Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 28, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | VECTREN CORP | |
Entity Central Index Key | 1,096,385 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 82,953,572 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash & cash equivalents | $ 32.6 | $ 68.6 |
Accounts receivable - less reserves of $6.6 & $6.0, respectively | 183.5 | 225.3 |
Accrued unbilled revenues | 129.8 | 172.4 |
Inventories | 117.3 | 129.9 |
Recoverable fuel & natural gas costs | 27.1 | 29.9 |
Prepayments & other current assets | 34.8 | 52.7 |
Total current assets | 525.1 | 678.8 |
Utility Plant | ||
Original cost | 6,633.9 | 6,545.4 |
Less: accumulated depreciation & amortization | 2,609 | 2,562.5 |
Net utility plant | 4,024.9 | 3,982.9 |
Investments in unconsolidated affiliates | 20.4 | 20.4 |
Other utility & corporate investments | 36.6 | 34.1 |
Other nonutility investments | 16.1 | 16.1 |
Nonutility plant - net | 429.2 | 423.9 |
Goodwill | 293.5 | 293.5 |
Regulatory assets | 324.8 | 308.8 |
Other assets | 42 | 42.2 |
TOTAL ASSETS | 5,712.6 | 5,800.7 |
Current Liabilities | ||
Accounts payable | 242.3 | 302.2 |
Accrued liabilities | 207.5 | 207.7 |
Short-term borrowings | 101.4 | 194.4 |
Current maturities of long-term debt | 124.1 | 124.1 |
Total current liabilities | 675.3 | 828.4 |
Long-term Debt - Net of Current Maturities | 1,590.2 | 1,589.9 |
Deferred Credits & Other Liabilities | ||
Deferred income taxes | 934.5 | 905.7 |
Regulatory liabilities | 462 | 453.7 |
Deferred credits & other liabilities | 260.2 | 254.9 |
Total deferred credits & other liabilities | 1,656.7 | 1,614.3 |
Commitments & Contingencies (Notes 7-11) | ||
Common Shareholders' Equity | ||
Common stock (no par value) – issued & outstanding 83.0 & 82.9, respectively | 731.6 | 729.8 |
Retained earnings | 1,060.1 | 1,039.6 |
Accumulated other comprehensive (loss) | (1.3) | (1.3) |
Total common shareholders' equity | 1,790.4 | 1,768.1 |
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ 5,712.6 | $ 5,800.7 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Millions, $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Current Assets | ||
Reserves | $ 6.6 | $ 6 |
Common Shareholders' Equity | ||
Common stock, shares issued (in shares) | 83 | 82.9 |
Common stock, shares outstanding (in shares) | 83 | 82.9 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
OPERATING REVENUES | ||
Gas utility | $ 292.8 | $ 281.2 |
Electric utility | 132.1 | 142.1 |
Nonutility | 199.6 | 161.5 |
Total operating revenues | 624.5 | 584.8 |
OPERATING EXPENSES | ||
Cost of gas sold | 112.9 | 111.6 |
Cost of fuel & purchased power | 41.2 | 44.2 |
Cost of nonutility revenues | 61.8 | 55.3 |
Other operating | 224.3 | 200 |
Depreciation & amortization | 67.8 | 63.9 |
Taxes other than income taxes | 15.1 | 17.6 |
Total operating expenses | 523.1 | 492.6 |
OPERATING INCOME | 101.4 | 92.2 |
OTHER INCOME | ||
Equity in (losses) of unconsolidated affiliates | (0.5) | (0.2) |
Other income – net | 8 | 5.7 |
Total other income | 7.5 | 5.5 |
INTEREST EXPENSE | 21.3 | 22.1 |
INCOME BEFORE INCOME TAXES | 87.6 | 75.6 |
INCOME TAXES | 32.2 | 27.3 |
NET INCOME AND COMPREHENSIVE INCOME | $ 55.4 | $ 48.3 |
WEIGHTED AVERAGE AND DILUTED COMMON SHARES OUTSTANDING (in shares) | 82.9 | 82.8 |
DILUTED COMMON SHARES OUTSTANDING (in shares) | 83 | 82.8 |
BASIC AND DILUTED EARNINGS PER SHARE OF COMMON STOCK (in dollars per share) | $ 0.67 | $ 0.58 |
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK (in dollars per share) | $ 0.42000000 | $ 0.4000000 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 55.4 | $ 48.3 |
Adjustments to reconcile net income to cash from operating activities: | ||
Depreciation & amortization | 67.8 | 63.9 |
Deferred income taxes & investment tax credits | 26.7 | 24.3 |
Provision for uncollectible accounts | 1.8 | 2.6 |
Expense portion of pension & postretirement benefit cost | 1 | 1 |
Other non-cash items - net | 2.6 | 3 |
Changes in working capital accounts: | ||
Accounts receivable & accrued unbilled revenues | 82.6 | 86.9 |
Inventories | 12.6 | 11.1 |
Recoverable/refundable fuel & natural gas costs | 2.8 | (16.8) |
Prepayments & other current assets | 16.8 | 33.3 |
Accounts payable, including to affiliated companies | (48.8) | (38.1) |
Accrued liabilities | 0.2 | (0.5) |
Employer contributions to pension & postretirement plans | (1.4) | (16.2) |
Changes in noncurrent assets | (5.5) | (6.4) |
Changes in noncurrent liabilities | (2.1) | 6 |
Net cash provided by operating activities | 212.5 | 202.4 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from dividend reinvestment plan & other common stock issuances | 1.5 | 1.5 |
Requirements for: | ||
Dividends on common stock | (34.9) | (33.2) |
Retirement of long-term debt | 0 | (60) |
Net change in short-term borrowings | (93) | (14.5) |
Net cash used in financing activities | (126.4) | (106.2) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Proceeds from sale of assets and other collections | 0.6 | 0.4 |
Requirements for: | ||
Capital expenditures, excluding AFUDC equity | (123.6) | (108.7) |
Changes in restricted cash | 0.9 | 0 |
Net cash used in investing activities | (122.1) | (108.3) |
Net change in cash & cash equivalents | (36) | (12.1) |
Cash & cash equivalents at beginning of period | 68.6 | 74.7 |
Cash & cash equivalents at end of period | $ 32.6 | $ 62.6 |
Organization and Nature of Oper
Organization and Nature of Operations | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | Organization and Nature of Operations Vectren Corporation (the Company or Vectren), an Indiana corporation, is an energy holding company headquartered in Evansville, Indiana. The Company’s wholly owned subsidiary, Vectren Utility Holdings, Inc. (Utility Holdings or VUHI), serves as the intermediate holding company for three public utilities: Indiana Gas Company, Inc. (Indiana Gas or Vectren Energy Delivery of Indiana - North), Southern Indiana Gas and Electric Company (SIGECO or Vectren Energy Delivery of Indiana - South), and Vectren Energy Delivery of Ohio, Inc. (VEDO). Utility Holdings also has other assets that provide information technology and other services to the three utilities. Utility Holdings’ consolidated operations are collectively referred to as the Utility Group. Both Vectren and Utility Holdings are holding companies as defined by the Energy Policy Act of 2005. Vectren was incorporated under the laws of Indiana on June 10, 1999. Indiana Gas provides energy delivery services to approximately 597,000 natural gas customers located in central and southern Indiana. SIGECO provides energy delivery services to approximately 145,000 electric customers and approximately 112,000 gas customers located near Evansville in southwestern Indiana. SIGECO also owns and operates electric generation assets to serve its electric customers and optimizes those assets in the wholesale power market. Indiana Gas and SIGECO generally do business as Vectren Energy Delivery of Indiana. VEDO provides energy delivery services to approximately 320,000 natural gas customers located near Dayton in west central Ohio. The Company, through Vectren Enterprises, Inc. (Enterprises), is involved in nonutility activities in two primary business areas: Infrastructure Services and Energy Services. Infrastructure Services provides underground pipeline construction and repair services. Energy Services provides energy performance contracting and sustainable infrastructure, such as renewables, distributed generation, and combined heat and power projects. Enterprises also has other legacy businesses that have investments in energy-related opportunities and services and other investments. All of the above is collectively referred to as the Nonutility Group. Enterprises supports the Company's regulated utilities by providing infrastructure services. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2017 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Basis of Presentation The interim condensed consolidated financial statements included in this report have been prepared by the Company, without audit, as provided in the rules and regulations of the Securities and Exchange Commission and include a review of subsequent events through the date the financial statements were issued. Certain information and note 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. The information in this report reflects all adjustments which are, in the opinion of management, necessary to fairly state the interim periods presented, inclusive of adjustments that are normal and recurring in nature. These interim condensed consolidated financial statements and related notes should be read in conjunction with the Company’s audited annual consolidated financial statements for the year ended December 31, 2016 , filed with the Securities and Exchange Commission on February 23, 2017, on Form 10-K. Because of the seasonal nature of the Company’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 periods. Actual results could differ from those estimates. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The Company uses the two class method to calculate earnings per share (EPS). The two class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common shareholders. Under the two class method, earnings for a period are allocated between common shareholders and participating security holders based on their respective rights to receive dividends as if all undistributed book earnings for the period were distributed. The amount of net income attributable to participating securities is immaterial. Basic EPS is computed by dividing net income attributable to only the common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the impact of share-based compensation to the extent the effect is dilutive. The following table illustrates the basic and dilutive EPS calculations for the periods presented in these financial statements. Three Months Ended March 31, (In millions, except per share data) 2017 2016 Numerator: Reported net income (Numerator for Basic and Diluted EPS) $ 55.4 $ 48.3 Denominator: Weighted average common shares outstanding (Denominator for Basic EPS) 82.9 82.8 Conversion of share based compensation arrangements 0.1 — Adjusted weighted-average shares outstanding and assumed conversions outstanding (Denominator for Diluted EPS) 83.0 82.8 Basic and Diluted EPS $ 0.67 $ 0.58 For the three months ended March 31, 2017 and 2016 , all share-based compensation was dilutive and immaterial. |
Excise & Utility Receipts Taxes
Excise & Utility Receipts Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Excise and Utility Receipts Taxes [Abstract] | |
Excise & Utility Receipts Taxes | Excise & Utility Receipts Taxes Excise taxes and a portion of utility receipts taxes are included in rates charged to customers. Accordingly, the Company records these taxes billed to customers, which totaled $9.4 million in each of the three months ended March 31, 2017 and 2016 , as a component of operating revenues. Expenses associated with excise and utility receipts taxes are recorded as a component of Taxes other than income taxes . |
Retirement Plans & Other Postre
Retirement Plans & Other Postretirement Benefits | 3 Months Ended |
Mar. 31, 2017 | |
Pension and Other Postretirement Benefit Expense [Abstract] | |
Retirement Plans & Other Postretirement Benefits | Retirement Plans & Other Postretirement Benefits The Company maintains three closed qualified defined benefit pension plans, a nonqualified supplemental executive retirement plan (SERP), and a postretirement benefit plan. The defined benefit pension plans and postretirement benefit plan, which cover eligible full-time regular employees, are primarily noncontributory. The postretirement health care and life insurance plans are a combination of self-insured and fully insured plans. The qualified pension plans and the SERP are aggregated under the heading “Pension Benefits.” The postretirement benefit plan is presented under the heading “Other Benefits.” Net Periodic Benefit Costs A summary of the components of net periodic benefit cost follows and the amortizations shown below are primarily reflected in Regulatory assets as a majority of pension and other postretirement benefits are being recovered through rates. Three Months Ended March 31, Pension Benefits Other Benefits (In millions) 2017 2016 2017 2016 Service cost $ 1.6 $ 1.8 $ — $ 0.1 Interest cost 3.5 3.6 0.4 0.4 Expected return on plan assets (5.3 ) (5.7 ) — — Amortization of prior service cost 0.1 0.1 (0.6 ) (0.7 ) Amortization of actuarial loss 1.9 1.8 — — Net periodic cost (benefit) $ 1.8 $ 1.6 $ (0.2 ) $ (0.2 ) Employer Contributions to Qualified Pension Plans Currently, the Company does no t anticipate making contributions to its qualified pension plans in 2017. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Mar. 31, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information As of March 31, 2017 and December 31, 2016 , the Company has accruals related to utility and nonutility plant purchases totaling approximately $20.1 million and $30.0 million , respectively. |
Investment in ProLiance Holding
Investment in ProLiance Holdings, LLC | 3 Months Ended |
Mar. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in ProLiance Holdings, LLC | Investment in ProLiance Holdings, LLC The Company has an investment in ProLiance Holdings, LLC (ProLiance), an affiliate of the Company and Citizens Energy Group (Citizens). Much of the Proliance business was sold on June 18, 2013 when ProLiance exited the natural gas marketing business through the disposition of certain of the net assets of its energy marketing business, ProLiance Energy, LLC. The Company's remaining investment in ProLiance relates primarily to an investment in LA Storage, LLC (LA Storage). Consistent with its ownership percentage, the Company is allocated 61 percent of ProLiance’s profits and losses; however, governance and voting rights remain at 50 percent for each member; and therefore, the Company accounts for its investment in ProLiance using the equity method of accounting. The Company's remaining investment at March 31, 2017 , shown at its 61 percent ownership share of the individual net assets of ProLiance, is as follows. As of March 31, (In millions) 2017 Cash $ 1.5 Investment in LA Storage 22.4 Other midstream asset investment 5.4 Total investment in ProLiance $ 29.3 Included in: Investments in unconsolidated affiliates $ 19.2 Other nonutility investments $ 10.1 LA Storage, LLC Storage Asset Investment ProLiance Transportation and Storage, LLC (PT&S), a subsidiary of ProLiance, and Sempra Energy International (SEI), a subsidiary of Sempra Energy (SE), through a joint venture, have a 100 percent interest in a development project for salt-cavern natural gas storage facilities known as LA Storage. PT&S is the minority member with a 25 percent interest, which it accounts for using the equity method. The project, which includes a pipeline system, is expected to include 12-19 Bcf of storage capacity, and has the potential for further expansion. This pipeline system is currently connected with several interstate pipelines, including the Cameron Interstate Pipeline operated by Sempra Pipelines & Storage, and can connect area liquefied natural gas regasification terminals to an interstate natural gas transmission system and storage facilities. Approximately 12 Bcf of the storage, which comprises three of the four FERC certified caverns, is fully tested but additional work is required to further develop the caverns. The timing and extent of development of these caverns and pipeline system is dependent on market conditions, including pricing, need for storage and transmission capacity, and development of the liquefied natural gas market, among other factors. To date, development activity has been modest due to the current low demand for storage facilities. The current FERC development permit expires in June 2017 and currently, SEI does not plan to renew the permit. The development of the storage market and related pricing are critical assumptions in the analysis of the recoverability of the investment's carrying value. As of March 31, 2017 and December 31, 2016 , ProLiance's investment in the joint venture was $36.7 million . |
Commitments & Contingencies
Commitments & Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments & Contingencies | Commitments & Contingencies Performance Guarantees & Product Warranties In the normal course of business, wholly owned subsidiaries, such as Energy Systems Group, LLC (ESG), a subsidiary of the Energy Services operating segment, issue payment and performance bonds and other forms of assurance that commit them to timely install infrastructure, operate facilities, pay vendors and subcontractors, and support warranty obligations. Specific to ESG's role as a general contractor in the performance contracting industry, at March 31, 2017 , there are 56 open surety bonds supporting future performance. The average face amount of these obligations is $9.8 million , and the largest obligation has a face amount of $75.9 million . The maximum exposure from these obligations is limited to the level of uncompleted work and further limited by bonds issued to ESG by various contractors. At March 31, 2017 , approximately 38.3 percent of work was yet to be completed on projects with open surety bonds. A significant portion of these open surety bonds will be released within one year. In instances where ESG operates facilities, project guarantees extend over a longer period. In addition to its performance obligations, ESG also warrants the functionality of certain installed infrastructure generally for one year and the associated energy savings over a specified number of years. Based on a history of meeting performance obligations and installed products operating effectively, no liability or cost has been recognized for the periods presented as the Company assesses the likelihood of loss as remote. Since inception, ESG has paid a de minimis amount on energy savings guarantees. Corporate Guarantees & Other Support The Company issues parent level guarantees to certain vendors and customers of its wholly owned subsidiaries. These guarantees do not represent incremental consolidated obligations; but rather, represent guarantees of subsidiary obligations in order to allow those subsidiaries the flexibility to conduct business without posting other forms of collateral. At March 31, 2017 , parent level guarantees support a maximum of $327 million of ESG’s performance contracting commitments, warranty obligations, project guarantees, and energy savings guarantees. Given the infrequent occurrence of any performance shortfalls historically on any of these commitments, no reserve for a potential liability has been deemed warranted. Further, an energy facility operated by ESG and managed by Keenan Ft. Detrick Energy, LLC (Keenan), is governed by an operations agreement. Under this agreement, all payment obligations to Keenan are also guaranteed by the Company. The Company guarantee of the Keenan operations agreement does not state a maximum guarantee. Due to the nature of work performed under this contract, the Company cannot estimate a maximum potential amount of future payments but assesses the likelihood of loss as remote based on, primarily, the nature of the project. The Company has not been called on to perform under these guarantees historically. While there can be no assurance that performance under these provisions will not be required in the future, the Company believes that the likelihood of a material amount being incurred under these provisions is remote given the nature of the projects, the manner in which the savings estimates are developed, and the fact that the value of the guarantees decrease over time as actual energy savings are achieved by the customer. The Company, from time to time, and primarily through Vectren Capital Corporation (Vectren Capital), issues letters of credit that support consolidated operations. At March 31, 2017, letters of credit outstanding total $30 million . Commitments The Company's regulated utilities have both firm and non-firm commitments, some of which are between five and twenty year agreements to purchase natural gas, electricity, and coal, as well as certain transportation and storage rights. Costs arising from these commitments, while significant, are pass-through costs, generally collected dollar-for-dollar from retail customers through regulator-approved cost recovery mechanisms. Legal & Regulatory Proceedings The Company is party to various legal proceedings, audits, and reviews by taxing authorities and other government agencies arising in the normal course of business. In the opinion of management, there are no legal proceedings or other regulatory reviews or audits pending against the Company that are likely to have a material adverse effect on its financial condition, results of operations or cash flows. |
Gas Rate & Regulatory Matters
Gas Rate & Regulatory Matters | 3 Months Ended |
Mar. 31, 2017 | |
Public Utilities, General Disclosures [Abstract] | |
Gas Rate & Regulatory Matters | Gas Rate & Regulatory Matters Regulatory Treatment of Investments in Natural Gas Infrastructure Replacement The Company monitors and maintains its natural gas distribution system to ensure natural gas is delivered in a safe and efficient manner. The Company's natural gas utilities are currently engaged in programs to replace bare steel and cast iron infrastructure and other activities in both Indiana and Ohio to mitigate risk, improve the system, and comply with applicable regulations, many of which are the result of federal pipeline safety requirements. Laws passed in both Indiana and Ohio provide utilities the opportunity to timely recover costs of federally mandated projects and other infrastructure improvement projects outside of a base rate proceeding. Indiana Senate Bill 251 (Senate Bill 251) provides a framework to recover 80 percent of federally mandated costs through a periodic rate adjustment mechanism outside of a general rate case. Such costs include a return on the federally mandated capital investment, based on the overall rate of return most recently approved by the IURC, along with recovery of depreciation and other operating costs associated with these mandates. The remaining 20 percent of those costs is deferred for future recovery in the utility's next general rate case. Indiana Senate Bill 560 (Senate Bill 560) supplements Senate Bill 251 described above, and provides for cost recovery outside of a base rate proceeding for projects that either improve electric and gas system reliability and safety or are economic development projects that provide rural areas with access to gas service. Provisions of the legislation require that, among other things, requests for recovery include a seven-year project plan. Once the plan is approved by the IURC, 80 percent of such costs are eligible for current recovery using a periodic rate adjustment mechanism. Recoverable costs include a return on the investment that reflects the current capital structure and associated costs, with the exception of the rate of return on equity, which remains fixed at the rate determined in the Company's last rate case. Recoverable costs also include recovery of depreciation and other operating expenses. The remaining 20 percent of project costs are deferred and recovered in the utility’s next general rate case, which must be filed before the expiration of the seven-year plan. The adjustment mechanism is capped at an annual increase in retail revenues of no more than two percent. Ohio House Bill 95 (House Bill 95) permits a natural gas utility to apply for recovery of much of its capital expenditure program. This legislation also allows for the deferral of costs, such as depreciation, property taxes, and debt-related post-in-service carrying costs until recovery is approved by the PUCO. Indiana Recovery and Deferral Mechanisms The Company's Indiana natural gas utilities received Orders in 2008 and 2007 associated with the most recent base rate cases. These Orders authorized the deferral of financial impacts associated with bare steel and cast iron replacement activities. The Orders provide for the deferral of depreciation and post-in-service carrying costs on qualifying projects totaling $20 million annually at Indiana Gas and $3 million annually at SIGECO. The debt-related post-in-service carrying costs are currently recognized in the Consolidated Statements of Income . The recording of post-in-service carrying costs and depreciation deferral is limited by individual qualifying project to three years after being placed into service at SIGECO and four years after being placed into service at Indiana Gas. At March 31, 2017 and December 31, 2016 , the Company has regulatory assets totaling $22.3 million and $21.9 million , respectively, associated with the deferral of depreciation and debt-related post-in-service carrying cost activities. Beginning in 2014, all bare steel and cast iron replacement activities are now part of the Company’s seven -year capital investment plan discussed below. Requests for Recovery under Indiana Regulatory Mechanisms In August 2014, the IURC issued an Order approving the Company’s seven-year capital infrastructure replacement and improvement plan (the Plan), beginning in 2014, and the proposed accounting authority and recovery. Compliance projects and other infrastructure improvement projects were approved pursuant to Senate Bill 251 and 560, respectively. As provided in the two laws, the Order approved semi-annual filings for rate recovery of 100 percent of the costs, inclusive of return, related to these capital investments and operating expenses, with 80 percent of the costs, including a return, recovered currently via an approved tracking mechanism and 20 percent of the costs deferred and recovered in the Company’s next base rate proceeding. In addition, the Order established guidelines to annually update the seven-year capital investment plan. Finally, the Order approved the Company’s proposal to recover eligible costs assigned to the residential customer class via a fixed monthly charge per residential customer. In March 2016, the IURC issued an Order re-approving approximately $890 million of the Company’s gas infrastructure modernization projects requested in the third update of the Plan, and approving the inclusion in rates of actual investments made through June 30, 2015. While most of the proposed capital spend has been approved as proposed, approximately $80 million of projects were not approved for recovery through the mechanisms pursuant to these filings. Specifically, the Company proposed to add a new project to its Plan pursuant to Senate Bill 560 totaling approximately $65 million . The project, which consists of a 20-mile transmission line and other related investments required to support industrial customer growth and ongoing system reliability in the Lafayette, Indiana area, as well as allows the Company to further diversify its gas supply portfolio via access to shale gas in the Marcellus and Utica reserves, was excluded for recovery under the Plan. The IURC stated because the project was not in the original plan filed in 2013, it does not qualify for cost recovery under Senate Bill 560. In the Order, the IURC did pre-approve the project for rate base inclusion upon the filing of the next base rate case. The Company believes such plan updates should be expected to accommodate new projects that emerge during the term of the plan as ongoing risk assessments determine new projects are required. The Company filed an appeal of the March 2016 Order on April 29, 2016 to challenge the IURC's finding which limits the scope of the Plan updates. On April 27, 2017, the Indiana Court of Appeals denied the Company's appeal of the Order. The Company is evaluating its options related to the Plan update issue, but as noted herein the project at issue was previously approved by the IURC for recovery in the Company's next general base rate case. Further, the Company does not expect similar issues related to updating future plan filings as the project inclusion process is now better understood by all parties. Subsequent to the March 2016 Order, the Company has received two additional Orders approving plan investments. On June 29, 2016, the IURC issued an Order approving the inclusion in rates of investments made from July 2015 to December 2015. On January 25, 2017 the IURC issued an Order (January 2017 Order) approving the inclusion in rates of investments made from January 2016 to June 2016. Through the January 2017 Order, approximately $338 million of the approved capital investment plan has been incurred and included for recovery. The January 2017 Order also approved the Company's plan update, which is now $950 million through 2020. The plan increase of $60 million is due to additional investment related to pipeline safety and compliance requirements under Senate Bill 251. At March 31, 2017 and December 31, 2016 , the Company has regulatory assets related to the Plan totaling $54.9 million and $51.1 million , respectively. On April 3, 2017, the Company submitted its sixth semi-annual filing, seeking approval for recovery of an additional $69.1 million of capital investments made through December 31, 2016. A procedural schedule has not been set in this proceeding; however the Company expects an order mid-2017. Ohio Recovery and Deferral Mechanisms The PUCO Order approving the Company's 2009 base rate case in the Ohio service territory authorized a distribution replacement rider (DRR). The DRR's primary purpose is recovery of investments in utility plant and related operating expenses associated with replacing bare steel and cast iron pipelines, as well as certain other infrastructure investments. This rider is updated annually for qualifying capital expenditures and allows for a return on those capital expenditures based on the rate of return approved in the 2009 base rate case. In addition, deferral of depreciation and the ability to accrue debt-related post-in-service carrying costs is also allowed until the related capital expenditures are included in the DRR. The Order also initially established a prospective bill impact evaluation on the annual deferrals. On February 19, 2014, the PUCO issued an Order approving a Stipulation entered into by the PUCO Staff and the Company which provided for the extension of the DRR for the recovery of costs incurred through 2017 and expanded the types of investment covered by the DRR to include recovery of certain other infrastructure investments. The Order limits the resulting DRR fixed charge per month for residential and small general service customers to specific graduated levels through 2017. The capital expenditure plan is subject to the graduated caps on the fixed DRR monthly charge applicable to residential and small general service customers approved in the Order. In the event the Company exceeds these caps, amounts in excess can be deferred for future recovery. The Order also approved the Company's commitment that the DRR can only be further extended as part of a base rate case. In total, the Company has made capital investments on projects that are now in-service under the DRR totaling $269.7 million as of March 31, 2017 , of which $204.0 million has been approved for recovery under the DRR through December 31, 2015. On May 1, 2017, the Company submitted its annual request for an adjustment in the DRR rates to recover an additional $57.1 million of capital investments made through December 31, 2016. Regulatory assets associated with post-in-service carrying costs and depreciation deferrals were $25.9 million and $24.4 million at March 31, 2017 and December 31, 2016 , respectively. The PUCO has also issued Orders approving the Company's filings under Ohio House Bill 95. These Orders approve deferral of the Company’s Ohio capital expenditure program for items not covered by the DRR as well as expenditures necessary to comply with PUCO rules, regulations, orders, and system expansion to some new customers. Ohio House Bill 95 Orders also established a prospective bill impact evaluation on the cumulative deferrals, limiting the total deferrals at a level which would equal $1.50 per residential and small general service customer per month. At March 31, 2017 and December 31, 2016 , the Company has regulatory assets totaling $46.7 million and $41.9 million , respectively, associated with the deferral of depreciation, post-in-service carrying costs, and property taxes. As of March 31, 2017 , the Company's deferrals have not reached this bill impact cap. On May 1, 2017, the Company submitted its most recent annual report required under its House Bill 95 Order. This report covers the Company's capital expenditure program through calendar year 2017. Given the extension of the DRR through 2017, as discussed above, and the continued ability to defer other capital expenses under House Bill 95, it is anticipated that the Company will file a general rate case for the inclusion in rate base of the above costs in early 2018. Pipeline and Hazardous Materials Safety Administration (PHMSA) In March 2016, PHMSA published a notice of proposed rulemaking (NPRM) on the safety of gas transmission and gathering lines. The proposed rule addresses many of the remaining requirements of the 2011 Pipeline Safety Act, with a particular focus on extending integrity management rules to address a much larger portion of the natural gas infrastructure and adds requirements to address broader threats to the integrity of a pipeline system. The Company is evaluating the impact these proposed rules will have on its integrity management programs and transmission and distribution systems. Progress on finalizing the rule continues to work through the administrative process. It is expected that the rule will be finalized in 2018 and the Company believes the costs to comply with the new rules would be considered federally mandated and therefore should be recoverable. In December 2016, PHMSA issued final rules related to integrity management for storage operations. Efforts are underway to implement the new requirements. Further, the Company reviewed the Underground Natural Gas Storage Safety Recommendations from a joint Department of Energy and PHMSA led task force. These rules could increase the potential for capital expenditures and increase operating and maintenance expenses. The Company believes that the cost to comply with these new rules would be considered federally mandated and therefore should be recoverable using various regulatory recovery mechanisms. Additionally, PHMSA finalized a rule on excess flow valves, which went into effect in April 2017. At the customer's request, excess flow valves will be installed at the customer's cost. |
Electric Rate & Regulatory Matt
Electric Rate & Regulatory Matters | 3 Months Ended |
Mar. 31, 2017 | |
Public Utilities, General Disclosures [Abstract] | |
Electric Rate & Regulatory Matters | Electric Rate & Regulatory Matters Regulatory Treatment of Investments in Electric Infrastructure On February 23, 2017, the Company filed for authority to recover costs related to its electric system modernization plan, using the mechanism allowed under Senate Bill 560. The electric system modernization plan includes investments to upgrade portions of the Company’s network of substations, transmission and distribution systems, to enhance reliability and allow the grid to accept advanced technology to improve the information and service provided to customers. The filing requests the recovery of associated capital expenditures estimated to be approximately $500 million over the seven -year period beginning in 2017. A field hearing in this proceeding was held on May 2, 2017. Testimony from the public provided during this hearing will be considered by the IURC in this case. Filed testimony of intervening parties is required by May 4, 2017. An evidentiary hearing has been scheduled for June 26, 2017. Under the timeline provided by Senate Bill 560, the Company expects an order in September 2017. Renewable Generation Resources On February 22, 2017, the Company also filed for authority to recover costs related to the construction of three solar projects, using the mechanism allowed under Senate Bill 29, which allows for timely recovery of costs and expenses incurred during the construction and operation of clean energy projects. These investments, presented as part of the Company’s Integrated Resource Plan (IRP) submitted in December 2016, allow the Company to add approximately 4 MW of universal solar generation, rooftop solar generation, and 1 MW of battery storage resources to its portfolio. See more information on the IRP below in Environmental & Sustainability Matters. The cost of the projects is estimated to be approximately $15 million . Filed testimony of intervening parties is required by May 11, 2017. An evidentiary hearing has been scheduled for June 15, 2017, and the Company expects an order by the end of 2017. SIGECO Electric Environmental Compliance Filing On January 28, 2015, the IURC issued an Order approving the Company’s request for approval of capital investments in its coal-fired generation units to comply with new EPA mandates related to mercury and air toxic standards (MATS) effective in 2015 and to address an outstanding Notice of Violation (NOV) from the EPA pertaining to its A.B. Brown generating station sulfur trioxide emissions. The MATS rule sets emission limits for hazardous air pollutants for existing and new coal-fired power plants and identifies the following broad categories of hazardous air pollutants: mercury, non-mercury hazardous air pollutants (primarily arsenic, chromium, cobalt, and selenium), and acid gases (hydrogen cyanide, hydrogen chloride, and hydrogen fluoride). The rule imposes mercury emission limits for two sub-categories of coal and proposed surrogate limits for non-mercury and acid gas hazardous air pollutants. As of March 31, 2017 , $30 million has been spent on equipment to control mercury in both air and water emissions, and $40 million to address the issues raised in the NOV. The Order approved the Company’s request for deferred accounting treatment, as supported by provisions under Indiana Senate Bill 29 and Senate Bill 251. The accounting treatment includes the deferral of depreciation and property tax expense related to these investments, accrual of post-in-service carrying costs, and deferral of incremental operating expenses related to compliance with these standards. These costs will be included for recovery no later than the next rate case. The initial phase of the projects went into service in 2014, with the remaining investment going into service in 2016. As of March 31, 2017 , the Company has approximately $9.0 million deferred related to depreciation and operating expense, and $3.3 million deferred related to post-in-service carrying costs. MATS compliance was required beginning April 16, 2015, and the Company continues to operate in full compliance with the MATS rule. In June 2015, Joint Appellants’ Citizens Action Coalition of Indiana, Inc., Sierra Club, Inc., and Valley Watch, Inc. (the appellants) challenged the IURC's January 2015 Order. On October 29, 2015, the Indiana Court of Appeals issued an opinion that affirmed the IURC’s findings with regard to equipment required to comply with MATS and certain national pollutant discharge elimination system rules but remanded the case to the IURC to determine whether a certificate of public convenience and necessity (CPCN) should be issued for the equipment required by the NOV. On June 22, 2016, the IURC issued an Order granting the Company a CPCN for the NOV-required equipment. On July 21, 2016, the appellants initiated an appeal of the IURC's June 22, 2016 Order challenging the findings made by the IURC. On February 14, 2017, the Court affirmed the IURC's June 22, 2016 Order. SIGECO Electric Demand Side Management (DSM) Program Filing On August 31, 2011, the IURC issued an Order approving an initial three -year DSM plan in the Company's electric service territory that complied with the IURC’s energy saving targets. Consistent with the Company’s proposal, the Order approved, among other items, the following: 1) recovery of costs associated with implementing the DSM Plan; 2) the recovery of a performance incentive mechanism based on measured savings related to certain DSM programs; and 3) lost margin recovery associated with the implementation of DSM programs for large customers. On June 20, 2012, the IURC issued an Order approving a small customer lost margin recovery mechanism, inclusive of all previous deferrals. For the three months ended March 31, 2017 and 2016 , the Company recognized electric utility revenue of $3.0 million and $2.6 million , respectively, associated with this approved lost margin recovery mechanism. On March 28, 2014, Indiana Senate Bill 340 was signed into law. The legislation allows for industrial customers to opt out of participating in energy efficiency programs and as a result of this legislation, most of the Company’s eligible industrial customers have since opted out of participation in the applicable energy efficiency programs. Indiana Senate Bill 412 (Senate Bill 412) requires electricity suppliers to submit energy efficiency plans to the IURC at least once every three years. Senate Bill 412 also requires the recovery of all program costs, including lost revenues and financial incentives associated with those plans and approved by the IURC. The Company made its first filing pursuant to this bill in June 2015, which proposed energy efficiency programs for calendar years 2016 and 2017. On March 23, 2016, the IURC issued an Order approving the Company’s 2016-2017 energy efficiency plan. The Order provides for cost recovery of program and administrative expenses and includes performance incentives for reaching energy savings goals. The Order also included a lost margin recovery mechanism that now limits that recovery related to new programs to the shorter of four years or the life of the installed energy efficiency measure. Prior electric energy efficiency orders did not limit lost margin recovery in this manner. This ruling follows other recent IURC decisions implementing the same lost margin recovery limitation with respect to other electric utilities in Indiana. The Company appealed this lost margin recovery restriction based on the Company’s commitment to promote and drive participation in its energy efficiency programs. On March 7, 2017, the Court of Appeals reversed the IURC finding on the Company's 2016-2017 energy efficiency plan that the four year cap on lost margin recovery was arbitrary and the IURC failed to properly interpret the governing statute requiring it to review the utility's originally submitted DSM proposal and either approve or reject it as a whole, including the proposed lost margin recovery. The case has been remanded back to the Commission for further proceedings to determine the reasonableness of the Company's entire energy efficiency plan. On April 10, 2017, the Company submitted its request for approval of its Energy Efficiency Plan for calendar years 2018 through 2020. Consistent with prior filings, this filing included a request for continued cost recovery of program and administrative expenses, including performance incentives for reaching energy savings goals and continued recovery of lost margins over the life of the installed energy efficiency measure. A procedural schedule has not been set in this proceeding; however an order is expected by the end of 2017. FERC Return on Equity (ROE) Complaints On November 12, 2013, certain parties representing a group of industrial customers filed a joint complaint with the FERC under Section 206 of the Federal Power Act against the MISO and various MISO transmission owners, including SIGECO (first complaint case). The joint parties sought to reduce the 12.38 percent ROE used in the MISO transmission owners’ rates, including SIGECO’s formula transmission rates, to 9.15 percent covering the refund period from November 12, 2013 through February 11, 2015 (first refund period). On September 28, 2016, the FERC issued a final order authorizing a 10.32 percent base ROE for the first refund period and prospectively through the date of the order in a second complaint case as detailed below. A second customer complaint case was filed on February 11, 2015 covering the refund period from February 12, 2015 through May 11, 2016 (second refund period). An initial decision from the FERC administrative law judge on June 30, 2016, authorized a base ROE of 9.70 percent for the second refund period. The FERC is expected to rule on the proposed order in the second complaint case in 2017, which will authorize a base ROE for this period and prospectively from the date of the order. Separately, on January 6, 2015, the FERC approved a MISO transmission owner joint request for an adder to the approved ROE. Under FERC regulations, transmission owners that are part of a Regional Transmission Organization (RTO) such as the MISO are authorized to earn an incentive of 50 basis points above the FERC approved ROE. The FERC deferred the implementation of this adder until the pending complaint is resolved. The adder will be applied retroactively from January 6, 2015 through May 11, 2016 and prospectively from the September 28, 2016 order in the first complaint case. The Company has reflected these results in its financial statements. As of March 31, 2017 , the Company had invested approximately $157.7 million in qualifying projects. The net plant balance for these projects totaled $136.0 million at March 31, 2017 . On April 14, 2017, the U.S. Court of Appeals for the District of Columbia circuit vacated the FERC Opinion in a prior case that established a new methodology for calculating ROE. This methodology was utilized in the final order in the Company's first complaint case, and the initial decision in the Company's second complaint case. The Appeals Court stated that FERC did not prove the existing ROE was not just and reasonable and also failed to provide any reasoned basis for their selected ROE. The Company will continue to monitor this proceeding and evaluate any potential impacts on the Company's complaint cases but would not expect them to be material. |
Environmental & Sustainability
Environmental & Sustainability Matters | 3 Months Ended |
Mar. 31, 2017 | |
Environmental Matters Disclosure [Abstract] | |
Environmental & Sustainability Matters | Environmental & Sustainability Matters The Company initiated a corporate sustainability program in 2012 with the publication of the initial corporate sustainability report. Since that time the Company continues to develop strategies that focus on those environmental, social and governance (ESG) factors that contribute to the long-term growth of a sustainable business model. As detailed further below and in the upcoming corporate sustainability report for 2016, the Company continues to set out its plans, among other things, to upgrade and diversify its generation portfolio. The sustainability policies and efforts, and in particular its policies and procedures designed to ensure compliance with applicable laws and regulations, are directly overseen by the Company's Corporate Responsibility and Sustainability Committee, as well as vetted with the Company's Board of Directors. Further discussion of key goals, strategies, and governance practices can be found in the Company’s latest sustainability report, which received core level certification from the Global Reporting Initiative. The Company is subject to extensive environmental regulation pursuant to a variety of federal, state, and municipal laws and regulations. These environmental regulations impose, among other things, restrictions, liabilities, and obligations in connection with the storage, transportation, treatment, and disposal of hazardous substances and limit airborne emissions from electric generating facilities including particulate matter, sulfur dioxide (SO2), nitrogen oxide (NOx), and mercury, among others. Environmental legislation and regulation also requires that facilities, sites, and other properties associated with the Company's operations be operated, maintained, abandoned, and reclaimed to the satisfaction of applicable regulatory authorities. The Company's current costs to comply with these laws and regulations are significant to its results of operations and financial condition. Similar to the costs associated with federal mandates in the Pipeline Safety Law, Senate Bill 251 is also applicable to federal environmental mandates impacting SIGECO's electric operations. Integrated Resource Planning Process As required by the state of Indiana, the Company completed its 2016 Integrated Resource Plan (IRP) and submitted to the IURC on December 16, 2016. The state requires each electric utility to perform and submit an IRP that uses economic modeling to consider the costs and risks associated with available resource options to provide reliable electric service for the next twenty year period. During 2016, the Company held three public stakeholder meetings to gather input and feedback as well as communicate results of the IRP process as it progressed. In developing its IRP, the Company considered both the cost to continue operating its existing generation units in a manner that complies with current and anticipated future environmental requirements, as well as various resource alternatives, such as the use of energy efficiency programs and renewable resources as part of its overall generation portfolio. After submission, parties to the IRP provide comments on the plan. While the IURC does not approve or reject the IRP, comments received are taken into consideration, ultimately resulting in a report issued by the IURC, likely in the summer of 2017. Currently, the Company operates approximately 1,000 MW of coal-fired generation, 245 MW of natural gas peaking units, and 3 MW via a landfill-gas-to-electricity facility. The Company also has 80 MW of wind power through two long-term power purchase agreements and 32 MW of coal generation through its ownership in OVEC. The Company’s 2016 IRP preferred portfolio illustrates a future less reliant on coal. The twenty year plan reflects the retirement of a portion of the Company’s current coal-fired fleet, transitions a significant portion of generation to natural gas and includes new renewable energy sources, specifically universal solar. The detailed plan would introduce approximately 54 MW of universal solar installed by 2019. The plan suggests the Company will exit its joint operations of Warrick Unit 4, a 300 MW unit shared with Alcoa, by 2020. The Company would complete upgrades to its existing coal-fired F.B. Culley Unit 3, a 270 -megawatt unit, to comply with federal water regulations specific to the Effluent Limitations Guidelines (ELG) around 2023 in order to keep the unit in operation. As discussed in more detail in the ELG section below, the EPA has administratively stayed the compliance deadlines in the ELG rule pending reconsideration. In 2024, the IRP points to the retirement of coal-fired A.B. Brown plant Units 1 & 2 along with F.B. Culley Unit 2, collectively representing 580 MW. This generation would be replaced by a newly constructed combined cycle natural gas plant, with the capability of producing approximately 890 MW by 2024. In addition, the Company intends to continue to offer energy efficiency programs annually. Similarly, as discussed in more detail below, the short-term uncertainties related to ELG implementation are not expected to have a significant impact on the Company’s long term preferred generation plan. The Company’s IRP considered a broad range of potential resources and variables and is focused on ensuring it offers a reliable, reasonably priced generation portfolio as well as a balanced energy mix. The Company plans to finalize this generation portfolio transition plan and submit a regulatory filing, including construction timelines and costs of new generation resources, as well as necessary unit retrofits, to the IURC in late 2017 to begin the generation transition process. The Company will seek approval of its generation plan, including timely recovery of all federally mandated compliance costs, as well as the authority to defer the cost of new generation until the time of a rate case. Coal Ash Waste Disposal, Ash Ponds and Water Coal Combustion Residuals Rule In December 2014, the EPA released its final Coal Combustion Residuals (CCR) rule which regulates ash as non-hazardous material under Subtitle D of the Resource Conservation and Recovery Act (RCRA). On April 17, 2015, the final rule was published in the Federal Register. The final rule allows beneficial reuse of ash and the majority of the ash generated by the Company’s generating plants will continue to be reused. As it relates to the CCR rule, legislation was passed in December 2016 by Congress that would provide for enforcement of the federal program by states rather than through citizen suits. Additionally, the CCR rule is currently being challenged by multiple parties in judicial review proceedings. Under the final CCR rule, the Company is required to complete a series of integrity assessments, including seismic modeling given the Company’s facilities are located within two seismic zones, and groundwater monitoring studies to determine the remaining service life of the ponds and whether a pond must be retrofitted with liners or closed in place, with bottom ash handling conversions completed. In late 2015, using general utility industry data, the Company prepared cost estimates for the retirement of the ash ponds at the end of their useful lives, based on its interpretation of the closure alternatives contemplated in the final rule. The resulting estimates ranged from approximately $35 million to $80 million . These estimates contemplated final capping and monitoring costs of the ponds at both F.B. Culley and A.B. Brown generating stations. These rules are not applicable to the Company's Warrick generating unit, as this unit has historically been part of a larger generating station that predominantly serves an adjacent industrial facility. Throughout 2016, the Company has continued to refine site specific estimates and now estimates the costs to be in the range of $45 million to $100 million . Significant factors impacting the resulting cost estimates include the closure time frame and the method of closure. Current estimates contemplate additional beneficial reuse of the ash, as well as implications of the Company’s preferred IRP. Ongoing analysis, the continued refinement of assumptions, or the inability to beneficially reuse the ash may result in estimated costs in excess of the current range. As of December 31, 2016, the Company had recorded an approximate $40 million asset retirement obligation (ARO). The recorded ARO reflects the present value of the approximate $45 million in estimated costs in the range above. These assumptions and estimations are subject to change in the future and could materially impact the amount of the estimated ARO. In order to maintain current operations of the ponds, the Company has spent approximately $17 million on the reinforcement of the ash pond dams and other operational changes in 2016 to meet the more stringent 2,500 year seismic event structural and safety standard in the CCR rule. Effluent Limitation Guidelines (ELGs) Under the Clean Water Act, the EPA sets technology-based guidelines for water discharges from new and existing electric generation facilities. On September 30, 2015, the EPA released final revisions to the existing steam electric ELGs setting stringent technology-based water discharge limits for the electric power industry. The EPA focused this rulemaking on wastewater generated primarily by pollution control equipment necessitated by the comprehensive air regulations, specifically setting strict water discharge limits for arsenic, mercury and selenium for scrubber waste waters. The ELGs will be implemented when existing water discharge permits for the plants are renewed, with compliance activities expected to commence where operations continue, within the 2018-2023 time frame. The ELGs work in tandem with the aforementioned CCR requirements, effectively prohibiting the use of less costly lined sediment basin options for disposal of coal combustion residuals, and virtually mandate conversions to dry bottom ash handling. The current wastewater discharge permit for the A.B. Brown power plant had an expiration date of October 2016 and, for the F.B. Culley plant, a date of December 2016, and final renewals were issued by the state environmental agency in February 2017 and March 2017, respectively. As part of the permit renewals, the Company requested alternate compliance dates for ELGs. Compliance with the ELGs will not be required prior to November 2018, but no later than December 31, 2023. For plants identified in the Company’s preferred IRP to be retired prior to December 31, 2023, the Company has requested those plants would not require new treatment technology, which was approved by the state agency provided that the Company notifies the state within one year of issuance of the renewal of its intent to retire the unit. For the F.B. Culley plant, the Company has proposed a 2020 compliance date for dry bottom ash and 2023 compliance date for flue gas desulfurization wastewater, which was approved by the state and finalized in the permit renewal. On April 13, 2017, as part of the Administration's regulatory reform initiative, which is focused on the number and nature of regulations, the EPA granted petitions to reconsider the ELG rule, and indicated it would stay the current implementation deadlines in the rule during the pendency of the reconsideration. With publication in the federal register, the EPA will be seeking public comment on the stay of the ELG implementation deadlines. The EPA has also indicated it intends to seek a stay of the current judicial review litigation in federal district court. As the Company does not currently have short-term ELG implementation deadlines in its recently renewed wastewater discharge permits, the Company does not currently anticipate immediate impacts from the EPA’s administrative stay of implementation deadlines due to the longer compliance time frames granted by the state, and will continue to work with the state agency to evaluate further implementation plans. The Company believes the stay of the ELG implementation deadlines do not impact its preferred generation plan as modeled in the IRP due to comparable ash handling restrictions required by the CCR rule which is not subject to an administrative stay; however, on May 3, 2017, a coalition of environmental organizations filed a challenge to the stay in the U.S. District Court for the District of Columbia. Cooling Water Intake Structures Section 316(b) of the Clean Water Act requires generating facilities use the “best technology available” (BTA) to minimize adverse environmental impacts on a body of water. More specifically, Section 316(b) is concerned with impingement and entrainment of aquatic species in once-through cooling water intake structures used at electric generating facilities. A final rule was issued by the EPA on May 19, 2014. The final rule does not mandate cooling water tower retrofits but requires a state level case-by-case assessment of BTA for each facility. The final rule lists seven presumptive technologies which would qualify as BTA. These technologies range from intake screen modifications to cooling water tower retrofits. Ecological and technology assessment studies must be completed prior to determining BTA for the Company’s facilities. The Company is currently undertaking the required ecological studies and anticipates timely compliance in 2021-2022. To comply, the Company believes capital investments will likely be in the range of $4 million to $8 million . Air Quality Ozone NAAQS On November 26, 2014, the EPA proposed to tighten the current National Ambient Air Quality Standard (NAAQS) for ozone from the current standard of 75 parts per billion (ppb) to a level within the range of 65 to 70 ppb. On October 1, 2015, the EPA finalized a new NAAQS for ozone at the high end of the range, or 70 ppb. On September 16, 2016, Indiana submitted its initial determination to the EPA recommending that counties in southwest Indiana, specifically Vanderburgh, Posey and Warrick, be declared in attainment of the new more stringent ozone standard based upon air monitoring data from 2014-2016. The EPA was expected to make final determinations as to whether a region is in attainment for the new NAAQS in 2017; however, in a March filing challenging the new standard, the EPA filed a request to stay the litigation pending a potential review of the ozone standard by the agency. While the future of the current ozone standard is not certain, it is possible counties in southwest Indiana could be declared in non-attainment with the current ozone standard, and thus could have an effect on future economic development activities in the Company's service territory. The Company does not anticipate any significant compliance cost impacts from the determination given its previous investment in SCR technology for NOx control on its units. In September 2016, the EPA finalized a supplement to the Cross State Air Pollution Rule (CSAPR) that requires further NOx reductions during the ozone season (May - September). The Company is positioned to comply with these NOx reduction requirements through its current investment in SCR technology. One Hour SO2 NAAQS On February 16, 2016, the EPA notified states of the commencement of a 120 day consultation period between the state and the EPA with respect to the EPA's recommendations for new non-attainment designations for the 2010 One Hour SO2 NAAQS. Identified on the list was Posey County, Indiana, where the Company's A.B. Brown Generating Station is located. While the Company is in compliance with all applicable SO2 limits in its permits, the Company reached an agreement with the state of Indiana on voluntary measures that the Company was able to implement without significant incremental costs to ensure that Posey County remains in attainment with the 2010 One Hour SO2 NAAQS. The Company's coal-fired generating fleet is 100 percent scrubbed for SO2 and 90 percent controlled for NOx. Climate Change On August 3, 2015, the EPA released its final CPP rule which requires a 32 percent reduction in carbon emissions from 2005 levels. This results in a final emission rate goal for Indiana of 1,242 lb CO2/MWh to be achieved by 2030. The new rule gives states the option of seeking a two-year extension from the initial deadline of September 2016 to submit a final state implementation plan (SIP). In March 2017, the EPA withdrew a Federal Implementation Plan (FIP) as a compliance option. Under the CPP, states have the flexibility to include energy efficiency and other measures should they choose to implement a SIP as provided in the final rule. While states are given an interim goal (1,451 lb CO2/MWh for Indiana), the final rule gives states the flexibility to shape their own emissions reduction over the 2022-2029 time period. The final rule was published in the Federal Register on October 23, 2015, and that action was immediately followed by litigation initiated by Indiana and 23 other states as a coalition challenging the rule. In January 2016, the reviewing court denied the states’ and other parties requests to stay the implementation of the CPP pending completion of judicial review. On January 26, 2016, 29 states and state agencies, including the 24 state coalition referenced above, filed a request for immediate stay of implementation of the rule with the U.S. Supreme Court. On February 9, 2016, the U.S. Supreme Court granted the stay request to delay the implementation of the regulation while being challenged in court. Extensive oral argument was held in September 2016. The stay will remain in place while the lower court concludes its review. Among other things, the stay delays the requirement to submit a final SIP by the original September 2016 deadline and could extend implementation to 2024. In March 2017, as part of the ongoing regulatory reform efforts of the Administration, the EPA has filed a motion with the U.S. Court of Appeals for the District of Columbia circuit to suspend litigation pending the EPA’s reconsideration of the CPP rule, which was granted on April 28, 2017. At the time of release of the CPP, Indiana was the 5th largest carbon emitter in the nation in tons of CO2 produced from electric generation. The Company’s share of total tons of CO2 generated by Indiana's electric utilities has historically been less than 6 percent . Since 2005 through 2015, the Company has achieved a reduction in emissions of CO2 of 31 percent (on a tonnage basis) through the retirement of F.B. Culley Unit 1, expiration of municipal wholesale power contracts, electric conservation, the addition of renewable generation, and the installation of more efficient dense pack turbine technology. Since emissions are further impacted by coal burn reductions and energy efficiency programs, the Company's emissions of CO2 can vary year to year. With respect to renewable generation, in 2008 and 2009, the Company executed long-term purchase power commitments for a total of 80 MW of wind energy. The Company currently has approximately 4 percent of its electricity being provided by energy sources other than coal and natural gas, due to the long-term wind contracts and a landfill gas investment. With respect to the CO2 emission rate, since 2005 through 2015, the Company has lowered its CO2 emission rate (as measured in lbs CO2/MWh) from 1,967 lbs CO2/MWh to 1,922 lbs CO2/MWh, for a reduction of 3 percent . The Company’s CO2 emission rate of 1,922 lbs CO2/MWh is basically the same as Indiana's average CO2 emission rate of 1,923 lbs CO2/MWh. The Company plans to consider these reductions in CO2 emissions and renewable generation in future discussions with the state to develop a possible state implementation plan. Impact of Legislative Actions & Other Initiatives is Unknown At this time, compliance costs and other effects associated with reductions in GHG emissions or obtaining renewable energy sources remain uncertain. The Company has gathered preliminary estimates of the costs to control GHG emissions. A preliminary investigation demonstrated costs to comply would be significant, first with regard to operating expenses and later for capital expenditures as technology becomes available to control GHG emissions. However, these compliance cost estimates were based on highly uncertain assumptions, including allowance prices if a cap and trade approach were employed, and energy efficiency targets. The Company is undertaking a detailed review of the requirements of the CPP and a review of potential compliance options. The Company will also continue to remain engaged with the Indiana legislators and regulators to assess the final rule and to develop a plan that is the least cost to its customers. In addition to the federal programs, the United States and 194 other countries agreed by consensus to limit GHG emissions beginning after 2020 in the 2015 United Nations Framework Convention on Climate Change Paris Agreement. The United States has proposed a 26-28 percent GHG emission reduction from 2005 levels by 2025. The Administration has not indicated yet whether it intends to remain in the Agreement or withdraw its participation. As previously noted, since 2005 through 2015, the Company has achieved reduced emissions of CO2 by 31 percent (on a tonnage basis). While the litigation and reconsideration of the CPP rules remains uncertain, the Company will continue to monitor regulatory activity regarding GHG emission standards that may affect its electric generating units. Manufactured Gas Plants In the past, the Company operated facilities to manufacture natural gas. Given the availability of natural gas transported by pipelines, these facilities have not been operated for many years. Under current environmental laws and regulations, those that owned or operated these facilities may now be required to take remedial action if certain contaminants are found above the regulatory thresholds. In the Indiana Gas service territory, the existence, location, and certain general characteristics of 26 gas manufacturing and storage sites have been identified for which the Company may have some remedial responsibility. A remedial investigation/ feasibility study (RI/FS) was completed at one of the sites under an agreed upon order between Indiana Gas and the IDEM, and a Record of Decision was issued by the IDEM in January 2000. The remaining sites have been submitted to the IDEM's Voluntary Remediation Program (VRP). The Company has identified its involvement in five manufactured gas plant sites in SIGECO’s service territory, all of which are currently enrolled in the IDEM’s VRP. The Company is currently conducting some level of remedial activities, including groundwater monitoring at certain sites. The Company has accrued the estimated costs for further investigation, remediation, groundwater monitoring, and related costs for the sites. While the total costs that may be incurred in connection with addressing these sites cannot be determined at this time, the Company has recorded cumulative costs that it has incurred or reasonably expects to incur totaling approximately $44.2 million ( $23.9 million at Indiana Gas and $20.3 million at SIGECO). The estimated accrued costs are limited to the Company’s share of the remediation efforts and are therefore net of exposures of other potentially responsible parties (PRP). With respect to insurance coverage, Indiana Gas has received approximately $20.8 million from all known insurance carriers under insurance policies in effect when these plants were in operation. Likewise, SIGECO has settlement agreements with all known insurance carriers and has received approximately $15.4 million of the expected $15.8 million in insurance recoveries. The costs the Company expects to incur are estimated by management using assumptions based on actual costs incurred, the timing of expected future payments, and inflation factors, among others. While the Company’s utilities have recorded all costs which they presently expect to incur in connection with activities at these sites, it is possible that future events may require remedial activities which are not presently foreseen and those costs may not be subject to PRP or insurance recovery. As of both March 31, 2017 and December 31, 2016 , approximately $2.9 million of accrued, but not yet spent, costs are included in Other Liabilities related to the Indiana Gas and SIGECO sites. |
Impact of Recently Issued Accou
Impact of Recently Issued Accounting Principles | 3 Months Ended |
Mar. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Impact of Recently Issued Accounting Principles | Impact of Recently Issued Accounting Principles Revenue Recognition Guidance In May 2014, the FASB issued new accounting guidance to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP. The amendments in this guidance state that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This new guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The guidance can be applied retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with a cumulative effect adjustment to retained earnings for initial application of the guidance at the date of initial adoption (modified retrospective method). While the Company continues to assess the standard and initial conclusions could change based on completion of that assessment, the Company preliminarily plans to adopt the guidance under the modified retrospective method. In July 2015, the FASB approved a one year deferral that became effective through an ASU in August and changed the effective date to annual reporting periods beginning after December 15, 2017, including interim periods, with early adoption permitted, but not before the original effective date of December 15, 2016. The Company is currently assessing the impacts this guidance may have on the Consolidated Balance Sheets, Consolidated Statements of Operations, and disclosures including the ability to recognize revenue for certain contracts, and its accounting for contributions in aid of construction (CIAC). While management will continue to analyze the impact of this new standard and the related ASUs that clarify guidance in the standard, at this time, management does not believe adoption of the standard will have a significant impact on the Company's pattern of revenue recognition. The Company plans to adopt the guidance effective January 1, 2018. Leases In February 2016, the FASB issued new accounting guidance for the recognition, measurement, presentation and disclosure of leasing arrangements. This ASU requires the recognition of lease assets and liabilities for those leases currently classified as operating leases while also refining the definition of a lease. In addition, lessees will be required to disclose key information about the amount, timing, and uncertainty of cash flows arising from leasing arrangements. This ASU is effective for the interim and annual reporting periods beginning January 1, 2019, although it can be early adopted, with a modified retrospective approach for leases that commenced prior to the date of adoption. The Company is currently evaluating the standard to determine the impact it will have on the financial statements. Stock Compensation In March 2016, the FASB issued new accounting guidance which is intended to simplify several aspects of accounting for share-based payment transactions, including the income tax consequences. This ASU is effective for annual periods beginning after December 15, 2016, and interim periods therein. Most of the Company's share based awards are settled via cash payments and are therefore not impacted by this standard. The Company's adoption of this standard did not have a material impact on the financial statements. Presentation of Net Periodic Pension and Postretirement Benefit Costs In March 2017, the FASB issued new accounting guidance to improve the presentation of net periodic pension and postretirement benefit costs. This ASU is effective for annual periods beginning after December 15, 2017, and relevant interim periods. Early adoption is permitted. This ASU requires the Company report the service cost component in the same line items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside of income from operations. The Company is currently evaluating the standard to determine the impact it will have on the financial statements, however, does not anticipate its adoption to have a significant impact on the financial statements. The Company plans to adopt the guidance effective January 1, 2018. Other Recently Issued Standards Management believes other recently issued standards, which are not yet effective, will not have a material impact on the Company's financial condition, results of operations, or cash flows upon adoption. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The carrying values and estimated fair values using primarily Level 2 assumptions of the Company's other financial instruments follow: March 31, 2017 December 31, 2016 (In millions) Carrying Amount Est. Fair Value Carrying Amount Est. Fair Value Long-term debt $ 1,714.3 $ 1,829.2 $ 1,714.0 $ 1,835.8 Short-term borrowings 101.4 101.4 194.4 194.4 Cash & cash equivalents 32.6 32.6 68.6 68.6 Restricted cash — — 0.9 0.9 For the balance sheet dates presented in these financial statements, the Company had no material assets or liabilities marked to fair value. Certain methods and assumptions must be used to estimate the fair value of financial instruments. The fair value of the Company's long-term debt was estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for instruments with similar characteristics. Because of the maturity dates and variable interest rates of short-term borrowings and cash & cash equivalents, those carrying amounts approximate fair value. Because of the inherent difficulty of estimating interest rate and other market risks, the methods used to estimate fair value may not always be indicative of actual realizable value, and different methodologies could produce different fair value estimates at the reporting date. Under current regulatory treatment, call premiums on reacquisition of utility-related long-term debt are generally recovered in customer rates over the life of the refunding issue. Accordingly, any reacquisition of this debt would not be expected to have a material effect on the Company's results of operations. Because of the nature of certain other investments and lack of a readily available market, it is not practical to estimate the fair value of these financial instruments at specific dates without considerable effort and cost. At March 31, 2017 and December 31, 2016 , the fair value for these financial instruments was not estimated. The carrying value of these investments at March 31, 2017 and December 31, 2016 was $16.1 million . |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company segregates its operations into three groups: 1) Utility Group, 2) Nonutility Group, and 3) Corporate and Other. The Utility Group is comprised of Vectren Utility Holdings, Inc.’s operations, which consist of the Company’s regulated operations and other operations that provide information technology and other support services to those regulated operations. The Company segregates its regulated operations between a Gas Utility Services operating segment and an Electric Utility Services operating segment. The Gas Utility Services segment provides natural gas distribution and transportation services to nearly two-thirds of Indiana and to west-central Ohio. The Electric Utility Services segment provides electric distribution services primarily to southwestern Indiana, and includes the Company’s power generating and wholesale power operations. Regulated operations supply natural gas and/or electricity to over one million customers. In total, the Utility Group is comprised of three operating segments: Gas Utility Services, Electric Utility Services, and Other operations. The Nonutility Group reports the following segments: Energy Services, Infrastructure Services, and Other Businesses. Energy Services, through the wholly owned subsidiary Energy Systems Group, LLC, provides energy performance contracting and sustainable infrastructure, such as renewables, distributed generation, and combined heat and power projects. The Infrastructure Services segment, through wholly owned subsidiaries Miller Pipeline, LLC and Minnesota Limited, LLC, provides underground pipeline construction and repair services for customers that include Vectren Utility Holdings' utilities. Fees incurred by Vectren Utility Holdings and its subsidiaries for these pipeline construction and repair services totaled $25.8 million and $19.6 million for the three months ended March 31, 2017 and 2016 . In 2016, the estimated depreciable lives for certain pieces of equipment at Minnesota Limited, LLC were reevaluated and extended due to a change in service life of the equipment. As a result of this evaluation, the Company extended the estimated useful life of certain pieces of equipment effective January 1, 2016. The effect of this change in estimate was an anticipated reduction of annual depreciation expense of approximately $9.6 million in 2016. Corporate and Other includes proceeds from life insurance policies offset by unallocated corporate expenses such as advertising and certain charitable contributions, among other activities, that benefit the Company’s other operating segments. Net income is the measure of profitability used by management for all operations. Information related to the Company’s reportable segments is summarized as follows: Three Months Ended March 31, (In millions) 2017 2016 Revenues Utility Group Gas Utility Services $ 292.8 $ 281.2 Electric Utility Services 132.1 142.1 Other Operations 11.4 10.6 Eliminations (11.3 ) (10.5 ) Total Utility Group 425.0 423.4 Nonutility Group Infrastructure Services 147.3 112.5 Energy Services 52.8 49.4 Total Nonutility Group 200.1 161.9 Corporate & Other Group 0.1 0.1 Eliminations (0.7 ) (0.6 ) Consolidated Revenues $ 624.5 $ 584.8 Profitability Measure - Net Income (Loss) Utility Group Net Income Gas Utility Services $ 47.9 $ 40.4 Electric Utility Services 13.7 16.6 Other Operations 4.3 4.1 Utility Group Net Income 65.9 61.1 Nonutility Group Net Income (Loss) Infrastructure Services (9.3 ) (12.6 ) Energy Services (1.2 ) 0.1 Other Businesses — (0.2 ) Nonutility Group Net Income (10.5 ) (12.7 ) Corporate & Other Group Net Income (Loss) — (0.1 ) Consolidated Net Income $ 55.4 $ 48.3 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Basic and Dilutive EPS | The following table illustrates the basic and dilutive EPS calculations for the periods presented in these financial statements. Three Months Ended March 31, (In millions, except per share data) 2017 2016 Numerator: Reported net income (Numerator for Basic and Diluted EPS) $ 55.4 $ 48.3 Denominator: Weighted average common shares outstanding (Denominator for Basic EPS) 82.9 82.8 Conversion of share based compensation arrangements 0.1 — Adjusted weighted-average shares outstanding and assumed conversions outstanding (Denominator for Diluted EPS) 83.0 82.8 Basic and Diluted EPS $ 0.67 $ 0.58 |
Retirement Plans & Other Post21
Retirement Plans & Other Postretirement Benefits (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Pension and Other Postretirement Benefit Expense [Abstract] | |
Net Periodic Benefit Costs | A summary of the components of net periodic benefit cost follows and the amortizations shown below are primarily reflected in Regulatory assets as a majority of pension and other postretirement benefits are being recovered through rates. Three Months Ended March 31, Pension Benefits Other Benefits (In millions) 2017 2016 2017 2016 Service cost $ 1.6 $ 1.8 $ — $ 0.1 Interest cost 3.5 3.6 0.4 0.4 Expected return on plan assets (5.3 ) (5.7 ) — — Amortization of prior service cost 0.1 0.1 (0.6 ) (0.7 ) Amortization of actuarial loss 1.9 1.8 — — Net periodic cost (benefit) $ 1.8 $ 1.6 $ (0.2 ) $ (0.2 ) |
Investment in ProLiance Holdi22
Investment in ProLiance Holdings, LLC (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summarized Financial Information of Equity Investment | The Company's remaining investment at March 31, 2017 , shown at its 61 percent ownership share of the individual net assets of ProLiance, is as follows. As of March 31, (In millions) 2017 Cash $ 1.5 Investment in LA Storage 22.4 Other midstream asset investment 5.4 Total investment in ProLiance $ 29.3 Included in: Investments in unconsolidated affiliates $ 19.2 Other nonutility investments $ 10.1 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value By Balance Sheet Grouping | The carrying values and estimated fair values using primarily Level 2 assumptions of the Company's other financial instruments follow: March 31, 2017 December 31, 2016 (In millions) Carrying Amount Est. Fair Value Carrying Amount Est. Fair Value Long-term debt $ 1,714.3 $ 1,829.2 $ 1,714.0 $ 1,835.8 Short-term borrowings 101.4 101.4 194.4 194.4 Cash & cash equivalents 32.6 32.6 68.6 68.6 Restricted cash — — 0.9 0.9 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting | Information related to the Company’s reportable segments is summarized as follows: Three Months Ended March 31, (In millions) 2017 2016 Revenues Utility Group Gas Utility Services $ 292.8 $ 281.2 Electric Utility Services 132.1 142.1 Other Operations 11.4 10.6 Eliminations (11.3 ) (10.5 ) Total Utility Group 425.0 423.4 Nonutility Group Infrastructure Services 147.3 112.5 Energy Services 52.8 49.4 Total Nonutility Group 200.1 161.9 Corporate & Other Group 0.1 0.1 Eliminations (0.7 ) (0.6 ) Consolidated Revenues $ 624.5 $ 584.8 Profitability Measure - Net Income (Loss) Utility Group Net Income Gas Utility Services $ 47.9 $ 40.4 Electric Utility Services 13.7 16.6 Other Operations 4.3 4.1 Utility Group Net Income 65.9 61.1 Nonutility Group Net Income (Loss) Infrastructure Services (9.3 ) (12.6 ) Energy Services (1.2 ) 0.1 Other Businesses — (0.2 ) Nonutility Group Net Income (10.5 ) (12.7 ) Corporate & Other Group Net Income (Loss) — (0.1 ) Consolidated Net Income $ 55.4 $ 48.3 |
Organization and Nature of Op25
Organization and Nature of Operations (Details) customer in Thousands | 3 Months Ended |
Mar. 31, 2017business_areacustomerpublic_utility | |
Public Utilities, General Disclosures [Line Items] | |
Public utilities subsidiaries owned by wholly owned subsidiary | public_utility | 3 |
Number of primary business areas | business_area | 2 |
INDIANA [Member] | Natural Gas Customers [Member] | Indiana Gas [Member] | |
Public Utilities, General Disclosures [Line Items] | |
Approximate number of customers | 597 |
INDIANA [Member] | Natural Gas Customers [Member] | SIGECO [Member] | |
Public Utilities, General Disclosures [Line Items] | |
Approximate number of customers | 112 |
INDIANA [Member] | Electric Customers [Member] | SIGECO [Member] | |
Public Utilities, General Disclosures [Line Items] | |
Approximate number of customers | 145 |
OHIO [Member] | Natural Gas Customers [Member] | VEDO [Member] | |
Public Utilities, General Disclosures [Line Items] | |
Approximate number of customers | 320 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Numerator: | ||
Reported net income (Numerator for Basic and Diluted EPS) | $ 55.4 | $ 48.3 |
Denominator: | ||
Weighted average common shares outstanding (Denominator for Basic EPS) (in shares) | 82.9 | 82.8 |
Conversion of share based compensation arrangements (in shares) | 0.1 | 0 |
Adjusted weighted-average shares outstanding and assumed conversions outstanding (Denominator for Diluted EPS) (in shares) | 83 | 82.8 |
Basic and Diluted EPS (in dollars per share) | $ 0.67 | $ 0.58 |
Excise & Utility Receipts Tax27
Excise & Utility Receipts Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Excise and Utility Receipts Taxes [Abstract] | ||
Excise and utility receipts taxes billed to customers | $ 9.4 | $ 9.4 |
Retirement Plans & Other Post28
Retirement Plans & Other Postretirement Benefits (Details) | 3 Months Ended | |
Mar. 31, 2017USD ($)pension_plan | Mar. 31, 2016USD ($) | |
Pension and Other Postretirement Benefit Expense [Abstract] | ||
Number of qualified defined benefit pension plans | pension_plan | 3 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Expected contribution to defined benefit plans for current year by employer | $ 0 | |
Pension Benefits [Member] | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Service cost | 1,600,000 | $ 1,800,000 |
Interest cost | 3,500,000 | 3,600,000 |
Expected return on plan assets | (5,300,000) | (5,700,000) |
Amortization of prior service cost | 100,000 | 100,000 |
Amortization of actuarial loss | 1,900,000 | 1,800,000 |
Net periodic cost (benefit) | 1,800,000 | 1,600,000 |
Other Benefits [Member] | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Service cost | 0 | 100,000 |
Interest cost | 400,000 | 400,000 |
Expected return on plan assets | 0 | 0 |
Amortization of prior service cost | (600,000) | (700,000) |
Amortization of actuarial loss | 0 | 0 |
Net periodic cost (benefit) | $ (200,000) | $ (200,000) |
Supplemental Cash Flow Inform29
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Supplemental Cash Flow Information [Abstract] | ||
Accruals related to utility and nonutility plant purchases | $ 20.1 | $ 30 |
Investment in ProLiance Holdi30
Investment in ProLiance Holdings, LLC (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Schedule of Equity Method Investments [Line Items] | ||
Ownership share (as a percent) | 61.00% | |
Voting rights (as a percent) | 50.00% | |
Summarized balance sheet information [Abstract] | ||
Investments in unconsolidated affiliates | $ 20.4 | $ 20.4 |
Other nonutility investments | 16.1 | 16.1 |
Proliance Holdings LLC [Member] | ||
Summarized balance sheet information [Abstract] | ||
Cash | 1.5 | |
Investment in LA Storage | 22.4 | |
Other midstream asset investment | 5.4 | |
Total investment in ProLiance | 29.3 | |
Investments in unconsolidated affiliates | 19.2 | |
Other nonutility investments | $ 10.1 | |
LA Storage [Member] | Corporate Joint Venture [Member] | ||
Summarized balance sheet information [Abstract] | ||
Ownership interest (as a percent) | 100.00% | |
LA Storage [Member] | Affiliated Entity [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership share (as a percent) | 25.00% | |
LA Storage [Member] | Proliance Holdings LLC [Member] | ||
Summarized balance sheet information [Abstract] | ||
Investment in joint venture | $ 36.7 | $ 36.7 |
Commitments & Contingencies (De
Commitments & Contingencies (Details) | 3 Months Ended |
Mar. 31, 2017USD ($)surety_bond | |
Performance Guarantees and Product Warranties [Abstract] | |
Warranty liability recognized | $ 0 |
Letters of credit outstanding | $ 30,000,000 |
Firm purchase commitment term one | 5 years |
Firm purchase commitment term two | 20 years |
Energy Systems Group [Member] | |
Performance Guarantees and Product Warranties [Abstract] | |
Maximum exposure by parent company on guarantees | $ 327,000,000 |
Energy Systems Group [Member] | Performance Guarantee [Member] | |
Performance Guarantees and Product Warranties [Abstract] | |
Number of surety bonds open to support future performance | surety_bond | 56 |
Face amount of surety bonds outstanding | $ 9,800,000 |
Work yet to be completed on surety bond projects (as a percent) | 38.30% |
Period for release of significant portion of surety bonds | 1 year |
Energy Systems Group [Member] | Performance Guarantee [Member] | Maximum [Member] | |
Performance Guarantees and Product Warranties [Abstract] | |
Face amount of surety bonds outstanding | $ 75,900,000 |
Gas Rate & Regulatory Matters (
Gas Rate & Regulatory Matters (Details) - USD ($) | 3 Months Ended | 12 Months Ended | 28 Months Ended | 29 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Jan. 25, 2017 | |
Public Utilities, General Disclosures [Line Items] | ||||||
Regulatory assets | $ 324,800,000 | $ 308,800,000 | $ 308,800,000 | |||
Other income – net | 8,000,000 | $ 5,700,000 | ||||
INDIANA [Member] | Indiana Recovery and Deferral Mechanisms [Member] | ||||||
Public Utilities, General Disclosures [Line Items] | ||||||
Regulatory assets | $ 22,300,000 | 21,900,000 | 21,900,000 | |||
Length of project plan required for recovery under new legislation | 7 years | |||||
INDIANA [Member] | Indiana Recovery and Deferral Mechanisms [Member] | Indiana Gas [Member] | ||||||
Public Utilities, General Disclosures [Line Items] | ||||||
Allowable capital expenditures under Vectren programs | $ 20,000,000 | |||||
Limitations of deferrals of debt-related post in service carrying costs | 4 years | |||||
INDIANA [Member] | Indiana Recovery and Deferral Mechanisms [Member] | SIGECO [Member] | ||||||
Public Utilities, General Disclosures [Line Items] | ||||||
Allowable capital expenditures under Vectren programs | $ 3,000,000 | |||||
Limitations of deferrals of debt-related post in service carrying costs | 3 years | |||||
INDIANA [Member] | Senate Bill 251 and 560 [Member] | ||||||
Public Utilities, General Disclosures [Line Items] | ||||||
Regulatory assets | $ 54,900,000 | 51,100,000 | 51,100,000 | |||
Amount of project investment approved | 890,000,000 | |||||
Amount of project investment not approved for recovery | 80,000,000 | |||||
Capital expenditure increase | $ 65,000,000 | $ 60,000,000 | ||||
Project spend life to date | 338,000,000 | |||||
Capital expenditures under plan | $ 950,000,000 | |||||
Additional capital investment | 69,100,000 | |||||
OHIO [Member] | Ohio Recovery and Deferral Mechanisms [Member] | ||||||
Public Utilities, General Disclosures [Line Items] | ||||||
Regulatory assets | 25,900,000 | 24,400,000 | $ 24,400,000 | |||
Payments for capital improvements | 269,700,000 | 57,100,000 | $ 204,000,000 | |||
OHIO [Member] | Ohio House Bill 95 [Member] | ||||||
Public Utilities, General Disclosures [Line Items] | ||||||
Bill impact per customer per month | 1.50 | |||||
Other income – net | $ 46,700,000 | $ 41,900,000 |
Electric Rate & Regulatory Ma33
Electric Rate & Regulatory Matters (Details) $ in Millions | Mar. 07, 2017 | Feb. 23, 2017USD ($) | Mar. 23, 2016 | Aug. 31, 2011 | Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Feb. 22, 2017USD ($)projectMW | Sep. 28, 2016 | Jun. 30, 2016 | Jan. 06, 2015 | Nov. 12, 2013 |
Public Utilities, General Disclosures [Line Items] | |||||||||||
Number of solar projects filed for authority to recover costs | project | 3 | ||||||||||
Additional solar generation resulting from project | MW | 4 | ||||||||||
Additional battery storage resources resulting from project | MW | 1 | ||||||||||
Amount of capital investments to date in equipment for mercury control | $ 30 | ||||||||||
Amount of capital investments to date in equipment to control sulfur trioxide emissions | 40 | ||||||||||
Estimated cost of equipment to comply with MATS | 9 | ||||||||||
Estimated cost of equipment required by the NOV | 3.3 | ||||||||||
Vectren South Electric Demand Side Management Program Filing [Abstract] | |||||||||||
Initial DSM plan period | 3 years | ||||||||||
Electric utility revenue | 132.1 | $ 142.1 | |||||||||
FERC Return On Equity Complaint [Abstract] | |||||||||||
Current return on equity used in MISO transmission owners rates | 12.38% | ||||||||||
Reduced return on equity percentage sought by third party through joint complaint | 9.15% | ||||||||||
FERC authorized base ROE percentage for first refund period | 10.32% | ||||||||||
FERC authorized base ROE percentage for second refund period | 9.70% | ||||||||||
FERC authorized incentive ROE percentage for first refund period | 0.50% | ||||||||||
Gross investment in qualifying projects | 157.7 | ||||||||||
Net plant balance for qualifying projects | 136 | ||||||||||
Electric Modernization Program - SB 560 [Member] | |||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||
Capital expenditures under plan | $ 500 | ||||||||||
Length of project plan required for recovery under new legislation | 7 years | ||||||||||
Renewable Generation - SB 29 [Member] | |||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||
Estimated cost of project | $ 15 | ||||||||||
Electric Demand Side Management Program [Member] | |||||||||||
Vectren South Electric Demand Side Management Program Filing [Abstract] | |||||||||||
Electric utility revenue | $ 3 | $ 2.6 | |||||||||
Maximum period for recovery under energy efficiency program | 4 years | 4 years |
Environmental & Sustainabilit34
Environmental & Sustainability Matters (Details) $ in Millions | 3 Months Ended | 12 Months Ended | 132 Months Ended | ||
Mar. 31, 2017USD ($)lb / MWhagreementsiteMW | Dec. 31, 2016USD ($)meeting | Dec. 31, 2015USD ($) | Dec. 31, 2015lb / MWh | Dec. 31, 2009MW | |
Site Contingency [Line Items] | |||||
Number of public stakeholder meetings to gather input and feedback | meeting | 3 | ||||
Coal-fired generation | MW | 1,000 | ||||
Natural gas peaking units | MW | 245 | ||||
Landfill-gas-to-electricity facility | MW | 3 | ||||
Wind power | MW | 80 | ||||
Number of purchase agreements | agreement | 2 | ||||
Period of plan | 20 years | ||||
Additional solar capacity | MW | 54 | ||||
Additional capacity from new plant | MW | 890 | ||||
Coal Ash Waste Disposal, Ash Ponds and Water [Abstract] | |||||
Asset retirement obligation (ARO) | $ 40 | ||||
Estimated spend for ash pond dam reinforcement and other operational changes | 17 | ||||
Notification period of issuance of the renewal of its intent to retire a unit | 1 year | ||||
Air Quality [Abstract] | |||||
Percentage of coal fired generating fleet currently being scrubbed for SO2 (in hundredths) | 100.00% | ||||
Percentage of coal fired generating fleet currently controlled for NOx (in hundredths) | 90.00% | ||||
Climate Changes [Abstract] | |||||
Vectren's share of Indiana's CO2 emissions in 2013 (less than) (as a percent) | 6.00% | ||||
Percent reduction of Vectren's CO2 emissions since 2005 | 31.00% | 31.00% | |||
Long term contract for purchase of electric power generated by wind energy (in megawatts) | MW | 80 | ||||
Percentage of total electricity obtained by the supplier to meet the energy needs of its retail customers provided by clean energy sources (in hundredths) | 4.00% | ||||
Vectren's emission rate (as measured in lbs CO2/MWh) prior to installation of new technology | lb / MWh | 1,967 | ||||
Vectren's emission rate (as measured in lbs CO2/MWh) after installation of new technology | lb / MWh | 1,922 | ||||
Percentage reduction of lbs CO2/MWh since 2005 | 3.00% | 3.00% | |||
Manufactured Gas Plants | |||||
Cumulative costs recorded | $ 44.2 | ||||
Accrued costs included in Other Liabilities | $ 2.9 | 2.9 | |||
Indiana Gas [Member] | |||||
Manufactured Gas Plants | |||||
Number of sites identified with potential remedial responsibility for entity (in number of sites) | site | 26 | ||||
Cumulative costs recorded | $ 23.9 | ||||
Insurance coverage, amount received | $ 20.8 | ||||
SIGECO [Member] | |||||
Manufactured Gas Plants | |||||
Number of sites identified with potential remedial responsibility for entity (in number of sites) | site | 5 | ||||
Cumulative costs recorded | $ 20.3 | ||||
Insurance coverage, amount received | 15.4 | ||||
Total estimated insurance recoveries | 15.8 | ||||
Minimum [Member] | |||||
Coal Ash Waste Disposal, Ash Ponds and Water [Abstract] | |||||
Estimated capital expenditures to comply with Ash Pond and Coal Ash disposal regulations | $ 35 | ||||
Ash Pond and Coal Ash Disposal Exit Costs Revised Anticipated Cost | 45 | ||||
Estimated capital expenditures to comply with Clean Water Act | 4 | ||||
Maximum [Member] | |||||
Coal Ash Waste Disposal, Ash Ponds and Water [Abstract] | |||||
Estimated capital expenditures to comply with Ash Pond and Coal Ash disposal regulations | $ 80 | ||||
Ash Pond and Coal Ash Disposal Exit Costs Revised Anticipated Cost | $ 100 | ||||
Estimated capital expenditures to comply with Clean Water Act | $ 8 | ||||
Warrick Unit 4 [Member] | |||||
Site Contingency [Line Items] | |||||
Current electric capacity under joint operations | MW | 300 | ||||
Culley Unit 3 [Member] | |||||
Site Contingency [Line Items] | |||||
Current electric capacity under joint operations | MW | 270 | ||||
AB Brown Unit 1, AB Brown Unit 2 & Culley Unit 2 [Member] | |||||
Site Contingency [Line Items] | |||||
Current electric capacity under joint operations | MW | 580 | ||||
OVEC [Member] | |||||
Site Contingency [Line Items] | |||||
Coal-fired generation | MW | 32 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Carrying Amount [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 1,714.3 | $ 1,714 |
Short-term borrowings | 101.4 | 194.4 |
Cash & cash equivalents | 32.6 | 68.6 |
Restricted cash | 0 | 0.9 |
Estimated Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 1,829.2 | 1,835.8 |
Short-term borrowings | 101.4 | 194.4 |
Cash & cash equivalents | 32.6 | 68.6 |
Restricted cash | $ 0 | $ 0.9 |
Fair Value Measurements Narrati
Fair Value Measurements Narrative (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Fair Value Disclosures [Abstract] | ||
Carrying value of notes receivable | $ 16.1 | $ 16.1 |
Segment Reporting Narrative (De
Segment Reporting Narrative (Details) customer in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017USD ($)segmentcustomer | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of operational groups | segment | 3 | ||
Portion of Indiana that is provided natural gas distribution and transportation services by the Gas Utility Services segment (in hundredths) | 66.67% | ||
Number of customers (greater than) | customer | 1 | ||
Utility Group [Member] | |||
Segment Reporting Information [Line Items] | |||
Number of operating segments | segment | 3 | ||
Fees incurred for pipeline construction and repair services | $ | $ 25.8 | $ 19.6 | |
Nonutility Group [Member] | Infrastructure Services [Member] | Change in Accounting Method Accounted for as Change in Estimate [Member] | |||
Segment Reporting Information [Line Items] | |||
Depreciation | $ | $ 9.6 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 624.5 | $ 584.8 |
Net income | 55.4 | 48.3 |
Utility Group [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 425 | 423.4 |
Operating Segments [Member] | Utility Group [Member] | ||
Segment Reporting Information [Line Items] | ||
Net income | 65.9 | 61.1 |
Operating Segments [Member] | Utility Group [Member] | Gas Utility Services [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 292.8 | 281.2 |
Net income | 47.9 | 40.4 |
Operating Segments [Member] | Utility Group [Member] | Electric Utility Services [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 132.1 | 142.1 |
Net income | 13.7 | 16.6 |
Operating Segments [Member] | Utility Group [Member] | Other Operations [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 11.4 | 10.6 |
Net income | 4.3 | 4.1 |
Operating Segments [Member] | Nonutility Group [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 200.1 | 161.9 |
Net income | (10.5) | (12.7) |
Operating Segments [Member] | Nonutility Group [Member] | Infrastructure Services [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 147.3 | 112.5 |
Net income | (9.3) | (12.6) |
Operating Segments [Member] | Nonutility Group [Member] | Energy Services [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 52.8 | 49.4 |
Net income | (1.2) | 0.1 |
Operating Segments [Member] | Nonutility Group [Member] | Other Businesses [Member] | ||
Segment Reporting Information [Line Items] | ||
Net income | 0 | (0.2) |
Eliminations [Member] | Utility Group [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | (11.3) | (10.5) |
Corporate & Other Group [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0.1 | 0.1 |
Net income | 0 | (0.1) |
Eliminations [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ (0.7) | $ (0.6) |