EX 99-1
News
Release
Vectren Corporation
P.O. Box 209
Evansville, IN 47702-0209
FOR IMMEDIATE RELEASE
March 12, 2004
Vectren Contact: Media - Mike Roeder (812) 491-4143 or mroeder@vectren.com
Vectren Investor Relations - Steve Schein, 812-491-4209 or sschein@vectren.com
OUCC Contact: Media - Anthony Swinger, (317) 233-2747 or aswinger@oucc.in.gov
Vectren South seeks approval of new natural gas base rates
Evansville, Ind. -- Vectren Energy Delivery of Indiana - South (Vectren South),
a subsidiary of Vectren Corporation (NYSE: VVC), filed a petition today with the
Indiana Utility Regulatory Commission (IURC) to adjust its base rates and
charges for its gas distribution business in southwestern Indiana, including
Vanderburgh, Posey, Warrick, Gibson, Knox, Daviess, Spencer, Pike and Dubois
counties. If the filing is approved, Vectren South expects to increase its base
(non-gas cost) rates by approximately $5.7 million to cover the ongoing cost of
operating and maintaining the approximately 3,000-mile distribution and storage
system used to serve more than 110,000 customers.
The petition indicates that Vectren South has reached an agreement in principle
with the Indiana Office of Utility Consumer Counselor (OUCC) regarding the
proposed changes to the rates and charges. In an effort to streamline one aspect
of the formal regulatory review process, Vectren South and the OUCC have been
engaged for several months in an intensive review of a proposed adjustment to
base rates. As a result of that process, subject to finalization of the
agreement in principle, Vectren South has agreed to reduce its original proposed
$14.7 million increase by more than 60 percent resulting in a $5.7 million
request to the IURC. The agreement in principle further provides for Vectren
South's recovery through a tracking mechanism of costs required to comply with a
new federal law dealing with pipeline safety. Vectren South and the OUCC
continue to meet in order to finalize the agreement in principle.
If finalized by the OUCC and ultimately approved by the IURC, the agreement in
principle would result in about a 5 percent increase for the typical Vectren
South residential customer who uses natural gas to heat his/her home. The
proposal will not affect the electric portion of Vectren South customer bills,
nor will the proposal impact current rates for Vectren North gas customers. If
the requested rate adjustment is approved, Vectren South's residential customers
will still have among the lowest gas residential bill totals in Indiana.
As required by the regulatory process, Vectren South will be required to submit
information substantiating the proposed adjustment to its base rates. During the
processing of the case by the IURC, there will also be one or more public
hearings conducted regarding the proposal, including a public field hearing in
Evansville at a date and location to be determined.
The petition only addresses Vectren South's "non-gas" costs, which represent
between 25 and 30 cents of every dollar paid by customers for their gas service.
These "non-gas" costs are incurred to build, operate and maintain the pipes,
other equipment and systems that are used to deliver gas across Vectren South's
system to its customers. The remaining 70 to 75 cents of each dollar represent
the actual cost of the gas used by customers. That gas is purchased on the
competitive wholesale market by Vectren South on behalf of its customers and its
actions are subject to regulatory scrutiny under the state's Gas Cost Adjustment
(GCA) procedures to ensure its purchasing actions are reasonable. Every three
months, the IURC reviews Vectren South's actual gas purchase costs to ensure
that those costs are reasonable. Under Indiana regulation, Vectren South is not
allowed to make a profit on the cost of gas.
Today's base rate filing marks the first time Vectren South has filed a request
for a base rate increase since 1995. As a result of that 1995 request, Vectren
South's existing base rates went into effect in 1996. Over the past eight years,
Vectren South has managed its operations in a way that enabled it to avoid an
increase for its "non-gas" costs. However, during that time frame, the company
has invested nearly $28 million in its natural gas delivery infrastructure,
which is not reflected in its current base rates. Also, since 1996, the amounts
paid for income and gross receipts taxes, health care, labor and other operating
costs have increased.
"It has been nearly nine years since we last sought to adjust our base rates.
Given this passage of time, we need an increase to recover the costs associated
with providing our customers with safe and reliable gas service. The primary
driver is our investment of nearly $28 million in infrastructure upgrades" said
Bill Doty, Vectren's executive vice president of utility operations. "A strong
utility infrastructure is a critical component to southwestern Indiana's
continued economic growth. Adjusting our base rates to reflect this investment
is important to our efforts to sustain and promote the service reliability that
is critical to our customers and the economic well-being of businesses in our
service territory."
"OUCC and Vectren staff have worked diligently over the past seven months to
find a fair resolution to Vectren South's request," said Anne E. Becker,
Indiana's Utility Consumer Counselor, the statutory representative of Indiana
utility customers. " After extensive investigation and scrutiny, our office has
arrived at an agreement in principle that fairly balances our interest in
keeping consumers' base gas rates as low as reasonably possible with Vectren
South's interest and right in having an opportunity to earn an appropriate
profit while meeting its obligation to provide consumers with safe and reliable
gas service."
The merger in early 2000 of Indiana Energy, Inc. and SIGCORP, Inc. to create
Vectren, combined with the acquisition later in that same year of the natural
gas distribution assets of The Dayton Power & Light Company, has contributed to
the ability to delay the need to seek a rate increase by creating a larger
customer base to more efficiently spread operating costs across the companies.
"We have achieved great cost savings since the merger and have made significant
investments in both our infrastructure and the state's economy. We are proud to
have opened a state-of-the-art call center in Evansville serving one million
customers. The consolidated call center and its associated technologies are
among the examples of the savings enjoyed by all customers since the last base
rate increase," Doty said.
About Vectren Corporation
Vectren Corporation is an energy and applied technology holding company
headquartered in Evansville, Indiana. Vectren's regulated energy delivery
subsidiaries provide gas and/or electricity to nearly one million customers in
adjoining service territories that cover nearly two-thirds of Indiana and west
central Ohio. Vectren's non-regulated subsidiaries and affiliates currently
offer energy-related products and services to customers throughout the Midwest
and Southeast. These include gas marketing and related services; coal production
and sales; utility infrastructure services; and broadband communication
services. To learn more about Vectren, visit www.vectren.com.
About the OUCC
The Indiana Office of Utility Consumer Counselor (OUCC) is the state agency that
represents the interests of all utility consumers and the public in matters
related to the provision of utility services. The agency is active in
proceedings before regulatory and legal bodies, and committed to giving
consumers a voice in the creation of utility service policy. Consumers with
questions or concerns regarding utility service can contact the OUCC toll-free
at 1-888-441-2494 or on the World Wide Web at www.IN.gov/OUCC.
Safe Harbor for Forward Looking Statements
This document contains forward-looking statements, which are based on
management's beliefs and assumptions that derive from information currently
known by management. Vectren wishes to caution readers that actual results could
differ materially from those contained in this document. Additional detailed
information concerning a number of factors that could cause actual results to
differ materially from the information that is provided to you is readily
available in our report on Form 10-K filed with the Securities and Exchange
Commission on February 26, 2004.