Vectren Corporation NYSE: VVC is an energy holding company headquartered in Evansville, Indiana. Through its utility subsidiaries (Indiana Gas Company, Southern Indiana Gas and Electric, and Vectren Energy Delivery of Ohio), the company distributes natural gas to approximately one million business and residential customers in Indiana and Ohio. It also distributes electricity to 141,000 customers and has 1,425 MW of primarily coal-fired generating capacity in Indiana. 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. It is a Fortune 1000 company with $4.3 billion in assets.
The company was incorporated on June 10, 1999 and in June of 2000 acquired Indiana Gas Company and Southern Indiana Gas and Electric Company (SIGECO). In the fall of 2000, Vectren also acquired the natural gas distribution assets of Dayton Power and Light Company in western Ohio.
In the fall of 2006, the company purchased Duke Energy Corporation's interest in the Miller Pipeline Corporation.
Vectren Corporation (Vectren), incorporated on June 10, 1999, is an energy holding company. Vectren’s wholly owned subsidiary, Vectren Utility Holdings, Inc. (Utility Holdings), serves as the intermediate holding company for three operating public utilities: Indiana Gas Company, Inc. (Indiana Gas), Southern Indiana Gas and Electric Company (SIGECO) and the Ohio operations. Utility Holdings also has other assets that provide information technology and other services to the three utilities. Indiana Gas provides energy delivery services to over 570,000 natural gas customers located in central and southern Indiana. SIGECO provides energy delivery services to over 142,000 electric customers and approximately 111,000 gas customers located near Evansville in southwestern Indiana. The Ohio operations provide energy delivery services to approximately 314,000 natural gas customers located near Dayton in west central Ohio.
SIGECO owns and operates electric generation assets to serve its electric customers and optimizes those assets in the wholesale power market. Indiana Gas and SIGECO do business as Vectren Energy Delivery of Indiana. The Ohio operations are owned as a tenancy in common by Vectren Energy Delivery of Ohio, Inc. (VEDO), a wholly owned subsidiary of Utility Holdings, and Indiana Gas. The Ohio operation does business as Vectren Energy Delivery of Ohio. Vectren, through Vectren Enterprises, Inc. (Enterprises), is involved in nonutility activities in four primary business areas: Infrastructure Services, Energy Services, Coal Mining, and Energy Marketing. Infrastructure Services provides underground construction and repair services. Energy Services provides performance contracting and renewable energy services. Coal Mining mines and sells coal. Energy Marketing markets and supplies natural gas and provides energy management services. Enterprises also have other legacy businesses that have invested in energy related opportunities and services, real estate, and leveraged leases, among other investments. Enterprises supports the Company’s regulated utilities pursuant to service contracts by providing natural gas supply services, coal, and infrastructure services.
Utility Group
The Utility Group consists of Utility Holdings operations. The operations of the Utility Group consist of the Company’s regulated operations and other operations that provide information technology and other support services to those regulated operations. The Company segregates its regulated operations into a Gas Utility Services operating segment and the Electric Utility Services operating segment. The Gas Utility Services segment includes the operations of Indiana Gas, the Ohio operations and SIGECO’s natural gas distribution business, and provides natural gas distribution and transportation services to Indiana and west central Ohio. The Electric Utility Services segment includes the operations of SIGECO’s electric transmission and distribution services, which provides electric distribution services primarily to southwestern Indiana, and the Company’s power generating and wholesale power operations. These regulated operations supply natural gas and/or electricity to over one million customers.
As of December 31, 2010, Vectren supplied natural gas service to approximately 994,800 Indiana and Ohio customers, including 909,300 residential, 83,800 commercial, and 1,700 industrial and other contract customers. During the year ended December 31, 2010, average gas utility customers served were approximately 982,100. The Company’s service area contains diversified manufacturing and agriculture-related enterprises. The principal industries served include automotive assembly, parts and accessories, feed, flour and grain processing, metal castings, aluminum products, polycarbonate resin (Lexan) and plastic products, gypsum products, electrical equipment, metal specialties, glass, steel finishing, pharmaceutical and nutritional products, gasoline and oil products, ethanol, and coal mining. The Company receives gas revenues by selling gas directly to customers at approved rates or by transporting gas through its pipelines at approved rates to customers that have purchased gas directly from other producers, brokers, or marketers. During 2010, total gas throughput was 197 millions of dekatherms (MMDth).
As of December 31, 2010, Vectren supplied electric service to approximately 141,600 Indiana customers, including approximately 123,200 residential, 18,300 commercial, and 100 industrial and other customers. During 2010, average electric utility customers served were approximately 141,300. The principal industries served include polycarbonate resin (Lexan) and plastic products, aluminum smelting and recycling, aluminum sheet products, automotive assembly, steel finishing, pharmaceutical and nutritional products, automotive glass, gasoline and oil products, ethanol, and coal mining. During 2010, retail electricity sales totaled 5,616.9 gigawatt hours (GWh).
Non-utility Group
Vectren is involved in non-utility activities in four primary business areas: Infrastructure Services, Energy Services, Coal Mining and Energy Marketing. Infrastructure Services provides underground construction and repair to utility infrastructure through its wholly owned subsidiary, Miller Pipeline, LLC (Miller). Miller provides services to many utilities, including Vectren’s utilities. Performance-based energy contracting operations and renewable energy services are performed through Energy Systems Group, LLC (ESG). ESG assists schools, hospitals, governmental facilities, and other private institutions. ESG is also involved in creating renewable energy projects, including projects to process landfill gas into usable natural gas and electricity. ESG’s customer base is located throughout the Midwest and Southeast United States.
The Coal Mining group mines and sells coal to the Company’s utility operations and to other third-parties through its wholly owned subsidiary, Vectren Fuels. Vectren owns three underground mines (Prosperity, Oaktown 1, and Oaktown 2) and one surface mine (Cypress Creek). All mines are located in Indiana. All coal is high-to-mid sulfur bituminous coal from the Illinois Basin. The Company engages contract mining companies to perform all mining operations. During 2010, Oaktown 1 underground mine located near Vincennes, Indiana, began operations. As of December 31, 2010, approximately 300 acres of coal have been mined from Oaktown undergroung mine with approximately 24,700 acres remaining. Prosperity is an underground mine located on 1,100 surface acres outside of Petersburg in Pike County, Indiana. As of December 31, 2010, approximately 6,000 acres of coal have been mined from Prosperity mine with approximately 13,000 acres remaining. Cypress Creek was an above-ground, or surface mine, located on 155 acres about four miles north of Boonville in Warrick County, Indiana.
The Energy Marketing group relies on three areas: gas marketing, energy management, and retail gas supply. ProLiance, a non-utility energy marketing affiliate of Vectren and Citizens, provides services to a range of municipalities, utilities, industrial operations, schools, and healthcare institutions located throughout the Midwest and Southeast United States. ProLiance’s customers include Vectren’s Indiana utilities and non-utility gas supply operations and Citizens’ utilities. ProLiance’s primary businesses include gas marketing, gas portfolio optimization, and other portfolio and energy management services. During 2010, the Company, including its non-utility retail gas marketing operations, contracted for approximately 69% of its natural gas purchases through ProLiance.
As of December 31, 2010, Vectren Source provided natural gas and other related products and services in the Midwest and Northeast United States to over 227,000 equivalent residential and commercial customers. This customer base reflects approximately 100,000 customers in VEDO’s service territory that have either voluntarily opted to choose their natural gas supplier or are supplied natural gas by Vectren Source but remain customers of the regulated utility as part of VEDO’s exit the merchant function process. During 2010, gas sold by Vectren Source was approximately 20,968 thousands of dekatherms (MDth), and average equivalent customers served by Vectren Source were 203,000.
The Other Businesses group includes a variety of legacy, wholly owned operations and investments that have invested in energy related opportunities and services, real estate, and leveraged leases, among other investments. As of December 31, 2010, investments included two Haddington Energy Partnerships both approximately 40% owned, and wholly owned subsidiaries, Southern Indiana Properties, Inc. and Energy Realty, Inc.
Vectren's wholly owned subsidiary, Vectren Utility Holdings, Inc., serves as the intermediate holding company for three operating utilities: Vectren Energy Delivery of Indiana - North (Vectren North), Vectren Energy Delivery of Indiana - South (Vectren South) and Vectren Energy Delivery of Ohio (VEDO).
Vectren North provides energy delivery services to 570,000 natural gas customers located in central and southern Indiana. Vectren South provides energy delivery services to 142,000 electric customers and 111,000 gas customers located in southwestern Indiana. Vectren South also owns and operates electric generation to serve its electric customers and optimizes those assets in the wholesale power market. VEDO provides energy delivery services to approximately 314,000 natural gas customers located in west central Ohio.
Vectren's total generation is nearly 1,300 megawatts (MW) and includes 1,000 MW of coal-fired generation, 295 MW of gas-fired generation and 3.2 MW of landfill gas-fired power. In addition, the company has 30 MW of purchased wind power and another 100 MW of purchased power. Furthermore, interruptible load and demand side management initiatives can yield more than 60 MW of energy savings to meet peak demand if needed.
Vectren's nonutility group is involved in four primary business areas: Infrastructure Services, Energy Services, Energy Marketing and Coal Mining. Infrastructure Services provides underground construction, repair, and replacement services (Miller Pipeline). Energy Services provides energy performance contracting services and renewable energy project development (Energy Systems Group). Energy Marketing markets natural gas (ProLiance Energy) and retail products and services (Vectren Source). Coal Mining mines and sells coal (Vectren Fuels).
OVERALL
Beta: 0.43
Market Cap (Mil.): $2,302.81
Shares Outstanding (Mil.): 81.72
Annual Dividend: 1.38
Yield (%): 4.90
FINANCIALS
VVC Industry Sector
P/E (TTM): 19.97 18.97 21.31
EPS (TTM): -7.32 -- --
ROI: 2.84 2.10 1.56
ROE: 7.98 4.04 3.22
Name Age Since Current Position
Niel Ellerbrook 62 2010 Non-Executive Chairman of the Board
Carl Chapman 55 2010 President, Chief Executive Officer, Director
Jerome Benkert 52 2010 Chief Financial Officer, Executive Vice President, President - Shared Services
John Bohls 54 2010 President of Vectren Energy Marketing and Services, Inc.
Ronald Christian 53 2010 EVP, CAO, General Counsel, Corporate Secy., Chief Legal and External Affairs Officer, Pres. - Vectren South
William Doty 60 2003 Executive Vice President - Utility Operations, President - VUHI
Robert Koch 72 2003 Lead Independent Director
John Engelbrecht 59 2000 Independent Director
William Mays 65 2010 Independent Director
J. Timothy McGinley 70 2010 Independent Director
Jean Wojtowicz 53 2000 Independent Director
Anton George 51 2000 Independent Director
R. Daniel Sadlier 64 2003 Independent Director
Michael Smith 62 2006 Independent Director
Martin Jischke 69 2007 Independent Director
James DeGraffenreidt 57 2010 Independent Director
Robert Jones 54 2011 Independent Director
COMPANY ADDRESS
Vectren Corp
ONE VECTREN SQUARE, 211 NW RIVER
EVANSVILLE IN 47708
The company was incorporated on June 10, 1999 and in June of 2000 acquired Indiana Gas Company and Southern Indiana Gas and Electric Company (SIGECO). In the fall of 2000, Vectren also acquired the natural gas distribution assets of Dayton Power and Light Company in western Ohio.
In the fall of 2006, the company purchased Duke Energy Corporation's interest in the Miller Pipeline Corporation.
Vectren Corporation (Vectren), incorporated on June 10, 1999, is an energy holding company. Vectren’s wholly owned subsidiary, Vectren Utility Holdings, Inc. (Utility Holdings), serves as the intermediate holding company for three operating public utilities: Indiana Gas Company, Inc. (Indiana Gas), Southern Indiana Gas and Electric Company (SIGECO) and the Ohio operations. Utility Holdings also has other assets that provide information technology and other services to the three utilities. Indiana Gas provides energy delivery services to over 570,000 natural gas customers located in central and southern Indiana. SIGECO provides energy delivery services to over 142,000 electric customers and approximately 111,000 gas customers located near Evansville in southwestern Indiana. The Ohio operations provide energy delivery services to approximately 314,000 natural gas customers located near Dayton in west central Ohio.
SIGECO owns and operates electric generation assets to serve its electric customers and optimizes those assets in the wholesale power market. Indiana Gas and SIGECO do business as Vectren Energy Delivery of Indiana. The Ohio operations are owned as a tenancy in common by Vectren Energy Delivery of Ohio, Inc. (VEDO), a wholly owned subsidiary of Utility Holdings, and Indiana Gas. The Ohio operation does business as Vectren Energy Delivery of Ohio. Vectren, through Vectren Enterprises, Inc. (Enterprises), is involved in nonutility activities in four primary business areas: Infrastructure Services, Energy Services, Coal Mining, and Energy Marketing. Infrastructure Services provides underground construction and repair services. Energy Services provides performance contracting and renewable energy services. Coal Mining mines and sells coal. Energy Marketing markets and supplies natural gas and provides energy management services. Enterprises also have other legacy businesses that have invested in energy related opportunities and services, real estate, and leveraged leases, among other investments. Enterprises supports the Company’s regulated utilities pursuant to service contracts by providing natural gas supply services, coal, and infrastructure services.
Utility Group
The Utility Group consists of Utility Holdings operations. The operations of the Utility Group consist of the Company’s regulated operations and other operations that provide information technology and other support services to those regulated operations. The Company segregates its regulated operations into a Gas Utility Services operating segment and the Electric Utility Services operating segment. The Gas Utility Services segment includes the operations of Indiana Gas, the Ohio operations and SIGECO’s natural gas distribution business, and provides natural gas distribution and transportation services to Indiana and west central Ohio. The Electric Utility Services segment includes the operations of SIGECO’s electric transmission and distribution services, which provides electric distribution services primarily to southwestern Indiana, and the Company’s power generating and wholesale power operations. These regulated operations supply natural gas and/or electricity to over one million customers.
As of December 31, 2010, Vectren supplied natural gas service to approximately 994,800 Indiana and Ohio customers, including 909,300 residential, 83,800 commercial, and 1,700 industrial and other contract customers. During the year ended December 31, 2010, average gas utility customers served were approximately 982,100. The Company’s service area contains diversified manufacturing and agriculture-related enterprises. The principal industries served include automotive assembly, parts and accessories, feed, flour and grain processing, metal castings, aluminum products, polycarbonate resin (Lexan) and plastic products, gypsum products, electrical equipment, metal specialties, glass, steel finishing, pharmaceutical and nutritional products, gasoline and oil products, ethanol, and coal mining. The Company receives gas revenues by selling gas directly to customers at approved rates or by transporting gas through its pipelines at approved rates to customers that have purchased gas directly from other producers, brokers, or marketers. During 2010, total gas throughput was 197 millions of dekatherms (MMDth).
As of December 31, 2010, Vectren supplied electric service to approximately 141,600 Indiana customers, including approximately 123,200 residential, 18,300 commercial, and 100 industrial and other customers. During 2010, average electric utility customers served were approximately 141,300. The principal industries served include polycarbonate resin (Lexan) and plastic products, aluminum smelting and recycling, aluminum sheet products, automotive assembly, steel finishing, pharmaceutical and nutritional products, automotive glass, gasoline and oil products, ethanol, and coal mining. During 2010, retail electricity sales totaled 5,616.9 gigawatt hours (GWh).
Non-utility Group
Vectren is involved in non-utility activities in four primary business areas: Infrastructure Services, Energy Services, Coal Mining and Energy Marketing. Infrastructure Services provides underground construction and repair to utility infrastructure through its wholly owned subsidiary, Miller Pipeline, LLC (Miller). Miller provides services to many utilities, including Vectren’s utilities. Performance-based energy contracting operations and renewable energy services are performed through Energy Systems Group, LLC (ESG). ESG assists schools, hospitals, governmental facilities, and other private institutions. ESG is also involved in creating renewable energy projects, including projects to process landfill gas into usable natural gas and electricity. ESG’s customer base is located throughout the Midwest and Southeast United States.
The Coal Mining group mines and sells coal to the Company’s utility operations and to other third-parties through its wholly owned subsidiary, Vectren Fuels. Vectren owns three underground mines (Prosperity, Oaktown 1, and Oaktown 2) and one surface mine (Cypress Creek). All mines are located in Indiana. All coal is high-to-mid sulfur bituminous coal from the Illinois Basin. The Company engages contract mining companies to perform all mining operations. During 2010, Oaktown 1 underground mine located near Vincennes, Indiana, began operations. As of December 31, 2010, approximately 300 acres of coal have been mined from Oaktown undergroung mine with approximately 24,700 acres remaining. Prosperity is an underground mine located on 1,100 surface acres outside of Petersburg in Pike County, Indiana. As of December 31, 2010, approximately 6,000 acres of coal have been mined from Prosperity mine with approximately 13,000 acres remaining. Cypress Creek was an above-ground, or surface mine, located on 155 acres about four miles north of Boonville in Warrick County, Indiana.
The Energy Marketing group relies on three areas: gas marketing, energy management, and retail gas supply. ProLiance, a non-utility energy marketing affiliate of Vectren and Citizens, provides services to a range of municipalities, utilities, industrial operations, schools, and healthcare institutions located throughout the Midwest and Southeast United States. ProLiance’s customers include Vectren’s Indiana utilities and non-utility gas supply operations and Citizens’ utilities. ProLiance’s primary businesses include gas marketing, gas portfolio optimization, and other portfolio and energy management services. During 2010, the Company, including its non-utility retail gas marketing operations, contracted for approximately 69% of its natural gas purchases through ProLiance.
As of December 31, 2010, Vectren Source provided natural gas and other related products and services in the Midwest and Northeast United States to over 227,000 equivalent residential and commercial customers. This customer base reflects approximately 100,000 customers in VEDO’s service territory that have either voluntarily opted to choose their natural gas supplier or are supplied natural gas by Vectren Source but remain customers of the regulated utility as part of VEDO’s exit the merchant function process. During 2010, gas sold by Vectren Source was approximately 20,968 thousands of dekatherms (MDth), and average equivalent customers served by Vectren Source were 203,000.
The Other Businesses group includes a variety of legacy, wholly owned operations and investments that have invested in energy related opportunities and services, real estate, and leveraged leases, among other investments. As of December 31, 2010, investments included two Haddington Energy Partnerships both approximately 40% owned, and wholly owned subsidiaries, Southern Indiana Properties, Inc. and Energy Realty, Inc.
Vectren's wholly owned subsidiary, Vectren Utility Holdings, Inc., serves as the intermediate holding company for three operating utilities: Vectren Energy Delivery of Indiana - North (Vectren North), Vectren Energy Delivery of Indiana - South (Vectren South) and Vectren Energy Delivery of Ohio (VEDO).
Vectren North provides energy delivery services to 570,000 natural gas customers located in central and southern Indiana. Vectren South provides energy delivery services to 142,000 electric customers and 111,000 gas customers located in southwestern Indiana. Vectren South also owns and operates electric generation to serve its electric customers and optimizes those assets in the wholesale power market. VEDO provides energy delivery services to approximately 314,000 natural gas customers located in west central Ohio.
Vectren's total generation is nearly 1,300 megawatts (MW) and includes 1,000 MW of coal-fired generation, 295 MW of gas-fired generation and 3.2 MW of landfill gas-fired power. In addition, the company has 30 MW of purchased wind power and another 100 MW of purchased power. Furthermore, interruptible load and demand side management initiatives can yield more than 60 MW of energy savings to meet peak demand if needed.
Vectren's nonutility group is involved in four primary business areas: Infrastructure Services, Energy Services, Energy Marketing and Coal Mining. Infrastructure Services provides underground construction, repair, and replacement services (Miller Pipeline). Energy Services provides energy performance contracting services and renewable energy project development (Energy Systems Group). Energy Marketing markets natural gas (ProLiance Energy) and retail products and services (Vectren Source). Coal Mining mines and sells coal (Vectren Fuels).
OVERALL
Beta: 0.43
Market Cap (Mil.): $2,302.81
Shares Outstanding (Mil.): 81.72
Annual Dividend: 1.38
Yield (%): 4.90
FINANCIALS
VVC Industry Sector
P/E (TTM): 19.97 18.97 21.31
EPS (TTM): -7.32 -- --
ROI: 2.84 2.10 1.56
ROE: 7.98 4.04 3.22
Name Age Since Current Position
Niel Ellerbrook 62 2010 Non-Executive Chairman of the Board
Carl Chapman 55 2010 President, Chief Executive Officer, Director
Jerome Benkert 52 2010 Chief Financial Officer, Executive Vice President, President - Shared Services
John Bohls 54 2010 President of Vectren Energy Marketing and Services, Inc.
Ronald Christian 53 2010 EVP, CAO, General Counsel, Corporate Secy., Chief Legal and External Affairs Officer, Pres. - Vectren South
William Doty 60 2003 Executive Vice President - Utility Operations, President - VUHI
Robert Koch 72 2003 Lead Independent Director
John Engelbrecht 59 2000 Independent Director
William Mays 65 2010 Independent Director
J. Timothy McGinley 70 2010 Independent Director
Jean Wojtowicz 53 2000 Independent Director
Anton George 51 2000 Independent Director
R. Daniel Sadlier 64 2003 Independent Director
Michael Smith 62 2006 Independent Director
Martin Jischke 69 2007 Independent Director
James DeGraffenreidt 57 2010 Independent Director
Robert Jones 54 2011 Independent Director
COMPANY ADDRESS
Vectren Corp
ONE VECTREN SQUARE, 211 NW RIVER
EVANSVILLE IN 47708