Vectren North Inks Natural Gas ContractsPosted: Updated:
Vectren Energy Delivery of Indiana-North has announced two multi-year natural gas deals. The utility says it has secured about one-fifth of its annual supply purchases with long-term contracts.
March 27, 2014
Indianapolis, Ind. -- Continued favorable natural gas market pricing conditions have allowed Vectren Energy Delivery of Indiana - North (Vectren) to secure additional long-term, fixed price contracts - one for five years and one for 10 years - with a national supplier to lock in a portion of its natural gas supply through December 2023. These two contracts complement similar 5- and 10-year term agreements inked last summer. With the execution of these recent contracts, the utility has secured about 20 percent of its annual supply purchases with very favorable pricing under these four longer-term agreements.
Under the terms of the recently-signed 10-year contract, Vectren will purchase 1.8 million dekatherms annually at a fixed price of $4.34 per dekatherm beginning in April 2014 and continuing through December 2023. Vectren will purchase 3 million dekatherms annually under the terms of the most recent 5-year deal at a fixed price of $4 per dekatherm from April 2014 through March 2019. By comparison to these long-term prices, market prices over the next 12 months are higher and currently average about $4.50 per dekatherm.
"Although we've seen some market volatility with short-term gas prices this winter due to the bitter cold weather, the long-term price of natural gas remains relatively stable and low as evidenced by these contracts," said Scott Albertson, Vectren's vice president of regulatory affairs and gas supply. "As a result of the tremendous increase in domestic gas supply due to the development of shale gas production, Vectren was again able to further secure long-term gas supply as part of the utility's long-standing portfolio approach to natural gas acquisition and provide additional price certainty for our customers. Such opportunities simply did not exist prior to the development of domestic shale gas production over the last several years."
Terms of the contracts signed last summer include:
• 5-year contract: Vectren is purchasing 6 million dekatherms annually at a cost just above $4 per dekatherm beginning in July 2013 and continuing through March 2018.
• 10-year contract: Vectren is purchasing nearly 1 million dekatherms annually at a fixed price of $4.70 per dekatherm beginning in August 2013 and continuing through March 2023.
Vectren received Indiana Utility Regulatory Commission (IURC) approval in August 2012 to modify its natural gas purchasing strategy, allowing the utility to enter into long-term purchases up to 10 years in duration. The company's remaining supply needs will continue to 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 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.
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.