This week, Vectren Energy Delivery of Indiana – South (Vectren) – in a filing made with the Indiana Utility Regulatory Commission (IURC) – outlined the robust gas infrastructure improveme
nt strategy the company will undertake over the next seven years to comply with federal pipeline safety rules and to ensure the company’s 110,000 gas customers in southwestern Indiana continue to receive safe, reliable gas service for decades to come.
The gas system improvements will result in upgrading portions of Vectren’s 3,200-mile network of distribution mains and transmission pipelines that serve nine counties in southwestern Indiana. The work will primarily consist of replacing 300 miles of bare steel and cast iron distribution mains with new mains, most of which will be plastic, as well as inspecting and upgrading Vectren’s transmission pipelines. These plans include acceleration of its pipeline replacement program and bolstering its transmission line integrity management work. Together, these efforts will call for an estimated $215 million in investments.
“Each year, we consistently invest in our gas infrastructure to ensure we maintain a safe, reliable system,†said Carl Chapman, Vectren’s chairman, president and CEO. “Over the next decade, this labor-intensive work will increase as federal regulations raise safety standards even higher ensuring the Hoosier state’s gas industry continues its excellent safety track record.â€
The filed plan, along with other expected capital expenditures, will have significant benefits for the economy according to a study conducted by the Indiana Business Research Center at Indiana University’s Kelley School of Business, including:
- generating about $1.5 million annually in increased state and local government revenue effects through 2020;
- supporting approximately 475 jobs annually; and
- resulting in an economic ripple effect that will lead to an additional $25 million in spending
annually over the seven-year period, including a statewide impact outside Vectren’s service territory.
Vectren filed this seven-year gas system modernization plan with the IURC, which seeks to recover $215 million of the planned capital expenditures through 2020. Under Senate Enrolled Act 560 and Senate Enrolled Act 251, which focuses on federally-mandated infrastructure needs, Indiana utilities are encouraged to submit their forward-looking capital investment plans to the IURC for review and cost recovery as provided for by this legislation. The IURC will have review, oversight and approval authority in this process.
For an overview of the seven-year gas system modernization plan outlining the infrastructure upgrades, visit www.vectren.com/safety.
If the plan is approved as filed, gas bills will not be adjusted for these expenditures until 2015 – a year following the plan’s expected approval – and those adjustments will continue with modest increases in subsequent years as the improvement projects are completed. In year one, 2015, the typical residential natural gas customer would see an average increase of about $1 to $1.50 per month. In 2013, the
average residential customer will pay a total of $570 for gas service. Even with the expected bill impacts for these gas infrastructure investments, due to considerably lower natural gas commodity costs, bills should remain substantially lower than they were during the late 2000s. For example, in 2008, the average annual residential gas bill was $985. See chart.
The filing has no impact on electric rates.
“While these infrastructure
enhancements are vital to meeting
federal requirements and ensuring the safety of our system, affordability of our gas service remains top of mind,†added Chapman. “Natural gas bills sit at decade-lows thanks to low, stable natural gas prices. Furthermore, Vectren South has among the lowest gas rates in the state. Of the 20 gas companies in Indiana, Vectren South is in position #18, meaning only two companies offer lower rates. As these investments continue, we will always strive for a safe and reliable system with a focus on customers’ bills.â€
So far, Vectren has conducted pipeline replacement work in six of the nine cities that have bare steel and cast iron mains in the company’s southwestern Indiana service territory. These include Evansville, Francisco, Loogootee, Montgomery, Oakland City, Petersburg, Princeton, Vincennes and Washington. Since 2008, more than 45 miles of gas mains have been replaced, which has led to a 12 percent reduction in leak calls and a reduction in natural gas emissions from our distribution system.
In addition to pipeline testing, maintenance and replacement, other portions of the infrastructure investments will go toward needed system upgrades, such as replacing vintage plastic main installed in the 1960s with today’s more durable standard of plastic and removing gas lines that are attached beneath bridge crossings and relocating those lines to underground locations.
Vectren Energy Delivery of Indiana – South delivers natural gas to approximately 110,000 natural gas customers in Daviess, Gibson, Knox, Martin, Pike, Posey, Spencer, Vanderburgh and Warrick counties.
About Vectren
Vectren Corporation (NYSE: VVC) is an energy holding company headquartered in Evansville, Ind. Vectren’s energy delivery subsidiaries provide gas and/or electricity to more than 1 million customers in adjoining service territories that cover nearly two-thirds of Indiana and west central Ohio. Vectren’s nonutility subsidiaries and affiliates currently offer energy-related products and services to customers throughout the U.S. These include infrastructure services, energy services and coal mining. To learn more about Vectren, visit www.vectren.com.
Get ready to bend over.
Yep, more money extracted by a government sanctioned monopoly. Its gonna cost you about $12 a month extra. Add that to the failures with local government to keep the sewers up to date and the highest electrical cost in the nation you can thank government meddling for a $300 a month hole in your pocket. When Obama is finished regular people won’t be able to afford toothpaste.
And Obama has WHAT to do with this issue?
Well? Is this more proof you’d blame bird shit on your car on Obama? Obama now sets local utility rates? Your chicken little act simply isn’t going to work. Your claims of a dead economy will see record spending on Chinese made junk this Thursday and Friday.
You have a dream. It won’t come true. You really must hate the USA to say the things you say on this website. Enjoy black Friday. Perhaps you should serve borhst and cabbage for Thanksgiving to honor your communist brothers.
Dodging the question? What exactly does Obama have to do with vectren’s monopoly? I suppose Obama levies your property taxes too, huh? Face it, you would’ve hated him had he developed a cure for cancer.
Not Obama you moron. Read each sentence separately. Government regulation (Indiana Utilities Regulatory Commission) created the legislated monopoly and approves the rates for the utilities in Indiana. Obama while not directly responsible for this but he is the king of regulation. He is indeed partially responsible for the increased cost of using coal as a fuel but even that is a “government regulation”. If you like regulations then don’t even bother to blame Vectren for bending you over the barrel.
I hope there’s at least 3 independent engineering studies saying those lines need to be replaced. Vectren’s regulated side will now make their required % Return On Investment due to their government mandated monopoly. I’m sure Miller Pipeline will do the work (a unregulated Vectren subsidiary), so the unregulated side will profit also. Talk about double dipping.
Remember, regulated utilities make money by spending more money. They are guaranteed a set return on every dollar they spend; so their goal is to spend as much as they can get away with. They have no incentive to have work done at the lowest cost, that hurts their rate base. Indiana needs utility deregulation. It’s ludicrous that we pay California utility rates to a utility that owns it’s own coal mines.
I agree that there needs to be independent confirmation that these pipeline upgrades are necessary before they are approved by the IURC.
I would also hope, but I do not know this to be a fact, that once approved, VECTREN would be required to seek competitive bids for the upgrade contracts, and not just to be allowed to hand this work to the wholly owned Miller Pipeline Corporation.
I think what is happening is that the IURC has already caved and has established regulations allowing companies like Vectren to “upgrade” a specified percentage of there pipeline network annually.
With their own pipeline company VECTREN is well positioned to take advantage of ratepayers if this work is not competitively bid.
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If you did not read the C&P article by Susan Orr: [Vectren earnings exceed estimate] (2-16-13) you should do so.
We are all aware that Vectren was using its wholly owned subsidiary Vectren Fuels to pay higher than market coal prices on long term contracts, pocket those profits, and pass the unjustifiably high costs along to their electric customers.
Well they are at it again with their wholly owned subsidiary Miller Pipeline. I will relate an example that I witnessed over a period of time on a daily basis.
Vectren owns an underground gas transmission line that crossed a small creek by an attachment to a concrete bridge, a small boxy type structure that never rises above the road grade.
I assume that the county was wanting to rehab the bridge and asked, or worse yet paid, Vectren to remove the gas line. We are talking less that 50 feet of exposed pipe.
Miller Pipeline shows up on the job and for close to two months proceeded to bring in every piece of construction equipment imaginable. We had a boring machine, an excavator, a backhoe, a bobcat, air compressor, tandem axle dump truck, and their own people flagging traffic and doing the labor work.
You can imagine what the bill for this job would be if you had to pay it out of your own pocket. Well if you are a Vectren customer you will be paying for it.
What incentive does Miller Pipeline have for holding down the cost of a project like this one? The more they can make, the more Vectren makes.
The irony of the situation is that before they were bought out by Vectren Miller Pipeline had to bid on these projects, just as the coal companies that comprise Vectren Fuels had to compete in the market to sell their coal before they were bought out by Vectren.
The above bridge job is just one of many continuing jobs that involve the rerouting, repair, or replacement of Vectren’s underground plant taking place every year.
The earnings for this division of Vectren, its “infrastructure” division, has increased from $14.9 Million in 2011 to $40.5 Million in 2012. Vectren has not owned Miller Pipeline all that long so it appears that the increase in earnings has coincided with that ownership.
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