Vectren head touts cheap gas, existing coal emissions retrofits

Vectren Corp. (NYSE: VVC) Chairman, President and CEO Carl Chapman told attenders at the company’s May 16 annual shareholders meeting that shale gas plays have brought low prices and a certain stability to U.S. natural gas supplies.

For Vectren’s natural gas utilities, Chapman emphasized the low-priced, stable natural gas market and how these prices, combined with Vectren’s energy efficiency programs, have helped reduce natural gas bills to 10-year lows.

“The nation’s emergence of shale gas has spurred natural gas supplies to levels not seen since 1971,” said Chapman. “This abundant supply has helped ease prices, and accordingly, bill amounts. Furthermore, prices are expected to remain low for several years, if not decades, which bodes well for our nearly 1 million gas customers and for growth opportunities for our three natural gas utilities.”

Vectren’s natural gas conservation programs, known as Conservation Connection, has over their first five years helped customers conserve enough natural gas to heat 37,000 homes for a year, he added.

Chapman also discussed the positive outlook of Vectren’s electric utility, Vectren South, because investments made in recent years to reduce coal-fired emissions mean the coal plants are in good position already to comply with new U.S. Environmental Protection Agency air regulations.

“We made the decision several years ago to make $410 million in emissions control investments at our power plants to improve the air quality for southwestern Indiana, and as such, our customers’ rates have increased to reflect these costs,” added Chapman. “However, we find ourselves in a position to more readily comply, while other regional utilities have already announced they will proceed with significant expenditures to meet EPA demands, which will increase customer bills, while others plan to retire some uncontrolled coal generation units.”

The early success of Vectren’s electric energy efficiency programs, which have helped customers save enough electricity to power 2,500 homes for a year, will further help preserve Vectren’s electric generation fleet and significantly delay the need for new, more-costly generating units in addition to helping customers manage costs, he added.

In highlighting nonutility growth opportunities, Chapman focused heavily on Vectren’s Infrastructure Services businesses, Miller Pipeline and Minnesota Limited, which continue to drive nonutility earnings and are positioned for growth.

“Given our nation’s growing need to address aging underground infrastructure, including gas, oil, water and wastewater pipelines, our Infrastructure Services businesses, which are licensed in 40 states, are primed to bid on a growing number of projects,” said Chapman. “Furthermore, the country’s shale gas and oil boom opens the door to additional pipeline construction opportunities to help meet the nation’s needs for additional pipelines to gather and transport these new sources of natural gas and oil throughout the nation.”

Vectren 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 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, coal mining (in Indiana only) and energy marketing.

Vectren has two coal mines operating -the Prosperity and Oaktown No. 1 deep mines – and a third – the Oaktown 2 underground mine – that is close to a development start, depending on market conditions. These mines supply coal to Vectren’s own power plants and to third parties.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.