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Vectren Gas Infrastructure Plans

Vectren Energy Delivery’s natural gas bills in Indiana include a Compliance and System Improvement Adjustment (CSIA). State laws allow Vectren to seek rate increases through the CSIA every six months.

  • A law approved by the Indiana legislature in 2011 allows natural gas utilities to seek periodic rate increases to pay for federal mandates, particularly for costs involving pipeline safety.
  • A separate state law approved in 2013 allows natural gas and electric utilities to seek IURC approval of long-term infrastructure plans. If a plan is approved, then the utility may request rate increases every six months to cover the costs of projects in the plan. The law requires the IURC to consider the plans and increases within very short timeframes.

Vectren’s Indiana natural gas utility has two service areas:

  • The Vectren North territory includes 48 central, south-central, and southeastern Indiana counties formerly served by Indiana Gas Co.
  • The Vectren South natural gas service territory includes nine southwestern Indiana counties formerly served by Southern Indiana Gas & Electric Co. (SIGECO).

CSIA Rate Increases to Date

The CSIA is included in each residential account as a flat monthly charge.

Vectren's pending requests would set the monthly residential CSIA at $4.82 in the North territory and $12.83 in the South territory. OUCC testimony is due November 27, 2019.

Vectren's most recently approved requests raised the monthly residential CSIA to $5.18 in the North territory and $10.99 in the South territory, under Commission orders approved in July 2019. The OUCC filed the following testimony in May 2019: Poole-North, Krieger-North, Ahmed-South, & Krieger-South.

Orders on Vectren's requests approved in January 2019 reduced these charges on each residential bill to $2.52 in the North territory and $5.54 in the South territory. The reductions are due to federal tax relief and over-collections through previous trackers.

  • The previous residential North and South CSIAs, approved in September 2018, respectively, were $6.10 and $8.69.
  • North and South CSIAs approved in January 2018, respectively, were $5.37 and $7.98.
  • North and South CSIAs approved in August 2017, respectively, were $4.59 and $7.31.
  • North and South CSIAs approved in February 2017, respectively, were $4.20 and $6.38.
  • North and South CSIAs approved in July 2016, respectively, were $3.19 and $5.30.
  • North and South CSIAs approved in March 2016, respectively, were $2.11 and $4.12.
  • North and South CSIAs approved in September 2015, respectively, were $1.25 and $2.67.

A Brief Summary of the Laws

Indiana Code 8-1-8.4 was approved by the Indiana General Assembly in 2011. It allows natural gas and electric utilities to recover federally mandated costs.

  • Under the statute, a utility’s costs of complying with a number of federal mandates can be recovered through rates, including any requirement issued by the United States Department of Transportation (which has jurisdiction over interstate gas pipeline issues), Environmental Protection Agency (EPA), Department of Energy (DOE), or by the Federal Energy Regulatory Commission (FERC).
  • Before recovering the costs through rates, the utility must receive IURC approval for its proposed projects. It may then recover 80 percent of the costs through incremental rate increases every six months (with the remaining 20 percent deferred until the utility’s next base rate case). The OUCC reviews these filings on behalf of ratepayer interests.
  • Vectren previously recovered these costs through its Pipeline Safety Adjustment (PSA).

Indiana Code 8-1-39 allows electric and natural gas utilities to submit infrastructure improvement plans for IURC approval. A plan may cover a 5- to 7-year range. The IURC must rule within 210 days once such a request is filed.

  • Once a plan receives IURC approval, the utility may request incremental rate increases every 6 months to pay for the projects. The rate adjustment is referred to as the Transmission, Distribution and Storage System Improvement Charge (TDSIC). The IURC has 120 days to rule on such a request.
  • TDSIC rate increases are limited to no more than 2 percent of a utility's total retail revenues.
  • The TDSIC rate mechanism (or tracker) allows the utility to recover 80 percent of the costs as they are incurred. The remaining costs are deferred until the utility's next base rate case, which must be filed before the end of the 7-year period.

Vectren’s Seven-Year Plans

Vectren’s initial seven-year plans received IURC approval in August 2014.

  • The North territory plan includes about $647.1 million in capital improvement projects. This total includes $369.7 million under the federal mandate law and $277.4 million in TDSIC rate recovery.
  • The South territory plan includes about $216.8 million in capital improvement projects. This total includes $173.7 million under the federal mandate law and $43.1 million in TDSIC rate recovery.
  • Projects in both plans include main replacements and upgrades to transmission and distribution pipelines. The North territory plan also includes extensions into areas that currently do not have natural gas service.

In its requested plans, Vectren projected that the CSIA would raise a monthly residential bill by 97 cents in the North territory and $1.34 in the South territory in the first year.

To review the case files, visit the IURC website and enter cause number 44429 (South) or 44430 (North).

10-21-19