Investor Presentation - SNL

Investor Presentation - SNL

Vectren Corporation EEI Financial Conference November 11, 2008 Forward-Looking Statements A safe harbor for forward-looking statements is provided by the Private Securities Litigation Reform Act of 1995 (Reform Act of 1995). The Reform Act of 1995 was adopted to encourage such forward-looking statements without the threat of litigation, provided those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause the actual results to differ materially from those projected in the statement. Certain matters described in Managements Discussion and Analysis of Results of Operations and Financial Condition are forward-looking statements. Such statements are based on managements beliefs, as well as assumptions made by and information currently available to management. When used in this filing, the words believe, anticipate, endeavor, estimate, expect, objective, projection, forecast, goal and similar expressions are intended to identify forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements, factors that could cause the Companys actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following: Factors affecting utility operations such as unusual weather conditions; catastrophic weather-related damage; unusual maintenance or repairs; unanticipated changes to fossil fuel costs; unanticipated changes to gas transportation and storage costs, or availability due to higher demand, shortages, transportation problems or other developments; environmental or pipeline incidents; transmission or distribution incidents; unanticipated changes to electric energy supply costs, or availability due to demand, shortages, transmission problems or other developments; or electric transmission or gas pipeline system constraints. Increased competition in the energy industry, including the effects of industry restructuring and unbundling. Regulatory factors such as unanticipated changes in rate-setting policies or procedures, recovery of investments and costs made under traditional regulation, and the frequency and timing of rate increases. Financial, regulatory or accounting principles or policies imposed by the Financial Accounting Standards Board; the Securities and Exchange Commission; the Federal Energy Regulatory Commission; state public utility commissions; state entities which regulate electric and natural gas transmission and distribution, natural gas gathering and processing, electric power supply; and similar entities with regulatory oversight. Economic conditions including the effects of an economic downturn, inflation rates, commodity prices, and monetary fluctuations. Increased natural gas commodity prices and the potential impact on customer consumption, uncollectible accounts expense, unaccounted for gas and interest expense. Changing market conditions and a variety of other factors associated with physical energy and financial trading activities including, but not limited to, price, basis, credit, liquidity, volatility, capacity, interest rate, and warranty risks. The performance of projects undertaken by the Companys nonutility businesses and the success of efforts to invest in and develop new opportunities, including but not limited to, the realization of synfuel income tax credits and the Companys coal mining, gas marketing, and energy infrastructure strategies. Direct or indirect effects on the Companys business, financial condition, liquidity and results of operations resulting from changes in credit ratings, changes in interest rates, and/or changes in market perceptions of the utility industry and other energy-related industries. Employee or contractor workforce factors including changes in key executives, collective bargaining agreements with union employees, aging workforce issues, or work stoppages. Legal and regulatory delays and other obstacles associated with mergers, acquisitions and investments in joint ventures. Costs, fines, penalties and other effects of legal and administrative proceedings, settlements, investigations, claims, including, but not limited to, such matters involving compliance with state and federal laws and interpretations of these laws. Changes in or additions to federal, state or local legislative requirements, such as changes in or additions to tax laws or rates, environmental laws, including laws governing greenhouse gases, mandates of sources of renewable energy, and other regulations. More detailed information about these factors is set forth in Vectrens filings with the Securities and Exchange Commission, including Vectrens annual report on Form 10-K filed on February 20, 2008 and on Form 10-Q filed on November 3, 2008. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of changes in actual results, changes in assumptions, or other factors affecting such statements. Vectren Contact:

Steven M. Schein, VP Investor Relations / 812-491-4209 / [email protected] 2 Vectren At A Glance NYSE Symbol: VVC Vectren Utility Service Areas Stable utility platform supported by appropriate rate design and rates Over 1.1 million utility customers Sensible nonutility portfolio linked to core utility $4.3 billion in assets $2.4 billion in revenues $2.1 billion market cap (11/3/08) $3.8 billion enterprise value S&P: A- / Moodys: Baa1 Sufficient liquidity and credit facilities 3 3rd Quarter 2008 Highlights 3rd Quarter earnings of $0.29 per share, compared to $0.18 per share in 2007 (exclusive of synfuels-related earnings of $0.05 per share) YTD 2008 earnings of $1.18 per share, compared to $1.25 per share in 2007 (exclusive of synfuels-related earnings of $0.11 per share) Improved utility results for the quarter and year to date ProLiance benefits from extreme market volatility and wider cash to NYMEX spreads to optimize assets Write-down of commercial real estate assets impacted by broad economic downturn Affirmed 2008 earnings guidance range of $1.60 to $1.75 per share Increased prices and growing production improve 2009 and later years outlook for Coal Mining Increased quarterly dividend 3.1% to $0.335 per share 4 Consolidated 3rd Quarter Results Amounts in millions except per share Utility Operations

Nonutility Group Corporate & Other Net Income (Excluding Synfuels) Utility Operations Nonutility Group Corporate & Other EPS (Excluding Synfuels) Avg. Shares Outstanding 3 Months Ended Sep 30 2008 2007 $ 13.6 $ 10.7 9.8 3.1 (0.2) (0.2) $ 23.2 $ 13.6 9 Months Ended Sep 30 2008 2007 $ 80.4 $ 69.6 12.1 25.1 (0.6) 0.2 $ 91.9 $ 94.9 $ $ $ 0.17 $ 0.12 0.29 $

0.14 0.04 0.18 80.6 75.9 $ 1.04 $ 0.15 (0.01) 1.18 $ 77.6 0.92 0.33 1.25 75.9 NOTE: 2007 was the last year for synfuel operations - synfuel-related results generated earnings of $3.5 million or $0.05 per share in the third quarter of 2007 and $8.3 million or $0.11 per share year to date in 2007. Improved YTD utility results were primarily due to impacts of regulatory initiatives, including base rate increases in Indiana service territories, and higher wholesale power sales The increase was partially offset by higher operating costs related to increasing maintenance and reliability costs contemplated in the base rate cases and favorable weather in 2007 Lower YTD nonutility results were primarily attributable to lower results from the primary nonutility operations and an impairment charge related to legacy commercial real estate investments within Other Businesses Third quarter results were strong due to ProLiance and Energy Infrastructure Services 5 Strong Credit Ratings with Available Liquidity Credit Ratings Unsecured debt A-/Baa1 by S&P and Moodys stable outlooks Commercial paper A2/P2 by S&P and Moodys Liquidity

Utility Short-term Borrowing Capacity of $520 million - $345 million available at 10/30 $515 million 5-year facility expires November 2010 - 11 participating banks Nonutility Short-term Borrowing Capacity of $385 million - $95 million available at 10/30 $255 million facility expires November 2010 - 8 participating banks $120 million facility expires September 2009 7 participating banks LTD outstanding - $1.4 Billion Weighted average life 14 years Effective interest rate 6.4% 2009 - $80 million one time investor put - August 2010 - $10 million one time investor put May 6 ProLiance Liquidity ProLiance Stand-Alone $400 million Credit Facility $307 million available at October 30 $300 million annual commitment level with additional $100 million surge Oct 1 to Mar 31 Facility expires June 2009 9 participating banks Storage gas ~ 97% full with peak borrowing needs having been met Greater than 90% of 2008 sales to investment grade counterparties 2008 sales approaching $2.8 billion with less than $1.1 million of receivables over 30 days and write offs to date less than $200,000

ProLiance viewed as excellent trading partner and has received expansion of $30 million trade credit in last 60 days 7 Utility Operations Vectren Utility Holdings, Inc. Generation Portfolio 5 Coal-fired base units 1,000 MW Vectren North - Indiana Gas Burn 3+ million tons of coal annually 569,000 Gas Customers Vectren Ohio - VEDO 319,000 Gas Customers Vectren South - SIGECO 112,000 Gas Customers Vectren South - SIGECO 141,000 Electric Customers 6 Gas-fired peak-use turbines 295 MW Purchased capacity contract of 100 MW through 2012 Purchased 30 MW of wind energy Wholesale Power Marketing Rate Protection Functions within the regulated electric utility operation Residential and commercial gas margins protected by conservation/decoupling tariffs Markets surplus power from generating units primarily through MISO 74% of residential and commercial gas margins

protected by Normal Temperature Adjustment 50/50 sharing of off-system sales above or below $10.5 million Working with intervening parties to develop electric conservation/ decoupling tariffs (in millions) Off-System Sales Transmission System Sales Total Asset Optimization 9 months 9/30/2008 $ 15.8 6.4 $ 22.2 12 months 12/31/2007 $ 16.9 4.7 $ 21.6 8 Constructive Regulation Base Rate Case Vectren South Gas Vectren South Electric Vectren North Gas Order Date 8/1/2007 $ 8/15/2007 $ 2/13/2008 $ Annual Revenue

Increase 7.7 60.8 26.9 Rate Base Return on Equity $ 122 $ 1,044 $ 797 10.15% 10.40% 10.20% Ratemaking Rate Equity of Ratio Return 47% 47% 49% 7.20% 7.32% 7.80% Settlement agreements reached on last 3 rate cases Vectren Ohio gas entered into a Stipulation and Recommendation on September 8 A rate increase of nearly $14.8 million, inclusive of the nearly $3 to $5 million annually recorded through the lost margin recovery mechanism An overall rate of return of 8.89% on rate base of about $235 million

An opportunity to recover costs of a program to accelerate replacement of cast iron and bare steel pipelines, as well as certain service risers Continuation and enhancements of energy efficiency and conservation programs Rate design to be decided by the PUCO based on evidence and arguments presented Expect PUCO to issue a decision by December 31, 2008 Vectren Ohio begins the process to exit merchant function PUCO approved auction selecting qualified wholesale suppliers effective October 1, 2008 through March 31, 2010 9 Rate Design & Recovery Mechanisms Environmental CWIP Recovery Under SB 29 Recovery of MISO Transmission Investments Gas Cost and Fuel Cost Recovery Lost Margin Recovery Mechanisms (Decoupling) Normal Temperature Adjustment (NTA) Bad Debt Expense - tracked Bad Debts Related to Gas Costs - tracked Unaccounted for Gas - tracked Recovery of Bare Steel/Cast Iron Replacement Costs South Gas North

Ohio Electric South Note: The Stipulation filed with the PUCO did not address the rate design to b e used. The Company has proposed, among other alternatives, the use of a straight fixed variab le rate design which places all, or a most of, the fixed cost recovery in the customer service charge. The PUCO is expected to address rate design b ased on evidence and arguments presented. Stability in earnings Indiana residential and commercial gas margins weather protected All gas territories residential and commercial gas margins protected from lost margins due to conservation Mitigated impact of volatile gas markets with bad debts and unaccounted for gas cost recovery mechanisms Favorable regulatory treatment for major investments Timely recovery of environmental expenditures Transmission investments approved by MISO related to Regional Expansion Criteria and Benefit Process (RECB) to be recovered at FERC approved rates tracked timely Bare Steel/Cast Iron multi-year replacement programs South and North Gas - Accrual for AFUDC and deferral of depreciation expense post in service 10 The Right Nonutility Businesses Vectren Enterprises Nonutility Business Operations Energy Marketing & Services ProLiance Energy (61%)

Traverse City Vectren Source Lansing York Chicago Dayton Columbus Indianapolis Coal Mining Kansas City Cincinnati St. Louis Prosperity Mine Evansville Louisville Johnson City Cypress Creek Mine Little Rock Greenville Ft. Worth Energy Infrastructure Services Miller Pipeline Energy Systems Group (1) Other Legacy Businesses (1) Richmond Raleigh Nashville

Oaktown 1&2 Mines (under development) South River Baltimore Birmingham Atlanta Mobile Houston New Smyrna Beach Clearwater Offices ProLiance Energy Miller Pipeline Energy Systems Group (1) Enterprises also has other investments in energy-related opportunities and services, real estate and leveraged leases, among other investments. 11 ProLiance Energy Storage & Transportation optimization is the primary driver of ProLiance earnings (includes arbitrage opportunities for price differences across time and location in physical and financial markets 42 Bcf of storage) Major Pipeline Access Seasonal spreads (summer to winter and winter to summer) Prompt month spreads or cash to NYMEX (todays physical market and next months financial markets Gas Marketing provides bundled gas services, including

base load, peaking sales, risk management, and other ancillary services Retail services to nearly 1,400 C & I customers Wholesale services to utilities, municipals, power generators Midstream Investments 2 intrastate pipelines Ohio Valley Hub & Heartland Gas Pipeline 3 storage fields White River, Lee 8 & Liberty ANR Southern Natural Columbia Gas Tennessee Gas Columbia Gulf Texas Gas Midwestern Gas Texas Eastern Panhandle Eastern Trunkline Gas The third quarter 2008 had significant price volatility with the prompt NYMEX price trading from over $13.00 to less than $7.00 creating the opportunity for ProLiance to utilize short term storage hedging strategies without exposing the storage book to open position risk Significant cash to NYMEX opportunities continued into October but overall price volatility has somewhat declined as NYMEX stabilized at lower price levels than in the third quarter As of September 30, storage was almost full and the seasonal spreads have not returned to historic levels impacting the fourth quarter storage optimization opportunity Libertys Sulphur site delayed by subsurface and well completion problems 12 Coal Mining

Prosperity Mine underground 33 million tons of reserves 3 million tons mined per year 5.0 lbs SO2 11.2 BTU Cypress Creek Mine surface 1+ million tons of reserves Depleted mid 2009 7.5 lbs SO2 10.5 BTU Oaktown Mines #1 & #2 underground 88 million tons of reserves 5 million tons projected mined per year 3 million tons @ Oaktown #1 2 million tons @ Oaktown #2 6.0 lbs SO2 11.2 BTU Oaktown timeline Coal Mining production estimates (millions of tons) Oaktown #1 - Slope on coal March 2009 and mine production May 2009 Oaktown #2 - Box cut excavation begins

May 2009 and mine production Oct 2010 Competitive location 13 power plants within 50 mile radius of underground mines 2009 priced 2010 priced 2011 4.6 to 5.2 100% 6.0 to 6.3 85% 7.7 to 8.3 35% price 100% of 2009 production sold on term contracts with 2009 estimated average margin of $8 to $12 per ton, pre-tax 2009 estimated overheads, including interest and corporate 13 Miller Pipeline Gas Pipeline/Waste Water Construction and Repair One of the largest gas distribution pipeline contractors in the United States Over 50 years in construction business and approximately 1,500 employees Major customers include Vectren, NiSource, Duke, LG&E, Alagasco and Citizens Gas Active primarily in the Midwest, Mid-Atlantic and Southern regions of the US Recent territorial expansion with acquisition of 4 small contractors Gas distribution and pipeline integrity programs and resulting bare steel/cast iron replacement will fuel growth over next several years 14 Energy Systems Group Performance-based and renewable

energy contracting services Development of energy efficiency facility improvements that pay for themselves from energy/operational savings Increase recurring revenues by expanding federal contracts and long-term operating contracts Develop additional renewable natural gas & waste to energy projects Live Oak $25 million landfill project metro Atlanta Approximately 200 employees Primarily in the Midwest, Mid-Atlantic and Southern regions of the US Major customers include hospitals, universities, governments and schools (HUGS) State and federal Renewable Portfolio Standards (RPS) and increased focus on conservation by the public sector will fuel growth over the next several years 15 2008 Earnings Guidance Affirmed 2008 consolidated earnings guidance range of $1.60 to $1.75 per share Sufficient liquidity with credit facilities in place with quality partners Stable utility results supported by appropriate rate design and rates Increased prices and growing production improve outlook for Coal Mining in 2009 and later years Increased quarterly dividend 3.1% to $0.335 per share These earnings expectations are based on normal weather in the companys electric business and Ohio gas territory for the remainder of 2008. Further, these earnings expectations assume no impairment charge related to ProLiances investment in Liberty Gas Storage. While the earnings expectation remains unchanged, further deterioration in the economy and credit markets beyond that currently anticipated could negatively impact results. Changes in these events or other circumstances, including economic conditions, could materially impact earnings and result in earnings for 2008 significantly above or below this guidance. These targeted ranges are subject to such factors discussed below under Forward-Looking Statements. 16

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