2004.
The proposed NOx emissions budget for Indiana stipulated in the
USEPA's final ruling requires a 36 % reduction in total NOx
emissions from Indiana. The ruling, pending finalization of
state rule making, could require SIGECO to lower its system-wide
emissions by approximately 70 %. Depending on the level of
system-wide emissions reductions ultimately required, and the
control technology utilized to achieve the reductions, the
estimated construction costs of the control equipment could reach
$160 million, which are expected to be expended during the 2001-
2004 period, and related additional operation and maintenance
expenses could be an estimated $8 million to $10 million,
annually.
Culley Generating Station Investigation Matter
The USEPA initiated an investigation under Section 114 of the Act
of SIGECO's coal-fired electric generating units in commercial
operation by 1977 to determine compliance with environmental
permitting requirements related to repairs, maintenance,
modifications and operations changes. The focus of the
investigation was to determine whether new source performance
standards should be applied to the modifications and whether the
best available control technology was, or should have been, used.
Numerous other electric utilities were, and are currently, being
investigated by the USEPA under an industry-wide review for
similar compliance. SIGECO responded to all of the USEPA's data
requests during the investigation. In July 1999, SIGECO received
a letter from the Office of Enforcement and Compliance Assurance
of the USEPA discussing the industry-wide investigation, vaguely
referring to the investigation of SIGECO and inviting SIGECO to
participate in a discussion of the issues. No specifics were
noted; furthermore, the letter stated that the communication was
not intended to serve as a notice of violation. Subsequent
meetings were conducted in September and October with the USEPA
and targeted utilities, including SIGECO, regarding potential
remedies to the USEPA's general allegations.
10
On November 3, 1999, the USEPA filed a lawsuit against seven
utilities, including SIGECO. The USEPA alleges that, beginning
in 1992, SIGECO violated the Act by: (i) making modifications to
its Culley Generating Station in Yankeetown, Indiana without
obtaining required permits; (ii) making major modifications to
the Culley Generating Station without installing the best
available emission control technology; and (iii) failing to
notify the USEPA of the modifications. In addition, the lawsuit
alleges that the modifications to the Culley Generating Station
required SIGECO to begin complying with federal new source
performance standards.
SIGECO believes it performed only maintenance, repair and
replacement activities at the Culley Generating Station, as
allowed under the Act. Because proper maintenance does not
require permits, application of the best available emission
control technology, notice to the USEPA, or compliance with new
source performance standards, SIGECO believes that the lawsuit is
without merit, and intends to vigorously defend the lawsuit.
The lawsuit seeks fines against SIGECO in the amount of $27,500
per day per violation. The lawsuit does not specify the number
of days or violations the USEPA believes occurred. The lawsuit
also seeks a court order requiring SIGECO to install the best
available emissions technology at the Culley Generating Station.
If the USEPA is successful in obtaining an order, SIGECO
estimates that it would incur capital costs of approximately $40
million to $50 million complying with the order. In the event
that SIGECO is required to install system-wide NOx emission
control equipment, as a result of the NOx SIP call issue, the
majority of the $40 million to $50 million for best available
emissions technology at Culley Generating Station would be
included in the $160 million expenditure previously discussed.
The USEPA has also issued an administrative notice of violation
to SIGECO making the same allegations, but alleging that
violations began in 1977.
While it is possible that SIGECO could be subjected to criminal
penalties if the Culley Generating Station continues to operate
without complying with the new source performance standards and
the allegations are determined by a court to be valid, SIGECO
believes such penalties are unlikely as the USEPA and the
electric utility industry have a bonafide dispute over the proper
interpretation of the Act. Consequently, SIGECO anticipates at
this time that the plant will continue to operate while the
matter is being decided.
Information Request
On January 23, 2001, SIGECO received an information request from
the USEPA under Section 114(a) of the Act for historical
operational information on the Warrick and A.B. Brown generating
stations. SIGECO has provided all information requested, and
management believes that no significant issues will arise from
this request.
8. Rate and Regulatory Matters
Commodity prices for natural gas purchases have increased
significantly, primarily due to a colder winter, increased demand
and tighter supplies. SIGECO is allowed full recovery of such
changes in purchased gas and fuel costs for its retail customers
through commission-approved gas and fuel cost adjustment
mechanisms.
As a result of the ongoing appeal of a generic order issued by
the IURC in August 1999 regarding guidelines for the recovery of
purchased power costs, SIGECO entered into a settlement agreement
with the Indiana Office of Utility Consumer Counselor (OUCC) that
provides certain terms with respect to the recoverability of such
costs. The settlement, originally approved by the IURC on August
9, 2000, has been extended by agreement through March 2002.
Under the settlement, SIGECO can recover the entire cost of
purchased power up to an established benchmark, and during forced
outages, SIGECO will bear a limited share of its purchased power
costs regardless of the market costs at that time. Based on this
agreement, SIGECO believes it has limited its exposure to
unrecoverable purchased power costs.
9. Affiliate Transactions
Certain wholly owned subsidiaries of Vectren began providing
support services to SIGECO beginning April 1, 2000. As of March
31, 2000, certain assets owned by SIGECO were contributed to a
wholly owned subsidiary of Vectren (Vectren Resources, LLC). The
contribution of assets was reflected as a reduction of common
shareholder's equity and is omitted from the Statements of Cash
Flows. Vectren Resources, LLC provides asset services to SIGECO,
the fee for which is reflected in operation and maintenance
11
expense in the accompanying financial statements. Services
provided include corporate-level management services, information
technology, financial, human resources, purchasing, building and
fleet services. For the three and twelve months ended March 31,
2001, amounts billed by other wholly owned subsidiaries of
Vectren to SIGECO were approximately $11.1 million and $41.1
million, respectfully. Prior to April 1, 2000, these costs were
incurred by SIGECO directly.
Vectren Fuels, Inc., a wholly owned subsidiary of Vectren, owns
and operates coal mines from which SIGECO purchases fuel used for
electric generation. Amounts paid for such purchases for the
three months ended March 31, 2001 and 2000 were $10.4 million and
$6.6 million respectively. Amounts paid for such purchases for
the twelve months ended March 31, 2001 and 2000 were $28.6
million and $22.2 million, respectively.
SIGECO also participates in a centralized cash management program
with its parent, affiliated companies and banks which permits
funding of checks as they are presented.
Amounts owed to wholly owned subsidiaries of Vectren as of March
31, 2001, March 31, 2000 and December 31, 2000 totaled $31.3
million, $6.5 million and $11.5 million, respectively, and are
included in accounts payable to affiliated company. Amounts due
from wholly owned subsidiaries of Vectren as of March 31, 2001,
March 31, 2000 and December 31, 2000 totaled $9.9 million, $8.2
million, and $27.8 million, respectively, and are included in
accounts receivable from affiliated company.
10. Segment Reporting
Operating segments are defined as components of an enterprise for
which separate financial information is available and evaluated
regularly by the chief operating decision makers in deciding how
to allocate resources and in the assessment of performance.
There were two operating segments of SIGECO during the reported
periods: (1) Electric Utility Services and (2) Gas Utility
Services. The Electric Utility Services segment generates,
transmits, distributes and sells electricity within primarily
southwestern Indiana and in periods of under utilized capacity,
sells excess electricity to other wholesale customers. The Gas
Utility Services segment distributes, transports and sells
natural gas to Evansville, Indiana and 64 communities in ten
counties in southwestern Indiana. Revenues for each segment are
principally attributable to customers in the United States.
Effective January 1, 2001, SIGECO announced the reorganization of
its utility operations into two primary business units: Energy
Delivery and Power Supply. During 2001, organizational alignment
will occur along with the development of management reporting
processes. As a result, SIGECO will report segment information
as Gas Utility Services and Electric Utility Services.
12
Certain information relating to SIGECO's business segments is
presented below.
Three Months
Ended March 31,
In thousands 2001 2000
--------- ---------
Operating Revenues:
Electric Utility Services $88,209 $72,990
Gas Utility Services 51,950 29,227
--------- --------
Total operating revenues $140,159 $102,217
========= ========
Net Income Applicable to
Common Shareholder:
Electric Utility Services $16,869 $2,607
Gas Utility Services 2,418 1,391
--------- -------
Net income applicable to common
shareholder $19,287 $3,998
========= ========
Twelve Months
Ended March 31,
In thousands 2001 2000
--------- ---------
Operating Revenues:
Electric Utility Services $351,628 $309,572
Gas Utility Services 132,007 67,741
--------- ---------
Total operating revenues $483,635 $377,313
========= =========
Net Income Applicable to
Common Shareholder:
Electric Utility Services $51,072 $35,017
Gas Utility Services 4,248 2,434
--------- ---------
Net income applicable to
common shareholder $55,320 $37,451
========= ========
March 31, March 31, December 31,
2001 2000 2000
--------- --------- ------------
Identifiable Assets:
Electric Utility Services $788,506 $755,884 $799,104
Gas Utility Services 149,025 122,517 152,210
-------- --------- ---------
Total identifiable
assets 937,531 $878,401 $951,314
========= ========= =========
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
Description of the Business
Southern Indiana Gas and Electric Company (SIGECO) operates as a
separate wholly owned subsidiary of Vectren Corporation (Vectren)
and provides generation, transmission, distribution and the sale
of electric power to Evansville, Indiana, and 74 other
communities, and the distribution and sale of natural gas to
Evansville, Indiana, and 64 communities in ten counties in
southwestern Indiana.
Vectren was organized on June 10, 1999 solely for the purpose of
effecting the merger of Indiana Energy, Inc. (Indiana Energy) and
SIGCORP, Inc. (SIGCORP), SIGECO's former parent company. On March
31, 2000, the merger of Indiana Energy with SIGCORP and into
Vectren was consummated with a tax- free exchange of shares that
has been accounted for as a pooling-of-interests. The merger did
not affect SIGECO's preferred stock or debt securities.
Results of Operations
Net Income Applicable to Common Shareholder
For the three months ended March 31, 2001, net income applicable
to common shareholder was $19.3 million. Net income applicable
to common shareholder before merger and integration costs and the
cumulative effect of the accounting change (adoption of FAS 133)
was $15.6 million, compared to net income applicable to common
shareholder before merger and integration costs for the first
quarter of 2000 of $13.0 million. (See discussion of merger and
integration costs and cumulative effect of change in accounting
principle below.)
For the twelve months ended March 31, 2001, net income applicable
to common shareholder was $55.3 million. Net income applicable
to common shareholder before merger and integration costs and the
cumulative effect of the accounting change (adoption of FAS 133)
was $53.2 million, compared to net income applicable to common
shareholder before merger and integration costs for the twelve
months ended March 31, 2000 of $46.5 million.
Utility Margin (Operating Revenues Less Cost of Fuel, Purchased
Power and Cost of Gas)
Electric Utility Margin
Electric Utility margin for the three months ended March 31, 2001
of $57.1 million, increased $5.8 million, or 11 %, over 2000
primarily due to a $5.5 million gain recorded to reflect certain
wholesale power marketing purchase and sale contracts at current
market values as required by Statement of Financial Accounting
Standard No. 133 "Accounting for Derivative Instruments and
Hedging Activities" (SFAS 133).
Electric Utility margin for the twelve months ended March 31,
2001 of $230.1 million, increased $15.0 million, or 7 % over 2000
primarily due to the current quarter $5.5 million gain recorded
to reflect certain wholesale power marketing purchase and sale
contracts at current market values as required by SFAS 133. The
remaining $9.5 million increase results from increased margin
from sales to wholesale energy markets with volumes increasing 69
% over 2000, and a 5 % increase in sales to retail customers for
the period due to the impact of colder weather on retail electric
heating sales and an increasing customer base.
Total cost of fuel for electric generation and purchased power
increased $9.5 million, or 44 %, and $27.1 million, or 29 %, for
the three and twelve month periods ended March 31, 2001, compared
to the same periods in the prior year due primarily to increased
purchased power related to the greater sales to other utilities
and power marketers.
14
Gas Utility Margin
Gas Utility margin for the three months ended March 31, 2001 of
$10.5 million increased $0.9 million, or 9 %, compared to 2000.
The increase is due to an 8 % increase in throughput resulting
primarily from temperatures being 16 % colder than the previous
year. These favorable impacts were partially offset by reduced
consumption and the cost of unaccounted for gas due to much
higher gas costs (see below).
Total cost of gas sold was $41.5 million for the three months
ended March 31, 2001 compared to $19.6 million in 2000. This
increase of $21.8 million, or 111 % is primarily due to
significantly higher average per unit purchased gas costs. The
total average cost per dekatherm of gas purchased by SIGECO for
the three months ended March 31, 2001 was $6.74 compared to $3.86
for the same period in 2000.
Gas Utility margin for the twelve months ended March 31, 2001 of
$31.3 million increased $3.3 million, or 12 %, compared to 2000.
The increase is due to a 15 % increase in throughput resulting
primarily from temperatures being 27 % colder than the previous
year and a 2 % increase in the residential customer base. These
favorable impacts on gas margin were partially offset by the cost
of unaccounted for gas due to higher gas costs.
Total cost of gas sold was $100.7 million for the twelve months
ended March 31, 2001 and $39.7 million in 2000. This increase of
$61.0 million, or 153 %, compared to 2000 is primarily due to
significantly higher per unit purchased gas costs.
Commodity prices for natural gas purchases have increased
significantly, primarily due to a colder winter, increased demand
and tighter supplies. SIGECO is allowed full recovery of such
charges in purchased gas costs from their retail customers
through commission-approved gas cost adjustment mechanisms, and
margin on gas sales should not be impacted. However, in 2001,
SIGECO has experienced and may continue to experience higher
working capital requirements, increased expenses including
unrecoverable interest costs, uncollectibles and unaccounted for
gas, and some level of price sensitive reduction in volumes sold.
Operating Expenses
Operations and Maintenance
Operations and maintenance expenses increased $2.2 million, or 10
%, for the three months ended March 31, 2001 compared to the
prior year, and operations and maintenance expenses increased
$10.6 million, or 11 % for the twelve months ended March 31,
2001. The increases reflect primarily higher general and
administrative costs and plant and system maintenance.
Depreciation and Amortization
Depreciation and amortization decreased $0.4 million and $2.3
million, respectively, for the three and twelve months ended
March 31, 2001 compared to the prior year due to the contribution
of certain information systems and equipment to a wholly owned
subsidiary of Vectren.
Income Taxes
Federal and state income taxes increased $4.8 million and $6.3
million for the three and twelve months ended March 31,
2001,respectively, compared to the prior year due primarily to
higher pre-tax earnings, partially offset by normal effective tax
rates in 2001. The effective tax rate for the three month period
in 2000 was higher as a result of the non-deductibility of
certain merger and integration costs.
Taxes Other Than Income Taxes
Taxes other than income taxes increased $0.4 million and $0.7
million, respectively, for the three and twelve month periods
ended March 31, 2001. The increases result from increases in
gross receipts and property taxes.
15
Merger and Integration Costs
These costs relate primarily to transaction costs, severance, and
other merger and integration activities such as signage and
vehicle identification changes. Vectren expects to realize net
merger savings of nearly $200 million over the next ten years
from the elimination of duplicate corporate and administrative
programs and greater efficiencies in operations, business
processes and purchasing. The continued merger integration
activities, which will contribute to the merger savings, will be
substantially completed in 2001. Merger costs are reflected in
the financial statements of Vectren's operating subsidiaries in
which merger savings are expected to be realized.
For the three months ended March 31, 2001, merger and integration
costs totaled $0.4 million ($0.2 million after tax), compared to
$12.4 million ($9.0 million after tax) for the same period in
2000. For the twelve months ended March 31, 2001, merger and
integration costs totaled $2.1 million ($1.8 million after tax),
compared to $12.4 million ($9.0 million after tax) for the same
period in 2000.
Other Income, Net
Other income, net increased $0.2 million and $1.4 million for the
three and twelve months ended March 31, 2001 compared to the
prior year due to increased allowance for funds used during
construction (AFUDC) resulting from increased utility plant
construction in progress.
Interest Expense
Interest expense increased by $0.5 million and $0.8 million,
respectively, for the three and twelve months ended March 31,
2001, when compared to the prior year. The increases were due
primarily to increased working capital requirements resulting
from higher natural gas prices.
Other Operating Matters
New Accounting Principle and Cumulative Effect of Change in
Accounting Principle
See Note 5 in the financial statements regarding the adoption of
SFAS 133, as amended.
Realignment
Effective January 1, 2001, SIGECO announced the reorganization of
its utility operations into two primary business units: Energy
Delivery and Power Supply. During 2001, organizational alignment
will occur along with the development of management reporting
processes. As a result, SIGECO will report segment information
as Gas Utility Services and Electric Utility Services.
Financial Condition
Environmental and Regulatory Matters
See Notes 7 and 8 in SIGECO's financial statements included in
Part I, Item 1 regarding matters affecting operations including
Clean Air Act compliance (Note 7) and purchased power costs
recovery (Note 8).
Liquidity and Capital Resources
SIGECO's capitalization objective is 40-55 % permanent
capitalization. This objective may have varied, and will vary,
from time to time, depending on particular business opportunities
and seasonal factors that affect the company's operation.
SIGECO's common equity component was 53 %, 51 % and 52 % of total
capitalization, including current maturities of long-term debt,
at March 31, 2001, March 31, 2000 and December 31, 2000,
respectively.
16
Short-term cash working capital is required primarily to finance
customer accounts receivable, unbilled utility revenues resulting
from cycle billing, gas in underground storage, prepaid gas
delivery services, capital expenditures and investments until
permanently financed. Short-term borrowings tend to be greatest
during the summer when accounts receivable and unbilled utility
revenues related to electricity are highest and gas storage
facilities are being refilled. However, working capital
requirements have been significantly higher during other periods
due to the higher natural gas costs.
Cash Flow from Operations
SIGECO's primary source of liquidity to fund working capital
requirements has been cash generated from operations, which
totaled approximately $46.0 million and $32.3 million for the
three months ended March 31, 2001 and 2000, respectively, and
$80.0 million and $99.5 million for the twelve months ended March
31, 2001 and 2000, respectively.
Cash flow from operations increased during the three months ended
March 31, 2001 compared to 2000 by $13.7 million due to increased
collections on accounts receivable offset by increased working
capital requirements due to higher gas costs.
Cash flow from operations decreased during the twelve months
ended March 31, 2001 compared to 2000 by $19.5 million, due to
increased working capital requirements due to higher gas costs
offset by decreased merger and integration costs.
SIGECO expects the majority of its capital expenditures and debt
security redemptions to be provided by internally generated
funds.
Financing Activities
Cash flow required for financing activities of $34.3 million for
the three months ended March 31, 2001 includes $25.3 million of
reductions in net borrowings and preferred stock and $8.8 million
common and preferred stock dividends. This is an increase in
cash required for financing activities when compared to the three
months ended March 31, 2000 of $18.9 million. The increase is
primarily due to increased payments on short-term borrowings from
internally generated funds in 2001.
Cash flow required for financing activities of $31.3 million for
the twelve months ended March 31, 2001 includes $4.4 million of
reductions in net borrowings and preferred stock and $29.7
million of common and preferred stock dividends. This is a
decrease in cash requirements for financing activities of $45.7
million over the same period in the prior year due primarily to a
decrease in short-term borrowings being paid down in 2001.
SIGECO has $53.7 million of adjustable rate pollution control
series first mortgage bonds which could, at the election of the
bondholder, be tendered to SIGECO when the interest rates are
reset. Prior to the latest reset on March 1, 2001, the interest
rates were reset annually, and the bonds subject to tender were
presented in the Balance Sheets as current liabilities.
Effective March 1, 2001, the bonds were reset for a
five-year period and have been classified as long-term debt.
Resulting from the reset, the interest rate on the $31.5 million
Series A bonds increased from 4.30 % to 4.75 %, and the interest
rate on the $22.2 million Series C bonds increased from 4.45 % to
5.00 %.
At March 31, 2001, SIGECO has approximately $74 million of short-
term borrowing capacity for use in its operations, of which
approximately $59 million is available.
SIGECO's credit rating on outstanding debt at March 31, 2001 was
A/A1.
Capital Expenditures and Other Investment Activities
Cash required for investing activities of $9.6 million and $47.2
for the three and twelve months ended March 31, 2001 is comprised
mainly of capital expenditures. Cash requirements for investing
activities have decreased from prior year requirements primarily
due a decrease in capital expenditures for utility plant.
17
New construction, normal system maintenance and improvements, and
technology investments needed to provide service to a growing
customer base will continue to require substantial expenditures.
Capital expenditures for the remainder of 2001 are estimated at
$88 million.
Forward-Looking Information
A "safe harbor" for forwarding-looking statements is provided by
the Private Securities Litigation Reform Act of 1995 (Reform Act
of 1995). The Reform Act of 1995 was adopted to encourage such
forward-looking statements without the threat of litigation,
provided those statements are identified as forward-looking and
are accompanied by meaningful cautionary statements identifying
important factors that could cause the actual results to differ
materially from those projected in the statement. Certain
matters described in Management's Discussion and Analysis of
Results of Operations and Financial Condition, including, but not
limited to Vectren's realization of net merger savings, are
forward-looking statements. Such statements are based on
management's beliefs, as well as assumptions made by and
information currently available to management. When used in this
filing, the words "believe," "anticipate," "endeavor,"
"estimate," "expect," "objective," "projection," "forecast,"
"goal," and similar expressions are intended to identify forward-
looking statements. In addition to any assumptions and other
factors referred to specifically in connection with such forward-
looking statements, factors that could cause Vectren and its
subsidiaries' actual results to differ materially from those
contemplated in any forward-looking statements included, among
others, the following:
* Factors affecting utility operations such as unusual
weather conditions; catastrophic weather-related damage;
unusual maintenance or repairs; unanticipated changes to
fossil fuel costs; unanticipated changes to gas supply
costs, or availability due to higher demand, shortages,
transportation problems or other developments;
environmental or pipeline incidents; transmission or
distribution incidents; unanticipated changes to electric
energy supply costs, or availability due to demand,
shortages, transmission problems or other developments; or
electric transmission or gas pipeline system constraints.
* Increased competition in the energy environment including
effects of industry restructuring and unbundling.
* Regulatory factors such as unanticipated changes in rate-
setting policies or procedures, recovery of investments
and costs made under traditional regulation, and the
frequency and timing of rate increases.
* Financial or regulatory accounting principles or policies
imposed by the Financial Accounting Standards Board, the
Securities and Exchange Commission, the Federal Energy
Regulatory Commission, state public utility commissions,
state entities which regulate natural gas transmission,
gathering and processing, and similar entities with
regulatory oversight.
* Economic conditions including inflation rates and monetary
fluctuations.
* Changing market conditions and a variety of other factors
associated with physical energy and financial trading
activities including, but not limited to, price, basis,
credit, liquidity, volatility, capacity, interest rate,
and warranty risks.
* Availability or cost of capital, resulting from changes in
SIGECO, interest rates, and securities ratings or market
perceptions of the utility industry and energy-related
industries.
* Employee workforce factors including changes in key
executives, collective bargaining agreements with union
employees, or work stoppages.
18
* Legal and regulatory delays and other obstacles associated
with mergers, acquisitions, and investments in joint
ventures.
* Costs and other effects of legal and administrative
proceedings, settlements, investigations, claims, and
other matters, including, but not limited to, those
described in Management's Discussion and Analysis of
Results of Operations and Financial Condition.
* Changes in federal, state or local legislature
requirements, such as changes in tax laws or rates,
environmental laws and regulations.
SIGECO undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of changes in
actual results, changes in assumptions, or other factors
affecting such statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
SIGECO is exposed to market risks associated with interest rates,
commodity prices and counterparty credit. The company employs a
variety of risk management policies to monitor and control these
risks including the use of both derivative and non-derivative
financial instruments. The company does not presently utilize
financial instruments for trading or speculative purposes.
Interest Rate Risk
SIGECO attempts to mitigate its exposure to interest rate
fluctuations through management of its short-term borrowings. An
internal guideline to manage short-term interest rate exposure
has been established. This guideline targets a maximum of 25% of
the company's total debt portfolio to consist of adjustable rate
bonds with a maturity of less than one year, short-term notes and
commercial paper. However, SIGECO acknowledges that there may be
times during the business cycle that the guideline may be
exceeded. At March 31, 2001, SIGECO's short-term debt
represented 5 % of the company's total debt portfolio, due
primarily to resetting of adjustable rate bonds for a five year
period, offset by increased working capital requirements
resulting from higher purchased gas costs and increased customer
consumption.
Market risk is estimated as the potential impact resulting from
fluctuations in interest rates on short-term borrowings,
including bank notes and lines of credit. These instruments have
interest rates indexed to short-term market interest rates. At
March 31, 2001, March 31, 2000 and December 31, 2000, the
combined borrowings under these facilities totaled $14.8 million,
$10.3 million and $40.2 million, respectively. Based upon
average borrowing rates under these facilities during the three
months ended March 31, 2001 and 2000, an increase of 100 basis
points (1 %) in the rates would have increased interest expense
by $0.1 for both periods. For the twelve months ended March 31,
2001 and 2000, an increase of 100 basis points in the rates would
have increased interest expense by $0.3 million and $0.5 million,
respectively.
Commodity Price Risk
SIGECO not currently exposed to market risks for purchases of
natural gas and electric energy for its retail customers due to
current Indiana regulations which allow for recovery of such
purchases through natural gas and fuel cost adjustment
mechanisms.
SIGECO's wholesale power marketing activities manage the
utilization of available generating capability through forward
sale contracts of electricity. Such contracts are used during
periods when SIGECO's available generating capability is expected
to exceed the demands of its retail, or native load, customers.
These activities expose the company to electricity market price
risk. To minimize the risk related to these forward contracts,
call option contracts to hedge against the unexpected loss of its
generating capability during periods of heavy demand may be used.
SIGECO also utilizes forward physical
19
contracts for the wholesale purchase of generating capability to
resell to other utilities and power marketers through non-firm
"buy-resell" transactions where the sale and purchase prices of
power are concurrently set. Management believes exposure from
these positions was not material.
Counterparty Credit Risk
SIGECO is also exposed to counterparty credit risk when a
customer or supplier defaults upon a contract to pay or deliver
the commodity. To mitigate these risks, procedures
to determine and monitor the creditworthiness of counterparties
have been established.
20
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
PART II - OTHER ITEMS
ITEM 1. LEGAL PROCEEDINGS
SIGECO is party to various legal proceedings arising in the
normal course of business. In the opinion of management, with
the exception litigation matter related to the Clean Air Act (See
Note 7), there are no legal proceedings pending against SIGECO
that are likely to have a material adverse effect on the
financial position or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K
On January 26, 2001, SIGECO filed a Current Report on Form 8-K with
respect to the release of Vectren Corporation's financial information
to the investment community regarding Vectren's results of
operations, financial position and cash flows for the three and
twelve month periods ended December 31, 2000, and Vectren declared a
quarterly common stock dividend and SIGECO declared a preferred stock
dividend. Both dividends were payable on March 1, 2001. The
financial information was released to the public through this filing.
Item 7. Exhibits
99.1 - Press Release - Fourth Quarter 2000 Vectren Earnings
99.2 - Financial Analyst Report - Fourth Quarter 2000
99.3 - Press Release - Declaration of Common Stock Dividend
99.4 - Press Release - Declaration of SIGECO 4.8% Preferred
Stock Dividend
99.5 - Analyst Teleconference Script - Fourth Quarter 2000
99.6 - Cautionary Statement for Purposes of the "Safe
Harbor" Provisions of the Private Securities Litigation
Reform Act of 1995
On February 21, 2001, SIGECO filed a Current Report on Form 8-K with
respect to the release of financial information regarding the
Company's results of operations and financial position for the year
ended December 31, 2000. The financial information was released to
the public through this filing.
Item 5. Other Events
Item 7. Exhibits
99.1 - Unaudited Balance Sheets as of December 31, 2000
and 1999 and the unaudited Statements of Income for the
years ended December 31, 2000, 1999 and 1998 of SIGECO
99.2 - Cautionary Statement for Purposes of the "Safe
Harbor" Provisions of the Private Securities Litigation
Reform Act of 1995
On March 29, 2001, SIGECO filed a Current Report on Form 8-K with
respect to the settlement between the Indiana Gas Company, Inc. (IGC)
(subsidiary company of Vectren Corporation), the Indiana Office of
the Utility Consumer Counselor, and the Citizens Action Coalition of
the appeals surrounding the Indiana Utility Regulatory Commission's
January 4, 2001 order that disallowed $3.8 million of gas cost
recovery by IGC.
Item 5. Other Events
Item 7. Exhibits
99.1 - Press Release
99.2 - Forward Looking Statements
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
Registrant
May 14, 2001 /s/Jerome A. Benkert, Jr.
-----------------------------
Jerome A. Benkert, Jr.
Executive Vice President and
Chief Financial Officer
/s/M. Susan Hardwick
--------------------------------
M. Susan Hardwick
Vice President and Controller