Vectren To Merge With Texas-Based CenterPoint Energy

Indiana-based energy company Vectren will be acquired by a Texas-based firm. The deal is expected to be complete by the first quarter of 2019.

Vectren serves a significant portion of central and southern Indiana. Over the past few years, the company has had some of the highest rates in Indiana. The merger with Houston-based CenterPoint Energy will not have any impact in the short term due to rates already being set.

However, Vectren President and CEO Carl Chapman says the acquisition could benefit consumers financially.

“For the longer term, what we would believe is that the combined operation, if you just think of the scale of the companies together, that combined scale ought to result in some lower rates,” says Chapman.

Indiana University business professor Scott Smart says while it could help reduce costs, it could also increase prices.

“When two firms in the same industry are combining, that that will reduce competition within a market. And reduced competition can lead to higher prices for consumers or lower service perhaps,” says Smart.

Executives with Houston-based CenterPoint Energy will now serve eight states and more than 7 million customers. Smart says small companies could be hurt by the consolidation.

“As a firm gets bigger its cost of doing business decline," says Smart. "If that’s why the industry is consolidating then that would certainly put smaller firms at a disadvantage.”

The combined company will have the gas distribution operations and Indiana electric operations headquartered in Evansville after the transaction is complete.

The merger still needs to be approved by the Federal Energy Regulatory Commission and Federal Communications Commission.