Vectren Corp.'s residential customers pay higher rates for electricity than anyone else in the state, and the gap is growing, according to state regulators.

Vectren customers who use 1,000 kilowatt hours of electricity a month — an approximate average for homeowners — paid $155.10 in bills sent out in July, according to data compiled by the Indiana Utility Regulatory Commission.

That's the highest in the state, and it easily tops Indiana's average price of $100.58. Of the state's 22 electric utilities, 20 charge at least $40 less for 1,000 kilowatt hours than Vectren.

It's also substantially higher than Indiana's four other investor-owned utilities. The second-highest rate being charged by such a utility is $110.37 for the same amount of electricity, by the Northern Indiana Public Service Co.

Vectren spokeswoman Chase Kelley said a key reason that the utility's rates are higher than others is because of its investment in environmentally-friendly technologies. She said she expects the rate differentials to even out in the coming years.

Vectren has spent $410 million over the last decade on upgrades to its 1,300-megawatt fleet of generating units.

She said emissions from those units are 100 percent scrubbed for sulfur dioxide, which contributes to acid rain, as well as 90 percent controlled for nitrous oxide, and filtered for mercury and particulate matter — pollutants that affect air quality.

"As such, that has made our fleet among the cleanest in the Midwest, but at the same time, that has sent our rates up about 30 percent over the last decade," Kelley said.

She said because of new U.S. Environmental Protection Agency regulations, other utilities will need to make similar investments in the coming years.

"We at this time have made the right call, and that investment, for us, is going to pay off, as others start to spend these dollars," Kelley said.

However, some of Vectren's customers are complaining about the price.

Harold Vore, Jr., a 46-year-old Santa Claus resident, said he has replaced his old light bulbs with more energy-efficient versions, dialed his air conditioner back to nearly 80 degrees and more.

Still, he said, the electric bill for his 2,300 square foot home was $200 in the summer five years ago, and is about $375 per month this year.

"For the consumer, there's no alternative. There's no competitive element. We're essentially at their mercy in terms of what they do," he said.

He said the high prices hurt him on two levels. The first is the hit to his own pocketbook. Also, he said, "It hurts me in terms of my property value if I ever decide to sell the home. A potential buyer is certainly going to want to know what the utilities are costing."

Until the last five years, Vectren's rates were roughly on par with the state's other investor-owned utilities.

A decade ago, Vectren's price of $74.19 per 1,000 kilowatt hours was second-highest among those five, but they were all grouped tightly together.

Vectren leapt from second place in 2007 to first place in 2008, and the gap between it and the second-place Northern Indiana Public Service Co. has expanded quickly since then.

Vectren's rates are up 62.8 percent, or $59.85 for that amount of electricity, over the last five years. They're up 109 percent, or $80.91, over the last decade.

Those increases, too, top all investor-owned utilities in Indiana. The second-highest increase over the last five years is American Electric Power Co., which is up 22.2 percent, and over the decade, it's Duke Energy Indiana, which is up 48.5 percent.

Kelley said other utilities will begin to catch up.

The Northern Indiana Public Service Co. is currently spending $600 million on capital improvements. Duke Energy Indiana is building its own new power plant in Edwardsport and that will likely lead to higher rates, too, she said.

"Another thing to consider is where utilities are in their rate case cycles," Kelley said. "We were recently approved, while others, it's been several years since they have filed. There's a chance that others are getting ready to file in the short term here, and that will certainly influence bill amounts."

Vectren spent $325 million on capital expenditures between 2006 and its most current rate hike.

Included in that price tag was a $99 million scrubber, which reduces sulfur dioxide, on the Alcoa power plant in Warrick County.

Also included were substation enhancements in Pigeon Creek for $14 million, McCutchanville for $20 million and Oak Grove for $15 million.

Vectren also spent $20 million on a fly ash recycling system, she said. That ash is now placed on a barge and shipped to Missouri, instead of being dumped in a landfill.

Earlier this year, the IURC, the state agency charged with regulating companies such as Vectren, approved a rate hike expected to be worth $28.6 million in extra annual revenue.

According to filings with the state, the rate increase was necessary to cope with decreasing demand, as well as the cost of new equipment.

The value of that rate increase started to show up in the company's profits during the last fiscal quarter.

Its utility operations numbers were about the same, with $16.3 million in earnings, compared to $16.2 million in earnings the same quarter of the previous year.

But the company spent $6.2 million in extra quarterly expenses on planned outages and maintenance in the most recent quarter — money balanced out by an extra $5.9 million collected thanks to the new rates.

Vore said when Vectren's prices are set side-by-side with Indiana's other investor-owned utilities, it "doesn't look pretty" for the utility's customers.

"There has to be some balance in this situation. I think the IURC's set up to be the balancing power, but as a citizen, I don't really understand how they represent me and how I can affect them," he said.

At least one state lawmaker has lodged similar complaints.

"Considering the performance of the IURC on the Vectren case, I think the public has every right to expect more from its protectors," said state Rep. Gail Riecken, D-Evansville, after the IURC approved Vectren's requested rate increase.

"This is going to be one of the issues I intend to study in greater depth as I begin to prepare for the next legislative session. I certainly intend to gauge the public's interest in it, and ask other elected officials to speak their minds about the need for changing the IURC."

Though Vectren's rate increases are also due to the need to make up for declining business, Kelley said the utility considers its expenditures on pollutant-reducing technologies one that has been worthwhile.

"As a company that is headquartered in Evansville, and our power plants are in Evansville, we felt it was the right investment to make," she said. "We live here, we work here, and we breathe the same air as our customers."

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