Vectren Secures Natural Gas Supply Contract

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Evansville-based Vectren Corp. (NYSE: VVC) has entered into a long-term fixed price contract for natural gas. The utility says stable pricing conditions allowed it to land the 10-year deal with a national supplier.

July 29, 2013

News Release

Evansville, Ind. -- Current low, stable natural gas market pricing conditions have allowed Vectren Energy Delivery of Indiana - North (Vectren) to secure a 10-year fixed price contract with a national supplier to lock in a portion of its natural gas supply through March 2023.

"This purchase combined with last month's 5-year contract provides additional price certainty for Vectren customers," said Scott Albertson, Vectren's vice president of regulatory affairs. "The abundant supply of natural gas in the U.S. has driven current prices much lower than they were five years ago. In order to take advantage of these favorable market conditions, we elected to purchase a portion of our gas supply at a fixed price over the next 10 years."

As a result of the tremendous increase in domestic gas supply due to the development of shale gas production, current market conditions provide the opportunity to secure long-term gas supply at an attractive price as part of the utility’s long-standing portfolio approach to natural gas acquisition. Under the terms of the contract, Vectren will purchase nearly 1 million dekatherms annually at a fixed price of $4.70 per dekatherm beginning in August 2013 and continuing through March 2023. As reflected by the price obtained, the natural gas market outlook for the next 10 years is very stable.

The 10-year contract complements a 5-year contract executed by Vectren last month. Under the terms of the 5-year deal, Vectren will purchase 6 million dekatherms annually, which is about 10 percent of the utility’s annual supply purchases, at a cost just above $4 per dekatherm beginning in July 2013 and continuing through March 2018. The company’s remaining supply needs will be met through its portfolio approach of long-term, intermediate-term and short-term purchases, as well as the utilization of its various storage fields throughout the state.

Vectren received Indiana Utility Regulatory Commission (IURC) approval in early 2013 to modify its natural gas purchasing strategy, allowing the utility to enter into long-term purchases of more than 24 months. Vectren Energy Delivery of Indiana – South has requested similar authorization from the IURC.

Vectren does not profit from the sale of natural gas, rather customers pay for actual commodity costs on a dollar-for-dollar basis.

Vectren Energy Delivery of Indiana-North serves 570,000 gas customers in all or a portion of Adams, Allen, Bartholomew, Blackford, Boone, Clark, Clay, Clinton, Decatur, Delaware, Fayette, Floyd, Fountain, Grant, Greene, Hamilton, Hancock, Hendricks, Henry, Huntington, Jackson, Jay, Jefferson, Johnson, Lawrence, Madison, Martin, Miami, Monroe, Montgomery, Morgan, Orange, Owen, Parke, Putnam, Randolph, Rush, Shelby, Tippecanoe, Tipton, Vermillion, Vigo, Wabash, Warren, Wayne, Wells and White counties.

About Vectren

Vectren Corporation (NYSE: VVC) is an energy holding company headquartered in Evansville, Ind. Vectren's energy delivery subsidiaries provide gas and/or electricity to more than one million customers in adjoining service territories that cover nearly two-thirds of Indiana and west central Ohio. Vectren’s nonutility subsidiaries and affiliates currently offer energy-related products and services to customers throughout the U.S. These include infrastructure services, energy services and coal mining. To learn more about Vectren, visit www.vectren.com.

Source: Vectren Corp.