Vectren 2008 Annual Report Download - page 40

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 Inclusion of incentives for investment in advanced clean coal technology and support for research and
development; and
 A strategy supporting alternative energy technologies and biofuels and increasing the domestic supply of
natural gas to reduce dependence on foreign oil and imported natural gas.
Current Initiatives to Increase Conservation and Reduce Emissions
The Company is committed to its policy on climate change and conservation. Evidence of this commitment
includes:
 Focusing the Company’s mission statement and purpose on corporate sustainability and the need to help
customers conserve and manage energy costs;
 Recently executing a 20 year contract to purchase 30MW of wind energy generated by a wind farm in
Benton County, Indiana;
 Evaluating other renewable energy projects to complement base load coal fired generation in advance of
mandated renewable energy portfolio standards;
 Implementing conservation initiatives in the Company’s Indiana and Ohio gas utility service territories;
 Participation in an electric conservation and demand side management collaborative with the OUCC and
other customer advocate groups;
 Evaluating potential carbon requirements with regard to new generation, other fuel supply sources, and
future environmental compliance plans;
 Reducing the Company’s carbon footprint by measures such as purchasing hybrid vehicles, and optimizing
generation efficiencies;
 Developing renewable energy and energy efficiency performance contracting projects through its wholly
owned subsidiary, Energy Systems Group.
Legislative Actions and Other Climate Change Initiatives
There are currently several forms of legislation being circulated at the federal level addressing the climate change
issue. These proposals generally involve either: 1) a “cap and trade” approach where there is a progressive cap on
greenhouse gas emissions and an auctioning and subsequent trading of allowances among those that emit
greenhouse gases or 2) a carbon tax. Currently no legislation has passed either house of Congress.
In the absence of federal legislation, several regional initiatives throughout the United States are in the process of
establishing regional cap and trade programs. While no climate change legislation is pending in the State of
Indiana, the State is an observer of the Midwestern Regional Greenhouse Gas Reduction Accord, and its legislature
has in the recent past debated, but did not pass, renewable energy portfolio standards. It is expected that the Indiana
State legislature will address a renewable energy portfolio standard again in 2009.
In April of 2007, the US Supreme Court determined that greenhouse gases meet the definition of "air pollutant"
under the Clean Air Act and ordered the USEPA to determine whether greenhouse gas emissions from new motor
vehicles cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare.
Should the USEPA find such endangerment, it is likely that major stationary sources will be subject to regulation
under the Act. In 2008, the USEPA published its Advanced Notice of Proposed Rulemaking in which the agency
solicited comment as to whether it is appropriate or effective to regulate greenhouse gas emissions under the Act.
The Obama administration has asserted that it will act on the endangerment finding in the absence of
comprehensive federal legislation within the next 18 months.
Impact of Legislative Actions and Other Initiatives is Unknown
If legislation requiring reductions in CO2 and other greenhouse gases or legislation mandating a renewable energy
portfolio standard is adopted, such regulation could substantially affect both the costs and operating characteristics
of the Company’s fossil fuel generating plants, nonutility coal mining operations, and possibly natural gas
distribution businesses. Further, any legislation would likely impact the Company’s generation resource planning
decisions. At this time and in the absence of final legislation, compliance costs and other effects associated with
reductions in greenhouse gas emissions or obtaining renewable energy sources remain uncertain. The Company
has gathered preliminary estimates of the costs to comply with a cap and trade approach to controlling greenhouse
gas emissions. A preliminary investigation demonstrated costs to comply would be significant, first to operating
expenses for the purchase of allowances, and later to capital expenditures as technology becomes available to