Vectren Retail, LLC to Cancel Market Based Rate Authority, Citing Impending "Business Transactions"

Vectren Retail, LLC d/b/a Vectren Source has submitted a notice of cancellation of its FERC market based rate tariff, and asked that FERC act on the notice expeditiously.

"Vectren Source is requesting expedited action from the Commission on this Notice in order to facilitate the completion of certain business transactions by the end of the year," the company said in its filing.

It is unclear what these transactions are. They could be a simple reorganization of the Vectren Retail electric marketing business into a separate affiliate, or similar perfunctory action not indicative of any strategy change for the Vectren retail marketing business. A Vectren representative was unable to comment substantively prior to publication time.

"Vectren Source respectfully requests that the Commission issue an order no later than December 28, 2011 accepting this Notice and making the cancellation of its MBR Tariff effective on the date of the order."

Vectren Source was granted market based rate authority in May 2011. In April 2011, as only reported by Matters, it received a retail electric supplier license in Ohio (4/11).

"Vectren Source has not made any sales of energy, capacity or ancillary services under its MBR Tariff," it told FERC. While not dispositive, this likely means Vectren Source has not engaged in any retail electric sales to date, as some balancing wholesale sales would be likely if it were serving retail electric load.

Obviously, lack of market-based rate authority would hinder any future retail electric marketing by Vectren Retail, unless an affiliate or parent assumed its wholesale load management.

If nothing else, the notice suggests that Vectren Retail will not launch retail electric marketing in the immediate future, as cursory review of current market-based rate authority holders and new FERC dockets/applications in the past month do not indicate any non-utility affiliate (e.g. ProLiance or some new entity) with market-based rate authority which would assume the wholesale balancing sale role for Vectren Retail, although it is possible the company could contract with a non-affiliated third party for this role.

Southern Indiana Gas & Electric Co., Vectren's regulated electric utility, does hold market based rate authority as well, and could theoretically provide various wholesale services to Vectren Retail; however, if this strategy were favored, it could have been pursued initially and thus is not seen as the likely alternative now. Notably, there is precedent for such a role, as The Dayton Power & Light Company (DP&L) serves as retail supplier DPL Energy Resources' provider of full requirements power supply procurement and portfolio management services, and as DPL Energy Resources' Transmission Scheduling Agent (TSA) with ISOs and RTOs such as PJM and MISO