Vectren 2012 Annual Report Download - page 4

Download and view the complete annual report

Please find page 4 of the 2012 Vectren annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

Laying the groundwork for reliability
In no other area have we physically laid more groundwork than within energy delivery infrastructure. For the past
five years and for the next decade and beyond, we have been and will continue to be focused on upgrading the
infrastructure of our gas utilities to ensure the continued delivery of safe, reliable natural gas.
To accomplish this and in many cases to comply with the Pipeline Safety Act of 2002, we have invested more
than $320 million into our 22,000-mile gas system over the past several years. These resources have gone
toward inspections and upgrades of our 1,100 miles of transmission lines and our robust bare steel and cast iron
replacement program that will permanently retire nearly 1,800 miles of existing infrastructure. Through 2012, we’ve
retired more than 325 miles. In total, these efforts will impact 90 cities or towns over the next decade and create
hundreds of jobs.
As the gas industry prepares for increased regulations stemming
from the Pipeline Safety, Regulatory Certainty and Job Creation Act
passed in 2011, we know additional investments are forthcoming as
these regulations will ultimately drive the need to accelerate
upgrades. On a positive note, we have favorable legislation in
Indiana and Ohio that will help us manage cost recovery of these
capital expenditures. A tracking mechanism in Ohio, for which we
will seek renewal in 2013, supports the ongoing cost recovery of
our bare steel/cast iron pipeline replacement program, and Ohio’s
House Bill 95 (HB 95), which was passed in 2011, provides favorable accounting treatment for our remaining capital
investments that are not already tracked. In fact, we received regulatory approval in late 2012 granting us this
accounting treatment for our fourth quarter 2011 and entire 2012 capital budget. In Indiana, 2011 brought passage
of legislation, Senate Bill 251, which provides favorable cost recovery of capital investments needed to comply with
federal mandates. For 2013, we have partnered with other Indiana utilities to support an infrastructure bill that, if
passed, would allow for immediate favorable cost recovery of capital investments for the gas and electric businesses
that aren’t already covered by Senate Bill 251 recovery.
Our challenge will be to balance the impact of these infrastructure investments on customer bills with the need to
comply with regulations and proactively maintain our system to ensure continued safety and reliability of service for
our nearly 1 million gas customers. The good news is our customers are benefitting from the low, stable natural gas
pricing environment, which has helped gas bills for our residential and small business customers plummet more than
40% in the past four years.
For the past five years and for
the next decade and beyond,
we have been and will continue
to be focused on upgrading the
infrastructure of our gas utilities
to ensure the continued delivery
of safe, reliable natural gas.
Coming off an outstanding 2012, Vectren’s Infrastructure Services is well-positioned for
continued success, as the need for transmission and distribution pipeline expansion and
upgrades remains strong.
2