State regulators have approved a Vectren Corp. proposal for a new customer fee to pay for a project replacing more than 1,000 miles of aging natural gas distribution lines across much of Indiana.
The approval from the Indiana Utility Regulatory Commission gives Vectren permission to charge a monthly fee to cover 80 percent of the project's estimated $865 million cost.
Vectren supplies gas to some 690,000 homes and businesses in central and southern Indiana.
Officials of the Evansville-based company say the project is needed to ensure the safety and reliability of its gas network. The project will include removing bare steel and cast iron distribution mains and installing new pipes, most of which will be plastic, according to Vectren.
The new fee will show up on customer bills starting in 2015 and continue through 2021, Vectren spokeswoman Chase Kelley told the Evansville Courier & Press. The average residential customer will be charged between $1 and $1.50 a month to start.
Vectren expects to increase these fees each six months so that by 2021 the average monthly fee will be between $13 and $14.
Kelley said the project fee won't show up as a separate charge on natural gas bills but will be included as part of the "Distribution and Service Charges" line item.
Kelley said all natural gas customers will pay the same fee, regardless of their monthly gas usage.
"All customers are benefiting from these system improvements," she said. "You're using the same infrastructure, if you will."
Vectren's plan calls for a $650 million project involving about 800 miles of pipeline in its north territory covering much of central Indiana and $215 million in work to replace 300 miles of pipeline in southwestern Indiana.
Company officials estimate it will take about seven years to complete the project, which will affect about 7 percent of its Indiana pipelines.