<PAGE> 1
PART 1
ITEM 1. BUSINESS
GENERAL
Southern Indiana Gas and Electric Company (Company) is an operating
public utility incorporated June 10, 1912, under the laws of the State of
Indiana, engaged in the generation, transmission, distribution and sale of
electric energy and the purchase of natural gas and its transportation,
distribution and sale in a service area which covers ten counties in
southwestern Indiana. The Company has three active wholly-owned
nonutility subsidiaries, Southern Indiana Properties, Inc., Southern
Indiana Minerals, Inc., and Energy Systems Group, Inc., and one wholly-
owned utility subsidiary, Lincoln Natural Gas Company, Inc. (See Note 1
(a) of the Notes To Consolidated Financial Statements, page 31, for
further discussion.)
Electric service is supplied directly to Evansville and 74 other
cities, towns and communities, and adjacent rural areas. Wholesale
electric service is supplied to an additional nine communities. At
December 31, 1994, the Company served 118,992 electric customers and was
also obligated to provide for firm power commitments to the City of
Jasper, Indiana and to maintain spinning reserve margin requirements under
an agreement with the East Central Area Reliability Group (ECAR).
At December 31, 1994, the Company supplied gas service to 102,929
customers in Evansville and 64 other nearby communities and their
environs. Since 1986, the Company has purchased its natural gas supply
requirements from numerous suppliers. During 1994, twenty-one suppliers
were used. Until November 1993, Texas Gas Transmission Corporation
(TGTC) was the Company's primary contract supplier. In November 1993,
TGTC restructured its services so that its gas supplies are sold
separately from its interstate transportation services. The Company
assumed full responsibility for the purchase of all its natural gas
supplies. (See subsequent reference under "Gas Business" to the
restructuring of interstate pipelines.) During 1994, twenty-two of the
Company's major gas customers took advantage of the Company's gas
transportation program to procure a portion of their gas supply needs from
suppliers other than the Company.
The principal industries served by the Company include polycarbonate
resin (Lexan) and plastic products, aluminum smelting and recycling,
aluminum sheet products, appliance manufacturing, pharmaceutical and
nutritional products, automotive glass, gasoline and oil products, and
coal mining.
The only property the Company owns outside of Indiana is
approximately eight miles of 138,000 volt electric transmission line which
is located in Kentucky and which interconnects with Louisville Gas and
Electric Company's transmission system at Cloverport, Kentucky. The
original cost of the property is less than $425,000. The Company does not
distribute any electric energy in Kentucky.
LINES OF BUSINESS
The percentages of operating revenues and operating income before
income taxes attributable to the electric and gas operations of the
Company for the five years ended December 31, 1994, were as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
Operating Revenues:
Electric 80.6% 81.8% 79.2% 78.4% 79.1%
Gas 19.4 18.2 20.8 21.6 20.9
Operating Income Before Income Taxes:
Electric 93.0% 97.4% 99.0% 99.5% 90.9%
Gas 7.0 2.6 1.0 0.5 9.1
<FN>
Periods beginning in 1992 reflect the results of Lincoln Natural Gas Company, Inc.,
acquired June 30, 1994.
</FN>
</TABLE>
Reference is made to Note 12 of the Notes To Consolidated Financial
Statements, page 41, for Segments of Business Data.
