Vectren 2010 Annual Report Download - page 19

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The Company executed a capacity contract with Benton County Wind Farm, LLC in April 2008 to purchase as much as 30 MW
from a wind farm located in Benton County, Indiana, with the approval of the IURC. The contract expires in 2029. In 2010, the
Company purchased approximately 85 GWh under this contract.
In December 2009, the Company executed a 20 year power purchase agreement with Fowler Ridge II Wind Farm, LLC to
purchase as much as 50 MW of energy from a wind farm located in Benton and Tippecanoe Counties in Indiana, with the
approval of the IURC. The Company purchased 129 GWh under this contract in 2010.
The Company had a capacity contract with Duke Energy Marketing America, LLC to purchase as much as 100 MW at any time
from a power plant located in Vermillion County, Indiana. The contract expired on December 31, 2009 and was not renewed.
Other Power Purchases
The Company also purchases power as needed principally from the MISO to supplement its generation and firm purchase
supply in periods of peak demand. Volumes purchased principally from the MISO in 2010 totaled 880 GWh.
MISO Capacity Purchase
In May 2008, the Company executed a MISO capacity purchase from Sempra Energy Trading, LLC to purchase 100 MW of
name plate capacity from its generating facility in Dearborn, Michigan. The term of the contract began January 1, 2010 and
continues through December 31, 2012.
Interconnections
The Company has interconnections with Louisville Gas and Electric Company, Duke Energy Shared Services, Inc., Indianapolis
Power & Light Company, Hoosier Energy Rural Electric Cooperative, Inc., Big Rivers Electric Corporation, and the City of
Jasper, Indiana, providing the ability to simultaneously interchange approximately 675 MW. This interchange capability has
increased in recent years as a result of ongoing initiatives to improve the transmission grid throughout the Midwest. The
Company, as a member of the MISO, has turned over operational control of the interchange facilities and its own transmission
assets, like many other Midwestern electric utilities, to MISO. See “Item 7 Management’s Discussion and Analysis of Results of
Operations and Financial Condition” regarding the Company’s participation in MISO.
Competition
The utility industry has undergone structural change for several years, resulting in increasing competitive pressures faced by
electric and gas utility companies. Currently, several states have passed legislation allowing electricity customers to choose
their electricity supplier in a competitive electricity market and several other states have considered such legislation. At the
present time, Indiana has not adopted such legislation. Ohio regulation allows gas customers to choose their commodity
supplier. The Company implemented a choice program for its gas customers in Ohio in January 2003. At December 31, 2010,
over 109,000 customers in Vectren’s Ohio service territory have opted to purchase natural gas from a supplier other than
VEDO. In addition, VEDO’s service territory continues transition toward a choice model for all gas customers. Margin earned
for transporting natural gas to those customers, who have purchased natural gas from another supplier, are generally the same
as those earned by selling gas under Ohio tariffs. Indiana has not adopted any regulation requiring gas choice; however, the
Company operates under approved tariffs permitting certain industrial and commercial large volume customers to choose their
commodity supplier.
Regulatory and Environmental Matters
See “Item 7 Management’s Discussion and Analysis of Results of Operations and Financial Condition” regarding the Company’s
regulatory environment and environmental matters.