For immediate release: Nov 16, 2007
Posted by: [OUCC]
Contact: Anthony Swinger
Phone: (317) 233-2747

OUCC and Vectren reach rate case agreement

The Indiana Office of Utility Consumer Counselor (OUCC) and Vectren Energy Delivery have reached an agreement on new natural gas base rates for Vectren customers in central, south-central and southeastern Indiana. The settlement agreement was filed this afternoon with the Indiana Utility Regulatory Commission (IURC) and requires IURC approval to take effect; the OUCC and Vectren will file written testimony in support of the agreement in the coming weeks.

Over the last six months, OUCC attorneys and technical experts conducted a thorough examination and audit of Vectren's rate case filings and determined that the company needs additional revenues to pay for necessary infrastructure improvements and operations throughout the 49-county "Vectren North" service territory (the areas formerly served by Indiana Gas Co.).

The agreement would provide Vectren with $27.5 million in new annual revenues including a distribution rate increase of $16.9 million for infrastructure improvements and operating costs. The settling parties anticipate that an average customer's monthly natural gas bill will increase by approximately $3.50 if the agreement is approved.

"This agreement will allow Vectren North to enhance its delivery system to ensure greater reliability and safety for all of its customers at a reasonable value," said Indiana Utility Consumer Counselor Susan L. Macey. "At the same time, improvements throughout the utility's system will make it a stronger asset for current and future economic development throughout central and southern Indiana."

Key provisions in the agreement address the need to hire and train additional workers to better address system requirements, including the aging workforce issue. Up to $20 million per year of incremental capital investment will begin replacing 245 miles of bare steel and cast iron pipelines throughout the Vectren North system. In addition, Vectren committed to improve meter maintenance and to continue to provide customer safety education. An additional $10.6 million will be recovered annually through existing rate tracking mechanisms for uncollected debt, "unaccounted for gas costs," and pipeline safety expenses.

"Of particular significance is Vectren's commitment to report to the OUCC, on an annual basis, its actual expenditures in accordance with the agreement," continued Macey. "The reports will include explanations of how these revenues specifically improve the system's infrastructure and enhance reliability for the benefit of all Vectren North customers."

The natural gas base rates at issue in this case comprise approximately 30 percent of a typical residential winter heating bill and cover "non-gas" costs such as operations, maintenance and infrastructure improvements. Actual gas costs - which account for approximately 70 percent of a typical winter heating bill - may be passed through to customers on a dollar-for-dollar basis and are subject to OUCC audits and IURC approval.

Vectren North originally requested $41.1 million in additional revenues when it initiated this case in May. Natural gas and electric rates for customers in the nine-county Vectren South service territory - formerly served by Southern Indiana Gas & Electric Co. - are not at issue in this case.

 

(IURC Cause No. 43298)

The Indiana Office of Utility Consumer Counselor (OUCC) is the state agency that represents residential and business consumer interests in cases before state and federal utility regulatory commissions. To learn more, visit www.IN.gov/OUCC.

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