2.2.0.7 false VARIABLE INTEREST ENTITIES 11701 - Disclosure - VARIABLE INTEREST ENTITIES true false false false 1 USD false false Unit1 Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 Unit13 Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 Unit12 Standard http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 VARIABLE INTEREST ENTITIES 0 aye_VariableInterestEntities aye false na duration VARIABLE INTEREST ENTITIES false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string VARIABLE INTEREST ENTITIES false 3 VARIABLE INTEREST ENTITIES 1 us-gaap_ScheduleOfVariableInterestEntitiesTextBlock us-gaap true na duration No definition available. false false false false false false false false false false false terselabel false 1 false false false false 0 0 <div> <a name="tx103575_29"> </a> <div> <a name="tx103575_29"> </a>NOTE 17: VARIABLE INTEREST ENTITIES GAAP requires the primary beneficiary of a Variable Interest Entity ("VIE") to consolidate the entity and also requires majority and significant variable interest investors to provide certain disclosures. A VIE is an entity in which the equity investors do not have a controlling financial interest or in which the equity investment at risk is insufficient to finance the entity's activities without receiving subordinated financial support from the other parties.   Independent Power Producer ("IPP") contracts. Potomac Edison and West Penn each have a long-term electricity purchase contract with unrelated IPPs. Allegheny periodically requests from these IPPs the information necessary to determine whether these entities are VIEs and whether Allegheny is the primary beneficiary. Allegheny has been unable to obtain the requested information, which was determined by the IPPs to be proprietary. Potomac Edison purchased power from an IPP in the amount of $29.1 million and $19.5 million for the three months ended September 30, 2010 and 2009, respectively, and $89.2 million and $65.6 million for the nine months ended September 30, 2010 and 2009, respectively. West Penn purchased power from an IPP in the amount of $11.5 million and $11.6 million for the three months ended September 30, 2010 and 2009, respectively and $29.9 million and $35.7 million for the nine months ended September 30, 2010 and 2009, respectively. Neither Potomac Edison nor West Penn is subject to any risk of loss associated with the applicable potential VIE, because neither has any obligation to the applicable IPP other than to purchase the power that the IPP produces according to the terms of the applicable electricity purchase contract. APS Constellation, LLC ("APS Constellation"). Allegheny Ventures, Inc., a non-utility subsidiary of AE, formed a partnership in 1995 with an unregulated business of Constellation Energy in a joint venture energy services company named APS Constellation. The business purpose of APS Constellation is the marketing, development, and implementation of energy conservation projects. APS Constellation, working under an Engineer/Procure/Construct agreement as a subcontractor for Potomac Edison, completed multiple energy conservation projects for Potomac Edison's government customers at Ft. Detrick, Maryland. The projects resulted in performance payments and other fees remitted to APS Constellation. APS Constellation securitized the future revenue streams from the projects through several financings and made a partnership distribution of the proceeds. Some of the project financings required Potomac Edison to provide ongoing guarantees. In 2005, the joint venture operating agreement was amended to limit Allegheny's obligations and participation in APS Constellation. The accounts of APS Constellation are not included in Allegheny's Consolidated Financial Statements because Allegheny does not have the power to direct activities that most significantly impact APS Constellation's economic performance. At September 30, 2010, Allegheny's maximum exposure to loss related to APS Constellation consisted of a $0.7 million equity investment in APS Constellation, a letter of credit guarantee of $3.1 million and recourse guarantees of $6.0 million. These guarantees are not recorded on Allegheny's Consolidated Balance Sheet. PATH WV. As described in Note 1, "Business and Basis of Presentation," PATH WV is owned equally by Allegheny and AEP. As described in Note 3, "Recently Adopted and Recently Issued Accounting Standards," Allegheny deconsolidated PATH WV from its financial statements effective January 1, 2010, and accounts for its investment in PATH WV under the equity method. Allegheny and AEP provide certain services to PATH WV and make capital contributions to PATH WV as needed. At September 30, 2010, Allegheny's consolidated balance sheet included Allegheny's investment in PATH WV on the equity method of accounting in the amount of $21.7 million. At December 31, 2009, Allegheny's consolidated balance sheet included property, plant and equipment of PATH WV in the amount of approximately $35.8 million, cash and cash equivalents of $3.4 million and noncontrolling interest related to AEP's ownership of approximately $14.9 million. Allegheny's consolidated statement of income for the three and nine months ended September 30, 2010 included other income of $1.0 million and $2.8 million, respectively, representing Allegheny's 50% equity in the pre-tax earnings of PATH WV. Allegheny's consolidated statement of income for the three and nine months ended September 30, 2009 included revenues of $3.2 million and $7.7 million, respectively, pretax income of $1.3 million and $2.8 million, respectively and net income attributable to noncontrolling interest of $0.4 million and $0.8 million, respectively.   Allegheny expects to make capital contributions to PATH WV to support its construction projects. Because of the nature of PATH WV's operations and its FERC-approved rate mechanism, Allegheny's maximum exposure to loss consists of its advances to, and investment in, PATH WV, which were $0.7 million and $21.7 million, respectively, at September 30, 2010. Energy Insurance Services, Inc. Allegheny has entered into an insurance arrangement with Energy Insurance Services, Inc. ("EIS"). EIS has multiple protected cells and writes policies for Allegheny in one segregated cell, referred to as Mutual Business Program No. 2 (the "Program"). Neither Allegheny nor its subsidiaries have an equity investment in EIS. The Program is governed by a Participation Agreement that limits claims paid on policies that are not reinsured to premium payments made by Allegheny, contributions to surplus and any investment returns on those premiums less expenses. The accounts of EIS are included in Allegheny's Consolidated Financial Statements because Allegheny is the sole beneficiary of the Program. Insurance premiums for the Program were $7.0 million and $7.7 million for the three months ended September 30, 2010 and 2009, respectively, and were $8.7 million and $9.6 million for the nine months ended September 30, 2010 and 2009, respectively. At September 30, 2010, total assets were $18.9 million, consisting primarily of investments, and total liabilities were $14.9 million, consisting primarily of claim reserves. At September 30, 2010, Allegheny's maximum exposure to loss related to EIS consisted of a $4.0 million equity investment in EIS recorded on its Consolidated Balance Sheet. </div> </div> NOTE 17: VARIABLE INTEREST ENTITIES GAAP requires the primary beneficiary of a Variable Interest Entity ("VIE") to consolidate the entity and also requires false false false us-types:textBlockItemType textblock Disclosure of variable interest entities (VIE), including, but not limited to the nature, purpose, size, and activities of the VIE, the carrying amount and classification of consolidated assets that are collateral for the VIE's obligations, lack of recourse if creditors (or beneficial interest holders) of a consolidated VIE have no recourse to the general credit of the primary beneficiary. An enterprise that holds a significant variable interest in a VIE but is not the primary beneficiary may disclose the nature of its involvement with the VIE and when that involvement began, the nature, purpose, size, and activities of the VIE and the enterprise's maximum exposure to loss as a result of its involvement with the VIE. Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 140 -Paragraph 35 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 46R -Paragraph 2, 14, 15, 16, 23, 24, 25, 26 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 46R -Paragraph 4 -Subparagraph g Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Staff Position (FSP) -Number FAS140-4 and FIN46(R)-8 -Paragraph C4 -Subparagraph d false 1 2 false UnKnown UnKnown UnKnown false true