EVANSVILLE, IN--(Marketwire - December 11, 2009) - Vectren Energy Delivery of Indiana - South
(Vectren) (
NYSE:
VVC) today filed a request with the Indiana Utility
Regulatory Commission (IURC) for a base rate increase for its southwestern
Indiana electric utility. The regulatory filing requests approval of the
increase to address capital investments in its energy delivery
infrastructure, a modified electric rate structure that facilitates a
partnership between the company and customers to pursue energy efficiency
and conservation, and new energy efficiency programs to complement those
currently offered for natural gas customers.
More than half of the request to increase rates is driven by the need to
recover costs associated with the roughly $325 million spent in
infrastructure construction within the past three years that was needed in
its seven-county service territory, which serves more than 140,000
customers. Most of the remainder of the request is to account for declines
in overall sales attributed to the recession, which has resulted in a cost
recovery shortfall. Additionally, the rate increase reflects a slight
increase in the utility's annual operating and maintenance costs.
As proposed, a typical residential combination gas and electric customer
who uses around 900 kilowatt hours per month would experience a monthly
bill increase of about $18.
"We recognize this is a challenging economy in which to seek a rate
increase, and we are committed to working with customers who may find
themselves challenged to pay," said Niel Ellerbrook, Vectren chairman and
CEO. "We have worked aggressively to manage costs and have cut costs where
possible. However, we cannot delay or cut projects indefinitely without
jeopardizing the safety of our system and the customer -- we are nearing
that crossroads. Furthermore, the need to attract capital to provide safe,
reliable service will only continue. We must maintain the level of service
our customers expect and ensure the financial stability of the company.
Unfortunately, there are times in which rate adjustments are the only way
to do that."
The proposed rate design, often referred to as decoupling, will break the
link between customers' consumption and the utility's rate of return,
thereby, aligning the utility's and customers' interests in using less
energy. This approach has already been successfully implemented for
Vectren's gas utilities.
If approved as filed, the energy efficiency programs will include automatic
discounts through various retailers on compact fluorescent light bulbs,
rebates for the early retirement of older, inefficient appliances,
including refrigerators and window-unit air conditioners, and custom
programs for high-efficiency lighting for small business customers. Vectren
has also proposed to establish on-site energy audits for both residential
and small commercial customers.
"Our planned energy efficiency programs will fundamentally change our
relationship with our customers and will allow us to more effectively
partner with them to use electricity wisely and efficiently," added
Ellerbrook. "In our current rate structure, customers must use more energy
in order for us to recover our costs, and that approach simply makes no
sense given the need to conserve and more efficiently utilize our natural
resources. This is particularly true as the country attempts to reduce
greenhouse gas emissions to deal with climate change concerns."
The request also includes a plan to install dense pack technology on two
generating units at the company's A.B. Brown power plant in Posey County,
Ind. The $35-million project, which will be completed in two phases over
2012 and 2013, will enhance generation efficiency and ultimately help delay
the need for a new generating plant, which would require a much higher
capital expenditure. By improving the units' efficiency, Vectren can use
less fuel and reduce emissions, including carbon, up to 5 percent. The
company is requesting the project costs be placed into base rates in 2013
upon project completion.
Key investments since the last rate adjustment include:
- $150 million for new infrastructure, including new substations, poles
and underground and overhead transmission and distribution lines. Key
projects include a $15 million expenditure to expand the Oak Grove
substation on Evansville's east side, which will ensure reliability in the
region and foster continued expansion, and $19 million and $14 million
projects in the McCutchanville and Pigeon Creek areas, respectively.
- $99 million to install a scrubber at its coal-fired generation unit,
Warrick Unit 4, which is located near the F.B. Culley power plant in
Warrick County. Although customers' bills have already been adjusted for
the majority of the costs incurred for this project, the filing will shift
the investment into base rates.
- $11 million for the Blackfoot Clean Energy Facility, a
landfill-gas-to-electricity project that was brought online earlier this
summer and provides 3.2 megawatts (MW) of cost-effective renewable energy
to Vectren's electric customers or enough to power 2,000 homes.
- Approximately $20 million to construct storage, conveyor and loading
equipment to avoid the continued landfilling of fly ash, a by-product of
coal-fired generation, and instead provide for the beneficial reuse of that
material by providing it to a company in Missouri for use in cement
manufacturing. This project will minimize the impact of fly ash disposal on
the environment, as well as avoid the future cost of placing the fly ash
into a landfill.
The Warrick Unit 4 scrubber concludes a spend of more than $410 million
over the past several years, in which Vectren's generation fleet is now 100
percent scrubbed for sulfur dioxide, 90 percent controlled for nitrogen
oxide and filtered for particulate matter and a significant portion of
mercury from the flue gas before exiting the stacks, which directly
improves the air quality of southwestern Indiana. Only approximately 35
percent of Indiana's generation (megawatts) will be able to meet the
proposed air pollutant limits to be finalized in 2011. Vectren's coal fired
generation fleet is included in that group. Thus, these investments make
Vectren's generation fleet one of the cleanest in the Midwest.
"Our decision several years ago to aggressively move forward with
significant investments in emission control equipment has us well ahead of
neighboring electric companies and exemplifies our commitment to the
environment," said Ellerbrook. "Other electric companies will also
experience rate adjustments as they make significant investments in the
coming years in an attempt to reach the level of emissions control that
Vectren has already achieved."
Vectren has established an informational web site,
http://www.vectren.com/ratecase, to help customers understand the rate case
process and elements of the filing. Customers can access frequently asked
questions, watch a video on the need for a rate case, review the proposed
energy efficiency programs and incentives and find resources to help lower
bills year-round.
The regulatory filing begins a comprehensive review by the IURC that will
take several months to a year and will include at least one public hearing.
The IURC will examine Vectren's investments to serve customers and the
reasonableness of its operating costs as part of the regulatory process to
ultimately determine final rates.
Vectren's electric utility serves more than 140,000 in all or portions of
Dubois, Gibson, Pike, Posey, Spencer, Vanderburgh and Warrick counties.
About Vectren
Vectren Corporation (
NYSE:
VVC) is an energy holding company headquartered
in Evansville, Ind. Vectren's energy delivery subsidiaries provide gas
and/or electricity to more than one million customers in adjoining service
territories that cover nearly two-thirds of Indiana and west central Ohio.
Vectren's nonutility subsidiaries and affiliates currently offer
energy-related products and services to customers throughout the Midwest
and Southeast. These include gas marketing and related services; coal
production and sales; and energy infrastructure services. To learn more
about Vectren, visit
http://www.vectren.com.
Safe Harbor for Forward Looking Statements
All statements other than statements of historical fact are forward-looking
statements made in good faith by the company and are intended to qualify
for the safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995. Such statements are based on management's
beliefs, as well as assumptions made by and information currently available
to management and include such words as "believe", "anticipate",
"endeavor", "estimate", "expect", "objective", "projection", "forecast",
"goal", "likely", and similar expressions intended to identify
forward-looking statements.
Vectren cautions readers that the assumptions forming the basis for
forward-looking statements include many factors that are beyond Vectren's
ability to control or estimate precisely and actual results could differ
materially from those contained in this document. Forward-looking
statements speak only as of the date on which our statement is made, and we
assume no duty to update them. More detailed information about these
factors is set forth in Vectren's filings with the Securities and Exchange
Commission, including Vectren's 2008 annual report on Form 10-K filed on
February 19, 2009.
Contact Information: Media contact:
Chase Kelley
(812) 491-4128
Investor contact:
Steve Schein
(812) 491-4209