Vectren agrees to slightly scaled back grid modernization plan

Vectren has reached an agreement with the Indiana Office of Utility Consumer Counselor on a proposal to spend $446 million over seven years for upgrades to electricity distribution and transmission infrastructure.

The plan comes with incremental rate increases for each of those seven years and it is remains subject to approval by the Indiana Utility Regulatory Commission. The IURC is expected to rule no later than September, according to Vectren.

The $446 million agreement is less than the $514 million Vectren first proposed in February. The IURC conducted a hearing on the plan earlier this month, and then the Indiana Office of Utility Consumer Counselor negotiated the changes with Vectren.

If the settlement is approved by IURC in its current form, electric bills will be gradually adjusted likely beginning in early 2018, and adjustments will continue with modest increases in subsequent years as the improvement projects are completed. In 2018, the typical residential electric customer would pay $1 to $2 more per month. The bill impact at the end of the seven-year period will now be $16 to $17 per month compared to $18 to $20 per month in the original filing.

Most of the agreement’s $68 million reduction relates to the removal of advanced metering infrastructure, commonly known as “smart meters.”

However, the agreement will allow Vectren to still move forward with those projects in the near-term. In removing it from the plan, the request for cost recovery for the project will not occur until the next base rate review proceeding, which will begin in 2023.

“This settlement is an important step in our efforts to ensure our energy grid is resilient and more capable of meeting the energy demands of our customers for years to come, including maintaining the reliability our customers have come to expect,” said Carl Chapman, Vectren chairman, president and CEO. “Although we agreed to remove some projects from the final plan, we will phase in advanced digital meters, likely beginning next year, as this technology provides many benefits to our customers, including the elimination of estimated meter reads and detailed insight into daily energy usage. This will help customers manage their energy consumption and help Vectren manage the energy grid.”

Under the settlement terms, the company has agreed that as bills increase during the seven years to recover the cost of the plan, fixed monthly charges related to the plan for residential and other small customers will not exceed $7 per month by the end of the period – about half of the fixed charge it had proposed in February. That means that by year seven, up to only $7 of the expected $16 to $17 monthly increase will be recovered in a fixed monthly service charge while the remaining portion will be recovered volumetrically (based on usage).

A Vectren website, www.vectren.com/SmartEnergyFuture, has more about the plan.

Vectren Energy Delivery of Indiana - South delivers electricity to approximately 145,000 customers in all or portions of Gibson, Dubois, Pike, Posey, Spencer, Vanderburgh and Warrick counties.