VECTREN
Not just power. Possibility.
AGA Financial Forum
May 3, 2005
[PDF of actual PowerPoint presentation attached to this filing.]
Forward Looking Statement
- --------------------------------------------------------------------------------
Statements contained or incorporated by reference in these slides regarding
future events and developments are "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933. Forward-looking statements
are based on management's beliefs and assumptions that derive from information
currently known by management. Because such statements are based on expectations
and not historical facts, actual results may differ materially from those
projected in the particular statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date of
this document, or in the case of documents incorporated by reference, as of the
date of those documents.
Additional detailed information concerning a number of factors that could cause
actual results to differ materially from the information that is provided to you
here is readily available in our report Form 10-K filed with the Securities and
Exchange Commission on March 2, 2005.
Contact:
Vectren Corporation
Steven M. Schein
812-491-4209
sschein@vectren.com
2
Vectren Today
- --------------------------------------------------------------------------------
Assets $3.6 billion
Operating Revenues $1.7 billion
Employees 1,800
Utility Customers 1.1 million
Shares Outstanding 75.9 million
Market Capitalization $2.0 billion
NYSE VVC
- -> A high quality Midwestern utility
headquartered in Evansville, Ind.
- -> A sensible and complementary
nonregulated business portfolio
[pie chart omitted]
12 months ended 12/31/04
Nonregulated & Corporate $0.33
Utility $1.10
EPS - $1.43
3
Vectren Is On The Right Track For The Future
- --------------------------------------------------------------------------------
- -> Utility growth opportunities will continue
- -> Successful nonregulated operations complement core utility focus
- -> Superior dividend record with 45 years of consecutive dividend increases
- -> Balance sheet remains strong with improving credit ratings
- -> 2005 Earnings guidance unchanged at $1.70 to $1.90 per share
4
Goals
- --------------------------------------------------------------------------------
- -> Corporate Goals
o 5% plus annual earnings per share growth
o Utility earnings growth rate objective of 3.5% to 4%
o Nonregulated contributing 25% to 35% of Vectren's earnings
o Achievement of an "A" credit rating
- -> Dividend Growth
o Fund 85% of dividend through regulated operations
o Consolidated payout of 55% to 65%
o 3% to 3.5% growth rate objective
- -> Total Shareholder Return
o An earnings growth rate of 5% plus
o A dividend yield of 4% or more
o Provides a total return potential of 9% or more
5
Utility Business - Energy Delivery
- --------------------------------------------------------------------------------
- -> 984,000 Gas Customers
- -> 136,000 Electric Customers
- -> Efficient Operations/Quality Service
- -> Disciplined Use of Capital
- -> High Customer Satisfaction
- -> Supportive Regulation
- -> Gas Rate Relief Achieved
[map of Indiana and Ohio omitted]
6
Utility Business - Low-cost, Reliable Generation
- --------------------------------------------------------------------------------
- -> Generation Portfolio
o Coal-fired units
- 6 units - base load
- 1,056 Megawatt capacity
- 90% availability
o Gas-fired turbines
- 6 units - peaking
- 295 Megawatt capacity
o Firm purchases likely to be replaced by coal generation
- -> Wholesale Power Marketing
o Short-term focus on asset optimization
o Conservative, risk averse approach
o Aggressively manage MISO impacts
[bar graph omitted]
Electric Capacity
MW
2002 2003 2004 2005P
---- ---- ---- -----
Coal Fired 1056 1056 1056 1056
Peaking 295 295 295 295
Firm Purchase 82 32 105 103
Interruptible 95 95 51 65
Peak Demand 1258 1272 1222 1339
1528 1478 1507 1519
Reserve Margin 21% 16% 23% 13%
7
Key Business Assumptions - Utility
- --------------------------------------------------------------------------------
- -> Modest economic growth vs. national averages
- -> Gas prices are projected to be $6.00 over the next two or three years
- -> Significant environmental and generation investments will continue
- -> Coal will be a desired generation feedstock
- -> Expenses will grow more rapidly than margins
- -> Periodic rate increases
8
Nonregulated Businesses
- --------------------------------------------------------------------------------
- -> Nonregulated business portfolio represents about 25% of consolidated earnings
stream
- -> Will continue to consist of businesses closely aligned to the core utility
business
o Energy Marketing & Services
o Coal Mining
o Utility Infrastructure Services
- -> Focus on operating companies
- -> Harvest existing investments and reinvest in core business groups
- -> Will grow about 10%+ per year
[photos omitted]
9
Energy Marketing & Services Growth Strategy
- --------------------------------------------------------------------------------
ProLiance o Grow company owned or leased storage by 15% per year
Energy Systems o Invest in projects operated by ESG that offer long-term
Group recurring revenue streams and grow federal business
Vectren Source o Add new territory as markets open or regulations allow
--> o Invest in midstream gas assets including gas storage,
gathering, processing and transmission
10
Coal Mining Growth Strategy
- --------------------------------------------------------------------------------
Vectren Fuels o Continue to aggressively manage mining operations to
ensure low costs per "mined" ton
o Open a new underground mine and surface mine
o Mining operations' earnings targeted to replace 70% to
75% of synfuel contribution
Vectren Synfuels o Continue production of synfuel through tax credit
expiration in 2007
o Purchased insurance to partially protect 2005 and 2006
tax credits
11
Utility Infrastructure Services Growth Strategy
- --------------------------------------------------------------------------------
Reliant Services o Enhance "cured in place" business
(Miller Pipeline) o Develop strategic partnerships to qualify for municipal
waste water and water business
o Expand into the construction and maintenance of
electric transmission and distribution systems
12
Other Businesses Growth Strategy
- --------------------------------------------------------------------------------
Haddington o Continue to harvest very strong energy investments
o Fund remaining commitment of $5 million
Broadband o Continue to assess strategic alternatives
o Existing business cash flow positive
Other o Hold leveraged leases and affordable housing partnerships
o Exit real estate notes upon refinancing
13
Financial Review
- --------------------------------------------------------------------------------
- -> Capital Forecast
- -> Balance Sheet and Liquidity
- -> Guidance
- -> Buy Now
14
Capital Forecast
- --------------------------------------------------------------------------------
Notable CapEx (2005-2009)
- -> Environmental Compliance
o $195 million
- -> Coal Fired Generation
o $150 million
- -> Import/Export Related Transmission Projects
o $45 million
- -> Automated meter reading
o $15 million
[bar graph omitted]
Capital Expenditures & Investments
$mm
2005 2006 2007 2008 2009
---- ---- ---- ---- ----
Nonregulated 93 65 60 47 29
Other Utility 172 172 180 146 136
Generation 1 5 24 60 60
Environmental 32 45 57 48 12
298 287 321 300 237
Depreciation Exp. 143 151 163 172 181
15
Strong Balance Sheet and Liquidity
- --------------------------------------------------------------------------------
[bar graph omitted]
Improved Liquidity
As of 3/31/05
VUHI Capital
---- -------
Borrowing $117 $114
Available $233 $141
Total $350 $255
Major Credit Facilities
- -> VUHI - $350 million 5-yr committed capacity
- -> Capital - $255 million 5-yr committed capacity
16
Strong Balance Sheet and Liquidity
- --------------------------------------------------------------------------------
[bar graph omitted]
LT Debt to Permanent Capital
2002 2003 2004 2005P
---- ---- ---- -----
Long Term Debt $954 $1,073 $1,017 $1,053
Debt to Capital 52% 50% 48% 48%
Credit Ratings
VUHI S&P Moody's
- ----- ----------------------------
Unsecured Debt A- Baa1
Commercial Paper A2 P2
Outlook Stable Stable
Vectren Capital
- ----------------
Unsecured Debt BBB+ Baa2
17
Utility Growth - 2005 vs. 2004
- --------------------------------------------------------------------------------
- -> Gas General Rate Relief
o South - $5.7 million revenue increase implemented 7/1/2004
o North - $24 million revenue increase implemented 12/1/2004
o Ohio - $15.7 million revenue increase implemented 4/14/2005
- -> Ongoing recovery of NOx compliance environmental expenditures via tracker
o $235 million of $255 million included in rates
o 8% return on capital invested
- -> 2005 YTD Weather
o Heating Degree Days - 90% of normal
- -> Margins are within 2005 forecasted range
18
Proven Success
- --------------------------------------------------------------------------------
[chart omitted]
|--Vectren Enterprises
|
|
|--Energy Marketing and Services
|
|
|--Coal Mining
|
|
|--Utility Infrastructure Services
|
|
|--Other Businesses
[bar graph omitted]
Vectren Enterprises Net Income
$mm
2001 2002 2003 2004
---- ---- ---- ----
$12.1 $19.0 $27.6 $26.4
30% CAGR
19
Enterprises Earnings Forecast
- --------------------------------------------------------------------------------
Nonregulated Net Income
In Millions
2004 2005P
------- --------------
Energy Marketing & Services $16.6 $ 19 - $ 21
Coal Mining 12.5 16 - 19
Utility Infrastructure Services 1.8 2 - 3
Other Businesses (1) (4.5) 4 - 5
------- --------------
Sub-Total $26.4 $ 41 - $ 48
Reserve for Performance Risk (7) - (7)
------- --------------
Total $26.4 $ 34 - $ 41
======= ==============
(1) Includes 2004 Broadband charges of $6 million
20
Earnings Guidance
- --------------------------------------------------------------------------------
- -> VUHI Key Assumptions
o Margins/Economy/Gas Costs
o Weather
- -> Enterprise Key Assumptions
o Growth in operating businesses
o Haddington harvesting
o Reserve for performance risk
2005 EPS Guidance $1.70 - $1.90
VUHI 1.28 - 1.40
Nonregulated 0.45 - 0.54
Corporate Expense (0.03) - (0.04)
21
45 Years of Consecutive Dividend Increases
- --------------------------------------------------------------------------------
- -> 3.5% increase payable Dec. 1, 2004
- -> 4.5% yield compared to peer group average of 4.0%
- -> Dividend Policy
o 3% to 3.5% long-term growth
o 55% to 65% target payout
o 85%+ funded from utility
o Less than 25% nonregulated payout
[bar graph omitted]
Dividends Paid
2000 2001 2002 2003 2004 (1)
---- ---- ---- ---- --------
$0.98 $1.03 $1.07 $1.11 $1.15
4.1% CAGR
(1) Current Annualized Dividend - $1.18
22
Vectren Is On The Right Track For The Future
- --------------------------------------------------------------------------------
- -> Utility growth opportunities will continue
- -> Successful nonregulated operations complement core utility focus
- -> Superior dividend record with 45 years of consecutive dividend increases
- -> Balance sheet remains strong with improving credit ratings
- -> 2005 Earnings guidance unchanged at $1.70 to $1.90 per share
23
Appendix - Vectren At A Glance
- --------------------------------------------------------------------------------
- -> Corporate Structure
- -> Regulated Operations
- -> Nonregulated Businesses
24
Corporate Structure
- --------------------------------------------------------------------------------
[organization chart omitted]
Vectren Corporation
|
------------------------------------------------------------------------
| |
--| Vectren Utility | Vectren
| | Holdings Inc. | Enterprises NOTE: Ownership Percentage in ( )
| |
| -----------------------------------------------------------------------------------------------
| | | | |
|--| Vectren North |--| Energy Marketing | --| Coal Mining |--| Utility Infrastructure |--| Other
| | (Indiana Gas) | | and Services | | | Services | | Businesses
| | | | |
|--| Vectren South |--| ProLiance Energy | --| Vectren Fuels |--| Reliant Services |--| Broadband
| | (SIGECO) | | (61%) | | | (50%) |
| | | | |
| | Vectren Energy |--| Energy Systems | --| Vectren Synfuels |--| Miller Pipeline |--| Haddington
|--| Delivery of Ohio | | Group | | | Energy (13%)
| (VEDO) | | |
| | |
|--| Vectren Source |--| Pace Carbon |--| Other
| Synfuels (8%)
25
Regulatory Update - Vectren South
- --------------------------------------------------------------------------------
As of 3/31/05
Electric - Semi-annual Filing
-----------------------------
- -> On going recovery of NOx compliance expenditures via a tracker
- -> $235 million of $255 million included in rates
- -> Projecting 2005 incremental return on investment of $7-8 million
- -> Highlights:
o Costs updated every six months
o Provides for an 8% return on capital investment
o Provides for full recovery of incremental O&M and depreciation
o O&M - $2.9 million; Depreciation - $5.1 million
26
Regulatory Update - Vectren South
- --------------------------------------------------------------------------------
As of 3/31/05
Gas - Case Concluded
--------------------
- -> March 26, 2004 filed Settlement Agreement supported by all parties
- -> Implemented new rates July 1, 2004
- -> Highlights:
o A rate increase of $5.7 million
o An authorized return on equity (ROE) of 10.5%
o An overall cost of capital of 7.41% (44% Equity Cap Structure)
o A tracker to recover annual pipeline integrity compliance costs up to
$0.5 million (Defer any excess)
o A new rate design which includes a larger service charge
27
Regulatory Update - Vectren North
- --------------------------------------------------------------------------------
As of 3/31/05
Case Concluded
--------------
- -> October 12, 2004 filed Settlement Agreement supported by all parties
- -> Implemented New Rates December 1, 2004
- -> Highlights:
o A rate increase of $24 million
o An authorized return on equity (ROE) of 10.6%
o An overall cost of capital of 8.38% (50% Equity Cap Structure)
o A return on rate base of $708 million
o A tracker to recover annual pipeline integrity compliance costs up to
$2.5 million (Defer any excess)
o A new rate design which includes a larger service charge
28
Regulatory Update - Vectren Ohio
- --------------------------------------------------------------------------------
As of 3/31/05
Case Concluded
--------------
- -> Late February filed Settlement Agreement
- -> Implemented New Rates April 14, 2005
- -> Highlights:
o A rate increase of $15.7 million
o An authorized return on equity (ROE) of 10.6%
o An overall cost of capital of 8.94% (50% Equity Cap Structure)
o A return on rate base of $245 million
o A new rate design which includes a larger monthly service charge
29
Energy Delivery - Gas
- --------------------------------------------------------------------------------
Overview
Vectren's three operating utilities provide reliable delivery service to 984,000
natural gas customers, including 899,000 residential, 81,000 commercial, and
4,000 industrial and other customers.
Markets
-> 57 counties in central and southwest Indiana
-> 17 counties in west central Ohio
Top Industrial Customers
-> ALCOA (Aluminum)
-> AE Staley (Grain Processing)
-> AK Steel (Steel)
-> Eli Lilly (Pharmaceuticals)
-> GE Plastics (Plastics)
-> General Motors (Automotive)
-> NUCOR (Steel)
Principal Industries
The principal industries include automotive assembly, parts and accessories,
feed, flour and grain processing, metal casting, aluminum products, appliance
manufacturing, resin and plastic products, gypsum products, electrical
equipment, metal specialties, glass, steel finishing, pharmaceutical and
nutritional products, gasoline and oil products, and coal mining
Gas Delivery
The Company's wholly owned subsidiary, Vectren Utility Holdings, Inc. (VUHI),
serves as the intermediate holding company for its three operating public
utilities: Indiana Gas Company, Inc. (Indiana Gas), formerly a wholly owned
subsidiary of Indiana Energy, Southern Indiana Gas and Electric Company
(SIGECO), formerly a wholly owned subsidiary of SIGCORP, and the Ohio
operations. VUHI also has other assets that provide information technology and
other services to the three utilities.
Indiana Gas provides natural gas distribution and transportation services to a
diversified customer base in 49 of Indiana's 92 counties. SIGECO provides
natural gas distribution and transportation services to 8 counties in
southwestern Indiana, including counties surrounding Evansville. The Ohio
operations provide natural gas distribution and transportation services to 17
counties in west central Ohio, including counties surrounding Dayton.
30
Energy Delivery - Electric
- --------------------------------------------------------------------------------
Overview
Vectren provides reliable delivery service to 136,300 electric customers,
including 119,000 residential, 17,100 commercial, and 175 industrial and other
customers.
Markets
6 counties in southwest Indiana
Top Industrial Customers
-> Berry Plastics (Plastics)
-> Bristol Myers (Pharmaceuticals/Food)
-> GE Plastics (Plastics)
-> MG Industries (Chemicals)
-> PPG Industries (Automotive)
-> Toyota (Automotive)
-> Whirlpool (Metal Products)
Principal Industries
The principal industries include resin and plastic products, aluminum smelting
and recycling, aluminum sheet products, automotive assembly, steel finishing,
appliance manufacturing, pharmaceutical and nutritional products, automotive
glass, gasoline and oil products, and coal mining.
Electric Delivery
The Company's wholly owned subsidiary, Vectren Utility Holdings, Inc. (VUHI),
serves as the intermediate holding company for its three operating public
utilities: Indiana Gas Company, Inc. (Indiana Gas), formerly a wholly owned
subsidiary of Indiana Energy, Southern Indiana Gas and Electric Company
(SIGECO), formerly a wholly owned subsidiary of SIGCORP, and the Ohio
operations. VUHI also has other assets that provide information technology and
other services to the three utilities.
SIGECO provides electric generation, transmission, and distribution services to
6 counties in southwestern Indiana, including counties surrounding Evansville,
and participates in the wholesale power market.
31
Power Supply
- --------------------------------------------------------------------------------
Overview
Provides low-cost, reliable electric generation for delivery to retail and firm
wholesale customers in Southwest Indiana. Optimizes assets by marketing
unutilized capacity to the open market.
Markets
-> Southwest Indiana - Retail and Wholesale
-> Midwest - Wholesale
Generating Capacity
-> 6 coal-fired base units - 1,056 MW
o Brown - 2 units, 500 MW
o Culley - 3 units, 406 MW
o Warrick - 1 unit, 150 MW
o Burn approximately 3.1 million tons of coal annually
-> 6 natural gas peaking units - 295 MW
-> Member of MISO
-> Has 7 interconnects
Wholesale Power Marketing
-> Functions within the regulated electric utility operation
-> Dynamic asset optimizer - markets surplus power from generating units
-> Capitalizes on regional physical and market knowledge
-> Strict volumetric and credit risk controls
o No credit related losses in 2002, 2003 and 2004
o Maximum approved VaR is $1.5 million
o Maximum VaR in 2004 was $0.9 million
-> Short-term focus
o 70% of contracts mature within the next 6 months
o No power marketing contracts mature beyond 24 months
32
Large Customer Volumes Budgeted By Industry
- --------------------------------------------------------------------------------
[pie charts omitted]
Gas Customers
Automotive 16%
Steel 11%
Bldg. Prdts. 8%
Food 7%
Aluminum 7%
Plastics 7%
Grain Processing 6%
Metal Prdts. 6%
Medical 4%
Packaging 4%
Education 4%
Misc. Mfg. 4%
Pharmaceuticals 3%
Government 3%
Paper Prdts. 2%
Power Generation 2%
Other 2%
Electronics 1%
Chemicals 1%
Paving 1%
Mining 0%
Electric Customers
Plastics 44%
Automotive 15%
Steel 7%
Food 6%
Chemicals 6%
Metal Prdts. 4%
Other 4%
Medical 3%
Mining 2%
Education 2%
Misc. Mfg. 2%
Packaging 1%
Government 1%
Pharmaceuticals 1%
Bldg. Prdts. 1%
Grain Processing 1%
33
Energy Marketing & Services - ProLiance Energy (1996)
- --------------------------------------------------------------------------------
Overview
Provides natural gas, and associated pricing and management services, plus an
owner operator of midstream gas assets. Created as an unregulated joint venture
with Citizens Gas & Coke Utility - 61% owned by Vectren, although governance is
50/50.
Strategy
ProLiance was formed as a natural gas marketer, delivering reduced gas costs to
the member utilities. Continued growth comes through third party marketing,
providing exceptional customer service and operational excellence. Long term
growth is enhanced by ownership of midstream assets and resource optimization
via transportation and storage management and price arbitrage.
Four Business Lines
-> Retail Gas Marketing - Mid-size commercial and industrial customers
-> Wholesale Services - Gas sales and resource management for utilities,
municipalities, power generators, other marketers, including Vectren's
three gas utilities, power supply and Vectren Source
-> Midstream Assets - Owns and operates gas storage and pipeline assets
-> Resource Optimization - Transportation and storage management, and price
arbitrage
Fast Facts
-> 100+ employees headquartered in Indianapolis
-> 90+ BCF of gas storage owned or managed
-> Asset ownership in 2 storage fields (White River & Lee 8)
-> Owner and developer of an intra-state pipeline (Ohio Valley Hub)
-> Approximate sales volumes of 1 BCF per day
-> Operates in 16 Midwestern and Southeastern states
-> 50%+ of volume with 3rd-party customers
-> 1,200 C&I customers
-> VaR capped at $2.5 million
-> Stand alone $150 million credit facility
-> Total VVC Investment 3/31/05: $107 million
[map omitted]
34
Energy Marketing & Services - Energy Systems Group (1995)
- --------------------------------------------------------------------------------
Overview
Provides energy savings performance contracting by implementing both demand and
supply side related improvements that pay for themselves from energy and
operational savings.
Strategy
ESG supports the utility core by offering ancillary energy services. ESG is
developing recurring revenues through long-term operating contracts and energy
infrastructure investments.
Fast Facts
-> Achieved 10 consecutive years of profitability
-> Providing energy performance contracting services for Hospitals,
Universities, Governments & Schools
-> Completed first acquisition in July '04.
-> 144 employees in 12 states
-> 3 energy centers
-> 4 military base program centers
-> Projects for 150 customers
-> Numerous award winning projects
-> Total assets 3/31/05: $30 million
[map omitted]
35
Energy Marketing & Services - Vectren Source (2001)
- --------------------------------------------------------------------------------
Overview
Provides natural gas and related services to over 118,000 residential and small
commercial customers in competitive markets in Indiana, Ohio and Georgia
Strategy
Vectren Source began operations to maintain the customer relationship in a
deregulated environment. Flexible and efficient marketing channels minimize
customer acquisition costs and attain high retention rates. Employs conservative
supply planning and hedging strategies to manage commodity risk.
Fast Facts
-> Annual volumes have grown from 1.8 Bcf in 2002 to 9.4 Bcf in 2004
-> State-of-the-art customer information and billing system, forecasting and
data warehouse decision support tools
-> Full-service web capabilities from enrollment to bill presentment and
payment
-> 25 full time employees, in-house call center
-> ProLiance Energy serves as agent for commodity purchases, day-to-day
operations and optimization activities
-> Total Assets 3/31/05: $26 million
[map omitted]
36
Coal Mining - Vectren Fuels (1997)
- --------------------------------------------------------------------------------
Overview
Owns two coal mines that sell coal to Vectren's utility operations and to other
third parties. Both Indiana mines are located within 50 miles of 9 power plants
and utilize contract miners. Also receives synfuels processing fees from 3rd
parties. Vectren purchases 85% to 90% of coal requirement from Fuels. Affiliate
contracts are on file with regulators.
Strategy
Supplies Vectren generating plants with nearly 3 million tons of coal annually.
Fuels also markets coal to other utilities and industrial accounts
Fast Facts
-> Staff of 4 in addition to 300 contract mining employees
-> Proven reserves of 42 million tons
-> Factors that affect profits: geologic conditions, 3rd party sale prices,
cost of explosives, dozer productivity
-> Synfuel related fees (after-tax)
2002 - $3.0 million
2003 - $3.5 million
2004 - $3.7 million
-> Total Assets 3/31/05: $110 million
Mines
-> Prosperity Mine
o Underground mine; mid-sulfur coal - 3.0 lbs SO2
o Reserves of 32 million tons
o Tons mined per year
2002 - 2.3 million tons
2003 - 2.2 million tons
2004 - 2.5 million tons
-> Cypress Creek Mine
o Surface mine; high-sulfur coal - 7.5 lbs SO2
o Reserves of 6 million tons
o Tons mined per year
2002 - 1.2 million tons
2003 - 1.1 million tons
2004 - 1.1 million tons
[photos omitted]
37
Coal Mining - Vectren Synfuels
- --------------------------------------------------------------------------------
Overview
Generates IRS Code Section 29 investment tax credits relating to the production
of coal-based synthetic fuels through its investment in Pace Carbon. Owns 1/12th
(8.3%) of Pace Carbon, which is an unconsolidated affiliate accounted for using
the equity method.
Strategy
Hold and defend through 2007 when tax credits expire
Fast Facts
-> Owns and operates 4 plants
-> All machines were in service by 6/30/1998
-> Through 3/31/05, Vectren has claimed tax credits of approximately $61
million
-> Synfuel Production
2002 - 4.4 million tons
2003 - 7.4 million tons
2004 - 7.1 million tons
-> Synfuels Net Income (including losses, tax benefits and tax credits)
2002 - $ 6.0 million
2003 - $10.3 million
2004 - $ 9.0 million
- -> Total VVC Investment 3/31/05: $9 million
38
Utility Infrastructure Services - Reliant Services (1998)
- --------------------------------------------------------------------------------
Overview
Provides underground construction and repair, facility locating and meter
reading services. Created as unregulated joint venture with Cinergy - 50% owned
by Vectren. Reliant purchased Miller Pipeline Corporation, one of the nation's
premier natural gas distribution contractors with over 50 years of experience in
the construction industry, in 2000 for $68 million.
Strategy
Build on core business of providing construction, maintenance and rehabilitation
services primarily to gas, waste water and water utilities.
Markets
-> Indiana Construction Division - Natural gas and water distribution and
transmission construction, repairs and rehabilitation in Indiana, Kentucky,
Mississippi and Alabama
-> Ohio Construction Division - Natural gas distribution and transmission
construction, repairs and rehabilitation in Ohio
-> Utility Division - Rehabilitation, repair and installation of waste water
and water distribution systems throughout US
-> Locating - Facility locating services for utilities in Indiana, Ohio and
Kentucky
-> Meter Reading - Services for Vectren and other utilities
Major Customers
Vectren, Cinergy, Columbia Gas of Ohio, Louisville Gas & Electric, NiSource
Fast Facts
-> Miller Pipeline is the 5th largest gas distribution contractor in the U.S.
and the largest in the Midwest
-> Over 1,300 employees
-> Pipeline Integrity Act should provide significant construction division
opportunities
-> Activities by the EPA related to storm sewers in major municipalities
should provide significant utility division opportunities
-> Total VVC Investment 3/31/05: $26 million
[map omitted]
39
Other Businesses
- --------------------------------------------------------------------------------
Haddington Energy Partners
-> Overview - The company is a partner in equity method investments that
invest in energy-related ventures. Haddington has three remaining
investments: an operational and income generating underground storage field
in California, a compressed air energy project to be used for generating
electricity in Ohio and a liquefied natural gas facility in Texas.
-> Strategy - Continue to harvest very strong energy investments
-> Total VVC Investment 3/31/05: $25 million with additional $2 million
commitment remaining
Broadband
-> Overview - The company is a minority owner of a broadband business that
provides bundled cable television, high speed internet and advanced local
and long-distance phone services in Evansville, IN
-> Strategy - Continue to assess strategic alternatives
-> Total VVC Investment 3/31/05: $11 million equity and $32 million
convertible debt
Vectren Financial Group
-> Overview - Energy Realty and Southern Indiana Properties hold investments
in affordable housing partnerships, leveraged leases, and real estate notes
-> Strategy - Hold leveraged leases and affordable housing partnerships. Exit
real estate notes upon refinancings
-> Total VVC Investment 3/31/05: $40 million
40
VECTREN
Not just power. Possibility.
41