The Indiana Office of Utility Consumer Counselor says it has reached a settlement with Evansville-based Vectren Corp. (NYSE: VVC) on a proposed seven-year electric infrastructure plan. The agreement reduces Vectren’s proposal by more than $67 million.
The utility’s original proposal totaled $514 million and will now be capped at $446.5 million over the next seven years. The proposal was filed under the state’s Transmission, Distribution, and Storage System Improvement Charge statute.
The settlement says costs will be recovered through rate tracker increases over the same time period and caps the increases’ fixed portions at $7.00 at the end of the seven-year term. The agreement also includes annual caps to "mitigate against substantial cost increases in any given year."
The OUCC says the money recovered through rate increases will primarily go toward the replacement of poles, lines, substations and other infrastructure. The settlement agreement removes certain projects, including the $39 million proposal to recover costs for advanced metering infrastructure deployment, which the OUCC describes as "beyond the scope of the TDSIC statute.
"Over the last four years, the TDSIC statute has been tested in several cases before the IURC and before the Indiana Court of Appeals. The Court’s opinions and previous IURC orders give clear guidance as to which infrastructure projects are eligible for TDSIC rate recovery," said Indiana Utility Consumer Counselor Bill Fine. "Based on those decisions and parameters, we have negotiated an agreement at arms-length that will allow eligible projects to go forward in the most cost-effective way that they can. At the same time, the utility will be able to strengthen its portion of the grid to ensure more reliable service in the future."
The settlement agreement must still be approved by the Indiana Utility Regulatory Commission.