Vectren Energy has filed a request with the Indiana Utility Regulatory Commission (IURC) for a base rate increase for its southwestern Indiana electric utility.
The regulatory filing requests approval of the increase to address capital investments in its energy delivery infrastructure, a modified electric rate structure that facilitates a partnership between the company and customers to pursue energy efficiency and conservation, and new energy efficiency programmes to complement those currently offered for natural gas customers.
More than half of the request to increase rates is driven by the need to recover costs associated with approximately $325m spent in infrastructure construction within past three years that was needed in its seven-county service territory. Most of the remainder of the request is to account for declines in overall sales attributed to the recession, which has resulted in a cost recovery shortfall. Additionally, the rate increase reflects a slight increase in the utility’s annual operating and maintenance costs.
As proposed, a typical residential combination gas and electric customer who uses around 900kWh per month would experience a monthly bill increase of about $18.
Niel Ellerbrook, chairman and CEO of Vectren, said: “We recognize this is a challenging economy in which to seek a rate increase, and we are committed to working with customers who may find themselves challenged to pay. We have worked aggressively to manage costs and have cut costs where possible. However, we cannot delay or cut projects indefinitely without jeopardizing the safety of our system and the customer – we are nearing that crossroads. Furthermore, the need to attract capital to provide safe, reliable service will only continue.
“We must maintain the level of service our customers expect and ensure the financial stability of the company. Unfortunately, there are times in which rate adjustments are the only way to do that.”
The proposed rate design, often referred to as decoupling, will break the link between customers’ consumption and the utility’s rate of return, aligning the utility’s and customers’ interests in using less energy, Vectren said.
If approved as filed, the energy efficiency programmes will include automatic discounts through various retailers on compact fluorescent light bulbs, rebates for early retirement of older, inefficient appliances, including refrigerators and window-unit air conditioners, and custom programmes for high-efficiency lighting for small business customers. Vectren has also proposed to establish on-site energy audits for both residential and small commercial customers.