Vectren Corp.: Evansville energy company maintains record of profitability.

• Author: Yancey, Madonna
• Position: Profile

"A merger of equals." That's how Niel Ellerbrook describes the deal that three years ago gave birth to Vectren, an Evansville-based energy and applied-technology company.

On March 31, 2000, Sigcorp Inc. of Evansville and Indiana Energy Inc. of Indianapolis joined to form Vectren Corp., a holding company with headquarters in Evansville. Sigcorp's operations included Southern Indiana Gas & Electric Co., or SIGECO, while Indiana Energy was the parent of Indiana Gas. Shortly after its creation, Vectren acquired the gas properties of Ohio-based Dayton Power & Light.

Vectren now supplies natural-gas service to all or sections of 58 counties in central and southwestern Indiana and 17 counties in western Ohio, as well as electric service to all or sections of 10 counties in southwestern Indiana, giving the company a customer base of nearly 1 million. Vectren is Indiana's eighth-largest company by revenue, with total employment of about 3,700 and a total annual payroll of more than $100 million. The Evansville headquarters employs more than 700.

"While both companies had long and successful histories, both of us were small," Ellerbrook, Vectren's chairman and CEO, says of Sigcorp and Indiana Energy. "Each had a market capitalization of about $700 million, compared to Cinergy in Cincinnati, which has about $5.5 billion. Each of us believed that to be successful in the long term, to raise the capital that we need to invest in technology to meet customers' needs, we needed to be together."

Vectren's management team comprises top individuals from both companies. Ellerbrook, who took the helm in the merger, had been CEO at Indiana Energy since 1999.

Ellerbrook says the choice of headquarters was made because "the board felt it was important for Evansville to keep the headquarters, that the loss of Indiana Energy's headquarters was far more absorbable for Indianapolis than had Sigcorp been lost to Evansville."

Utility companies are increasingly looking for ways to boost revenues by branching out into other business. Vectren, for example, has ownership interests in non-regulated subsidiaries and affiliates in several categories. Among other things, Vectren has a 14 percent ownership share in local broadband provider Sigecom, with the remaining 86 percent owned by Utilicom Networks LLC. Sigecom provides local and long-distance telephone, cable television and high-speed Internet services to more than 25,000 residential and commercial customers in the...