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Vectren Chairman Illustrates Local Impact of National Climate Change Legislation

Posted on: Wednesday, 13 May 2009, 13:07 CDT

EVANSVILLE, Ind., May 13 /PRNewswire-FirstCall/ -- With proposed legislation on global climate change now pending before the U.S. Congress, Vectren Chairman and CEO Niel C. Ellerbrook used today's annual shareholders' meeting to drive awareness of the highly-controversial subject and illustrate how that action could result in Vectren electric customers experiencing 10 to 40 percent bill increases immediately upon the effectiveness of the legislation.

"Given the consensus of the scientific community regarding the contributions of mankind to global warming, I believe the U.S. should be the leader in addressing the reduction of carbon, and I am optimistic our elected officials can reach a comprehensive approach to tackling this crisis," said Ellerbrook. "However, we must find a solution that's fair to all Americans and works to aggressively cut carbon emissions without crippling our economy. We are strongly advocating for the interests of the Midwest, and more specifically our customers, who will ultimately have more of an uphill climb in this transition to a carbon-constrained America given the majority of electric production in our region comes from coal."

The current climate change bill, which was drafted by California Representative Henry Waxman and Massachusetts Representative Ed Markey, proposes to cut carbon emissions by 20 percent by 2020 and 83 percent by 2050. According to the Energy Information Administration, electric generation contributes about 40 percent of the nation's carbon emissions, followed by the transportation industry at 28 percent and the industrial sector at 22 percent.

"Coal meets half of our nation's energy needs and more than 95 percent of Indiana's needs," added Ellerbrook. "Therefore, we cannot simply enact aggressive, short-sighted legislation overnight and not expect a dramatic financial impact to the Midwest, which relies so heavily on coal-fired generation. We must be pragmatic given there is no commercially-available technology to capture and store carbon emissions."

A number of variables in the Waxman-Markey bill, which proposes using a cap and trade system to reduce emissions over the next four decades, are currently undergoing debate, and many could dramatically impact the cost Americans will have to pay to reduce carbon emissions.

"This is certainly a very difficult subject for most customers to understand given the bill's complexity and the continuous changes being made as it progresses through the House of Representatives," added Ellerbrook. "However, we want our customers to understand how much of a game-changer this legislation is - but we're not asking for it to be killed - we're advocating for a fair solution to a global problem, and we hope our customers will join us in contacting their elected officials."

At this point, the legislation provides for allowances that would give companies the right to emit carbon. One of the most-heavily debated points is whether the allowances should be auctioned off to the highest bidder or be provided at no cost for a period of time to allow the technology to develop to enable companies to minimize their output of carbon. The auction approach would greatly increase Vectren's and other electric utilities' costs by requiring them to successfully bid for allowances to enable the continued operation of their coal-fired generation equipment. These auction costs would be recoverable from customers as a cost of doing business.

Vectren is urging its Midwest Congressional leaders to:

1. Fight for more zero-cost (free) allowance allocations to coal-based electric generators to help ease the financial burden on its customers;
2. Allow a transition period before the effective date of any carbon legislation to provide time for the economy to rebound as well as allow utilities to focus on preparing their businesses and customers for carbon reduction efforts; and
3. Ensure that any proceeds from auctioned allowances are invested in research and development efforts for carbon capture and sequestration and/or lower bills rather than create an additional revenue source for new government programs.

"Providing a larger percentage of free allowances rather than auctioned allowances would give time for proven carbon capture technology to develop over a period of several years and lessen the financial impact to our customers," said Ellerbrook. "It is completely unjustified that our customers could be forced to pay for an unnecessarily high number of auctioned allowances and then pay again for carbon capture and sequestration technology once it comes online."

Ellerbrook challenged shareholders and customers to join Vectren in voicing their requests to Indiana and Ohio legislators who will likely be voting on the bill in the coming weeks. A sample letter and links to Congressional representatives are available at http://www.vectren.com.

About Vectren

Vectren Corporation (NYSE: VVC) is an energy holding company headquartered in Evansville, Indiana. 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 Midwest and Southeast. These include gas marketing and related services; coal production and sales; and energy infrastructure services. To learn more about Vectren, visit http://www.vectren.com.

SOURCE Vectren Corporation

Source: PR Newswire

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