EPA Requirements on Mercury, Other Emissions Finalized; Vectren's Electric Generation Well-Positioned to Comply

EVANSVILLE, IN--(Marketwire - Jan 17, 2012) - As expected, the U.S. Environmental Protection Agency (EPA) finalized more stringent rules last month via the Mercury and Air Toxics Standards (MATS), which regulates emissions of mercury and other pollutants. Given Vectren's (NYSE: VVC) significant investment in emissions control equipment over the past decade, the utility is in a position to largely comply with MATS without significant additional investment.

Since 2001, Vectren has installed more than $410 million in emissions control equipment on its predominantly coal-fired generation fleet in southwestern Indiana. As a result, Vectren's electric generation fleet is now 100 percent scrubbed for sulfur dioxide, 90 percent controlled for nitrogen oxide and substantially controlled for particulate matter and a significant portion of mercury.

"As we've seen with other EPA clean air rules issued in 2011, our previous investment in air quality for this region will help ensure we can comply with these new standards," said Carl Chapman, Vectren's chairman, president and CEO.

The new rules, which were proposed on March 16 and finalized on Dec. 21, 2011, illustrate the continued trend by EPA to further regulate coal-fired generation. Existing power plants generally will have up to four years, if needed, to comply with MATS. This includes the three years provided to all sources by the Clean Air Act, and state permitting authorities can also grant an additional year as needed for technology installation.

"We made the decision several years ago to make these investments to improve the air quality for southwestern Indiana and pave the way for further economic development in our region, and as such, our customer's rates have increased to reflect these costs," added Chapman. "However, we again find ourselves in a position to comply, while other regional utilities have already announced they will proceed with significant expenditures to meet EPA demands or retire some uncontrolled coal generation units."

EPA's analysis estimates the rules will cost utilities and ultimately customers about $9.4 billion when the rules take effect in 2015 and each year slowly decrease to a low of $7.4 billion per year through 2030. However, an analysis for the American Coalition for Clean Coal Electricity by National Economic Research Associates (NERA) found that the proposed rule and other pending EPA regulations will increase electricity and other energy prices by $170 billion. The EPA acknowledged the regulations will result in 14.7 gigawatts of power supply (or 1 to 2 percent) being eliminated from the U.S. power grid. Many believe this estimate is low.

Vectren has nearly 1,300 megawatts (MW) of generating capacity, of which 1,000 MW is coal-fired. Vectren has two power plants: F.B. Culley in Warrick County and A.B. Brown in Posey County. The utility shares ownership of Warrick Unit 4, a 150-MW unit, with Alcoa. Vectren serves 142,000 electric customers in Dubois, Gibson, Pike, Posey, Spencer, Vanderburgh and Warrick counties.

About Vectren
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, coal mining and energy marketing. To learn more about Vectren, visit http://www.vectren.com.