The Indiana Office of Utility Consumer Counselor (OUCC) and Vectren Energy Delivery have reached an agreement on Vectren's pending request for an electric rate increase. The settlement agreement - also signed by a group of industrial customers that intervened in the case through legal counsel - was filed with the Indiana Utility Regulatory Commission (IURC) today and will require IURC approval to take effect.

Under the agreement, Vectren would receive approximately $60.8 million in new annual revenues through its electric base rates and charges. The utility originally requested $90.4 million in new electric revenues while the OUCC - the state agency representing consumer interests in IURC proceedings - filed testimony on Feb. 27 recommending an increase of $51.4 million.

The agreement in IURC Cause No. 43111 includes the following provisions:

• A return on equity (ROE) of 10.4 percent. Vectren had requested a 12 percent ROE for its electric utility; the OUCC had recommended a 9.25 percent level in its February testimony.
  
  
• Limiting the residential customer facilities charge to $5.50 as recommended in the OUCC's testimony. Vectren had proposed raising this flat, monthly service charge from $4.35 to $7.50.
  
  
• Agreements on regional transmission costs and Vectren's acceptance of the OUCC's recommendations on costs for environmental chemicals and pollution control catalysts.
  
  
• Agreed amounts for employee hiring and training expenses, as well as depreciation and bad debt collection costs.
  
  
• Agreements regarding overall facilities maintenance expenses, including costs for line and pole inspections, substation inspections, underground facilities maintenance and tree trimming near distribution lines. The agreement reduces the utility's proposed costs in these areas while keeping maintenance programs consistent with electric industry standards. In addition, Vectren will provide regular reports to the OUCC over the next three years regarding its progress and reliability benefits.
  
  
• A new tracking mechanism allowing Vectren electric customers to share in cost savings related to emission allowances and wholesale power sales.
  
  
• The creation of a safety education program that will focus on schools in Vectren's electric service territory.
  
  
• New customer service options:
  
  
  
  • New payment sites in Evansville and Mount Vernon at which customers will be able to pay Vectren bills in person,
    
    
  • The installation of a new electronic kiosk in Evansville where customers will be able to deposit cash payments with no extra fees, and
    
    
  • Vectren's commitment to train one or two customer service employees to assist customers in person and face-to-face.
    

The customer service options are largely in response to concerns raised by Vectren customers during the Jan. 8 public field hearing in this case in Evansville. The OUCC and Vectren also agreed to these same provisions in the utility's pending natural gas rate case.

In addition, today's agreement requires Vectren to file a new electric base rate case - allowing for another full review of its electric rates and charges - by 2012.

If approved, the settlement agreement would provide Vectren's electric utility - which serves 140,000 customers in Vanderburgh, Gibson, Pike, Posey, Spencer and Warrick Counties - with its first base rate increase since 1995. This case does not affect Vectren's quarterly Fuel Adjustment Clause (FAC) proceedings, which allow regulated electric utilities to recover the costs of coal and other fuels on a dollar-for-dollar basis. FAC cost recovery is subject to OUCC review and IURC approval every three months.

Vectren is also seeking a natural gas base rate increase for customers in its "South territory," which includes 10 counties in southwestern Indiana. A pending settlement agreement in that case (IURC Cause No. 43112) would increase Vectren's annual natural gas base rate revenues by $5.3 million. Neither case would affect natural gas rates for customers in Vectren's "North territory," which includes counties in central, south-central and southeastern Indiana.

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

(IURC Cause No. 43111)

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