Vectren Energy Delivery of Ohio receives approval to adjust delivery prices and recover costs associated with pipeline safety and reliability
Dayton, Ohio – Vectren Energy Delivery of Ohio (Vectren), a CenterPoint Energy (NYSE: CNP) company, received approval today from the Public Utilities Commission of Ohio (PUCO) authorizing its plans to adjust charges for Vectren’s natural gas distribution business in its 17-county service area in west central Ohio. The request to increase base rates for its natural gas delivery charges is the first Vectren has filed in more than a decade and will cover the ongoing costs of operating, maintaining and expanding the approximately 5,600-mile pipeline system used to serve its 318,000 natural gas customers.The Order approved a Stipulation and Recommendation, entered by Vectren with the Staff of the PUCO and other parties in January 2019, with the following terms:
- A rate increase of nearly $22.7 million;
- An overall rate of return of 7.48 percent; and
- An extension of Vectren’s authorized recovery of investments to accelerate replacement of cast iron and bare steel pipelines, with targeted completion by 2023.
New charges will take effect on customer bills on or around September 1. The average residential customer bill will increase by approximately $6 per month as a result of this Order, which includes a portion of the benefits of the decrease in the corporate tax rate as a result of the federal tax legislation enacted in the Tax Cuts and Jobs Act of 2017. The remaining tax benefits, still pending before the Commission in a separate proceeding, will decrease the average residential customer bill by approximately $4 per month once approved.
Since the last base rate adjustment in January 2009, Vectren has invested approximately $700 million into its network of natural gas pipelines, regulator stations and metering systems that serve the Miami Valley. The comprehensive effort to modernize its system, known as Vectren’s Smart Energy Future strategy, aims to continue the focus on system safety and reliability.
“The primary driver of this filing was our infrastructure work needed to continue safe, dependable energy delivery to existing customers and the ability to provide service to new customers. This approval provides for additional funding to execute compliance-related activities associated with Federal pipeline safety regulations,” said Richard Leger, vice president of Natural Gas Distribution, Indiana and Ohio. "Likewise, many of the infrastructure enhancements made over the past 10 years have been driven by these Federal regulations, while other capital expenditures have been focused on improving our customers’ experience when it comes to meter access and accurate billing.”
Key projects executed over the last decade include:
- Robust pipeline integrity programs to test, upgrade and, in some cases, re-locate high-pressure, large-diameter transmission pipelines;
- Expanding gas infrastructure to serve new customers;
- Replacing Vectren’s distribution pipelines with durable plastic to improve system performance;
- The recent completion of automated meter reading technology on all meters leading to greater accuracy and efficiency of meter reading; and
- Moving indoor meters outside, which includes the installation of new service lines, to improve access and safety.
In addition, the order provides for the continuation through 2020 of Vectren’s energy efficiency programs for residential and commercial customers in Ohio, including rebates on high-efficiency natural gas appliances and support for low-income home weatherization programs. These programs will be monitored, reviewed, and adapted as deemed appropriate through the oversight of an existing collaborative, which includes representatives of various stakeholders within the State. Within the order, Vectren has committed to file with the Commission by the end of 2019 to seek an extension of these programs beyond 2020.
The approval today only addresses Vectren’s delivery charges, which are listed on the bill as “Distribution and Service Charges” and represent between 40 and 45 cents of every dollar paid by customers for their natural gas service during the winter heating months. These charges are incurred to build, operate and maintain the pipes, equipment, services and systems that are used to deliver natural gas to its customers regardless of the customer’s usage. The remaining 55 to 60 cents of each dollar represents the cost of the gas used by customers. Vectren, however, is not a natural gas supplier; rather the natural gas supply that its customers consume is offered and priced by PUCO-certified suppliers through the Choice program or Standard Choice Offer (SCO) service. In 2018, the average residential customer paid about $55 to $60 per month for their natural gas service, although the majority of the annual costs for natural gas service are incurred in the winter heating season.
Vectren delivers natural gas to approximately 318,000 customers in all or portions of Auglaize, Butler, Champaign, Clark, Clinton, Darke, Fayette, Greene, Highland, Logan, Madison, Miami, Montgomery, Pickaway, Preble, Shelby and Warren counties.
About CenterPoint Energy
Headquartered in Houston, Texas, CenterPoint Energy, Inc. is an energy delivery company with regulated utility businesses in eight states and a competitive energy businesses footprint in nearly 40 states. Through its electric transmission & distribution, power generation and natural gas distribution businesses, the company serves more than 7 million metered customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas. CenterPoint Energy’s competitive energy businesses include natural gas marketing and energy-related services; energy efficiency, sustainability and infrastructure modernization solutions; and construction and repair services for pipeline systems, primarily natural gas. The company also owns 53.8 percent of the common units representing limited partner interests in Enable Midstream Partners, LP, a publicly traded master limited partnership that owns, operates and develops strategically located natural gas and crude oil infrastructure assets. With approximately 14,000 employees and nearly $34 billion in assets, CenterPoint Energy and its predecessor companies have been in business for more than 150 years. For more information, visit CenterPointEnergy.com.
Forward Looking Statement
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should,” “target,” “will” or other similar words are intended to identify forward-looking statements. These forward-looking statements are based upon assumptions of management which are believed to be reasonable at the time made and are subject to significant risks and uncertainties. Actual events and results may differ materially from those expressed or implied by these forward-looking statements. Any statements in this news release regarding future events, such as the company’s expected uses of the newly approved natural gas delivery charges for ongoing system operation, maintenance and expansion costs, the target completion for the company’s cast iron and bare steel pipeline replacement, the effective date of the newly approved charges, the average residential customer monthly bill increases, the outcome of the pending regulatory proceeding regarding tax benefits and their anticipated effect on customer bills, the continuation of the company’s energy efficiency programs, including seeking an extension of such programs beyond 2020, and any other statements that are not historical facts are forward-looking statements. Each forward-looking statement contained in this news release speaks only as of the date of this release. Factors that could affect actual results include the timing and impact of future regulatory and legislative decisions, effects of competition, weather variations, changes in business plans, financial market conditions and other factors discussed in CenterPoint Energy’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, CenterPoint Energy's Quarterly Report on Form 10-Q for the quarters ended March 31, 2019 and June 30, 2019 and other reports CenterPoint Energy or its subsidiaries may file from time to time with the Securities and Exchange Commission.