Vectren Energy is seeking to raise rates for its natural gas customers across Indiana to pay for improvements in its pipelines and other infrastructure.
Vectren has asked the Indiana Utility Regulatory Commission for permission to charge customers as much as $9 to $14 more per month, increases that would be phased in over seven years starting in 2015.
The higher rates are not scheduled to expire; they would become part of Vectren's base rates.
"Each year, we consistently invest in our gas infrastructure to ensure we maintain a safe, reliable system," said Carl Chapman, the company's chairman and president. "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."
The projects are broken down into Vectren's two, separate gas systems: Vectren North, which encompasses 570,000 customers in Central and Southeast Indiana, and Vectren South, which serves 110,000 customers in Southwest Indiana.
If regulators approve Vectren's plans, customers in the north territory would pay roughly $1 more per month starting in 2015, an amount that would increase over seven years until it reached about $8 to $9 more per month, said Chase Kelley, a spokeswoman for the company. Currently, the average customer pays about $750 a year for gas.
The company will use the revenue to make $650 million in upgrades to parts of its 13,000-mile network of distribution mains and transmission pipelines that serve 48 counties. The work will primarily consist of replacing 800 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.
Customers in the south territory would pay $1 to $1.50 more per month for natural gas service in 2015. That would slowly increase to $13 to $14 more per month by 2022. Currently, the average customer in the south territory pays about $570 a year for gas service.
Kelley said the proposed rate increase is higher in Vectren South because the customer base is smaller and the company's pipeline replacement efforts are not as far along in that territory.
The revenue would be used to make $215 million in upgrades over seven years to the territory's 3,200-mile network of distribution mains and transmission pipelines that serve nine. 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.
The proposal does not impact electricity rates in the Vectren South territory.
Vectern officials said customer bills throughout its systems should remain lower than they were just five years ago, even with the rate hikes. That's because the price Vectren pays to buy natural gas has dropped significantly.
"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," Chapman said in a statement. "Natural gas bills sit at decade-lows thanks to low, stable natural gas prices. As these investments continue, we will always strive for a safe and reliable system with a focus on customers' bills."
The Indiana Utility Regulatory Commission has authority to approve the rate requests, deny it or order changes to the plan.
Lesley Weidenbener is executive director of TheStatehouseFile.com, a news service powered by Franklin College journalism students and faculty.