Vectren 2010 Annual Report Download - page 41

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To comply with Indiana’s implementation plan of the Clean Air Act of 1990, the CAIR regulations, and to comply with potential
future regulations of mercury and further NOx and SO2 reductions, SIGECO has IURC authority to invest in clean coal
technology. Using this authorization, SIGECO has invested approximately $411 million in pollution control equipment, including
Selective Catalytic Reduction (SCR) systems, fabric filters, and an SO2 scrubber at its generating facility that is jointly owned
with ALCOA (the Company’s portion is 150 MW). SCR technology is the most effective method of reducing NOx emissions
where high removal efficiencies are required and fabric filters control particulate matter emissions. Of the $411 million, $312
million was included in rate base for purposes of determining SIGECO’s new electric base rates that went into effect on August
15, 2007, and $99 million is currently recovered through a rider mechanism which is periodically updated for actual costs
incurred including depreciation expense. As part of its recent rate proceeding, the Company has requested to also include these
more recent expenditures in rate base as well.
SIGECO’s coal fired generating fleet is 100 percent scrubbed for SO2 and 90 percent controlled for NOx. SIGECO's
investments in scrubber, SCR, and fabric filter technology allows for compliance with existing regulations and should position it
to comply with future reasonable mercury pollution control legislation, if and when, reductions are promulgated by EPA. On July
6, 2010, the EPA issued its proposed revisions to CAIR, renamed the Clean Air Transport Rule, for public comment. The
Transport Rule proposes a 71 percent reduction of SO2 over 2005 national levels and a 52 percent reduction of NOx over 2005
national levels and would further impact the utilization of currently granted SO2 and NOx allowances. The Company is currently
reviewing the sufficiency of its existing pollution control equipment in relation to the requirements proposed in the Clean Air
Transport Rule and currently does not expect significant capital expenditures will be required to comply if the Transport Rule is
adopted in its current form.
Climate Change
Vectren is committed to responsible environmental stewardship and conservation efforts. While scientific uncertainties exist and
the debate surrounding global climate change is ongoing, current information suggests a potential for adverse economic and
social consequences should world-wide carbon dioxide (CO2) and other greenhouse gas emissions continue at present levels.
The Company emits greenhouse gases (GHG) primarily from its fossil fuel electric generation plants. The Company uses
methodology described in the Acid Rain Program (under Title IV of the Clean Air Act) to calculate its level of direct CO2
emissions from its fossil fuel electric generating plants. The Company’s direct CO2 emissions from its plants over the past 5
years are represented below:
(in thousands) 2010 2009 2008 2007 2006
Direct CO
2
Emissions (tons) 6,120 5,500 1/ 8,029 7,995 7,827
1/ The decline in emissions from 2008 to 2009 is primarily due to recessionary impacts that resulted in a 30 percent decrease in
generation. It is not clear to what extent this recent reduction may continue.
Based on 2005 data made available through the Emissions and Generation Resource Integrated Database (eGRID) maintained
by the EPA, the Company’s direct CO2 emissions from its fossil fuel electric generation that report under the Acid Rain Program
were less than one half of one percent of all emissions in the United States from similar sources. The EPA has yet to release
data subsequent to 2005.
Emissions from other Company operations, including those from its natural gas distribution operations, are monitored internally
using the Department of Energy 1605(b) Standard, and the Company will report these other emissions generated in 2010 to the
EPA per mandatory reporting requirements later in 2011.
The need to reduce CO2 and other greenhouse gas emissions, yet provide affordable energy, requires thoughtful balance. For
these reasons, Vectren supports a national climate change policy with the following elements:
 An inclusive scope that involves all sectors of the economy and sources of greenhouse gases, and recognizes early
actions and investments made to mitigate greenhouse gas emissions;
 Provisions for enhanced use of renewable energy sources as a supplement to base load coal generation including
effective energy conservation, demand side management, and generation efficiency measures;
 A flexible market-based cap and trade approach with zero cost allowance allocations to coal-fired electric generators.
The approach should have a properly designed economic safety valve in order to reduce or eliminate extreme price