Vectren 2010 Annual Report Download - page 42

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spikes and potential price volatility. A long lead time must be included to align nearer-term technology capabilities and
expanded generation efficiency and other enhanced renewable strategies, ensuring that generation sources will rely
less on natural gas to meet short term carbon reduction requirements. This new regime should allow for adequate
resource and generation planning and remove existing impediments to efficiency enhancements posed by the current
New Source Review provisions of the Clean Air Act;
 Inclusion of incentives for investment in advanced clean coal technology and support for research and development;
 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; and
 The allocation of zero cost allowances to natural gas distribution companies if those companies are required to hold
allowances for the benefit of the end use customer.
Current Initiatives to Increase Conservation & Reduce Emissions
The Company is committed to a policy that reduces greenhouse gas emissions and conserves energy usage. 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;
 Building a renewable energy portfolio 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;
 The recent settlement agreement between the Company and the OUCC regarding electric demand side management
initiatives;
 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 utilizing hybrid vehicles and optimizing generation
efficiencies; and
 Developing renewable energy and energy efficiency performance contracting projects through its wholly owned
subsidiary, Energy Systems Group.
Legislative Actions & Other Climate Change Initiatives
Numerous competing legislative proposals have been introduced in recent years that involve carbon, energy efficiency, and
renewable energy. Comprehensive energy legislation at the federal level continues to be debated, but there has been little
progress to date. The progression of regional initiatives throughout the United States has also slowed. While no climate
change legislation is pending in Indiana, the state is an observer to the Midwestern Regional Greenhouse Gas Reduction
Accord and the state’s legislature debated, but did not pass, a renewable energy portfolio standard in 2009.
In advance of a federal or state renewable portfolio standard, SIGECO received regulatory approval to purchase a 3 MW landfill
gas generation facility from a related entity. The facility was purchased in 2009 and is directly interconnected to the Company’s
distribution system. In 2009, the Company also executed a long term purchase power commitment for 50 MW of wind energy.
These transactions supplement a 30 MW wind energy purchase power agreement executed in 2008.
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 EPA to determine whether greenhouse gas emissions from motor vehicles cause or contribute to air
pollution that may reasonably be anticipated to endanger public health or welfare. In April of 2009, the EPA published its
proposed endangerment finding for public comment. The proposed endangerment finding concludes that carbon emissions
from mobile sources pose an endangerment to public health and the environment. The endangerment finding was finalized in
December of 2009, and is the first step toward EPA regulating carbon emissions through the existing Clean Air Act in the
absence of specific carbon legislation from Congress. Therefore, any new regulations would likely also impact major stationary
sources of greenhouse gases. The EPA has promulgated two greenhouse gas regulations that apply to SIGECO’s generating
facilities. In 2009, the EPA finalized a mandatory greenhouse gas emissions registry which will require reporting of emissions
beginning in 2011 (for the emission year 2010). The EPA has also recently finalized a revision to the Prevention of Significant
Deterioration (PSD) and Title V permitting rules which would require facilities that emit 75,000 tons or more of greenhouse
gases a year to obtain a PSD permit for new construction or a significant modification of an existing facility.