“We are very pleased with first quarter results from our operating companies, especially given the economic environment impacting all customers,” said Niel C. Ellerbrook, Vectren’s chairman and chief executive officer. “Our utility results were slightly down, primarily due to lower usage from our large volume customers and lower wholesale power margins.”

“The significant first quarter improvement from our nonutility businesses resulted from increased earnings from each of our primary businesses, energy marketing and services, coal mining and energy infrastructure services,” Ellerbrook said. “Vectren Source, the retail gas marketing business, had a very strong quarter, as did the coal mining operation. Both Energy Systems Group and Miller Pipeline showed significant improvement over the prior year as well. We remain confident that all of these businesses are positioned

to meet the challenges ahead.”

2009 Earnings Guidance Affirmed

The company expects 2009 consolidated earnings to be in the range of $1.65 to $1.95 per share, consistent with earlier estimates. This estimate includes projected earnings from the utility group of $1.20 to $1.40 per share and from the Nonutility Group of $0.40 to $0.60 per share. As previously reported, the company’s earnings guidance reflects a reduction of $0.20 to $0.25 per share recognizing the continuing weakness in the economy. Further deterioration beyond what is currently anticipated could negatively impact actual results. These earnings expectations are based on normal weather in the company’s electric business and reflect that weather impacts in the gas territories are largely mitigated as a result of weather mechanisms and/or rate design in place in Indiana and Ohio. The earnings guidance excludes any impact from a potential impairment charge related to ProLiance’s investment in Liberty gas storage.

Vectren Ohio new rates approved on January 7, 2009, the public utilities commission of Ohio (PUCO) issued an order approving the stipulation reached in the Vectren ohio rate case. The order provided for a rate increase of nearly $14.8 million, 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 pipes, as well as certain service risers; and base rate recovery of an additional $2.9 million in conservation program spending. The rates were approved and implemented on February 22, 2009.

The order also adjusted the rate design used to collect the agreed-upon revenue from Vectren Ohio’s customers. The order allows for the phased movement toward a straight fixed variable (SFV) rate design which places substantially all of the fixed cost recovery in the customer service charge. A SFV design mitigates most weather risk as well as the effects of declining usage, similar to the company’s lost margin recovery mechanism, which expired when this new rate design went into effect on February 22, 2009.

After year one, nearly 90% of the combined residential and commercial base rate margins will be recovered through the customer service charge. The Office of Consumer Counsel (OCC) filed a request for rehearing on the rate design finding by the PUCO. The rehearing request mirrors similar requests filed by the OCC in each case where the PUCO has approved similar rate designs, and to date all such requests have been denied.

With this rate order the company has in place for its Ohio gas territory rates that allow for the phased implementation of a SFV rate design that mitigates both weather risk and lost margin; tracking of bad debt and% of income payment plan (PIPP) expenses; base rate recovery of pipeline integrity management expense; timely recovery of costs associated with the accelerated replacement of bare steel and cast iron pipes, as well as certain service risers; and expanded conservation programs now totaling up to $5 million in annual expenditures.

Long-Term Financing Transactions

The company’s A-/Baa1 investment grade credit ratings have allowed it to access the capital markets as needed during this period of credit market volatility. Over the last twelve months, the company has restored its short-term borrowing capacity with the completion of several long-term financing transactions including the issuance of long-term debt in both 2008 and 2009 and the settlement of an equity forward contract in 2008. The liquidity provided by these transactions, when coupled with existing cash and

expected internally generated funds, is expected to be sufficient over the near term to fund anticipated capital expenditures, investments, and debt security redemptions.

Long-term debt transactions completed in 2009 include a $150 million issuance by Vectren Capital Corp., which is the Nonutility Group financing arm, with terms of five, seven and ten years and annual interest rates of 6.37%, 6.92% and 7.30%, respectively and a $100 million issuance by Vectren Utility Holdings, Inc., which finances utility operations, with an eleven year term and an interest rate of 6.28%. Vectren South also recently remarketed $41.3 million of long-term debt.

Utility Group Discussion

In 2009, the utility group’s earnings were $56.2 million compared to $58 million in 2008, a slight decrease of $1.8 million. The decrease resulted primarily from lower customer usage and lower wholesale power sales, both of which have been impacted by the recession. Increased revenues associated with regulatory initiatives and lower interest costs in 2009 partially offset these declines.

Gas Utility Margin:

For the quarter ended March 31, 2009, gas utility margins were $172.8 million, an increase of $1.2 million over the prior year.

Margin from Wholesale Activities:

For the quarter ended March 31, 2009, wholesale margins were $5.7 million, representing a decrease of ($2.4) million, compared to 2008.

During 2009, margin from off-system sales retained by the company decreased ($4.5) million compared to 2008. The company experienced lower wholesale power marketing margins due primarily to lower wholesale prices, coupled with increasing coal costs. The base rate case effective August 17, 2007, requires that wholesale margin from off-system sales earned above or below $10.5 million be shared equally with customers as measured on a fiscal year ending in August, and results reflect the impact of that sharing.

Beginning in June 2008, the company began earning a return on electric transmission projects constructed by the company in its service territory that benefit reliability throughout the region. Margin associated with these projects totaled $2.1 million in 2009.

Other operating for the three months ended March 31, 2009, other operating expenses were $79.3 million, which represents an increase of $5.3 million, compared to 2008. The increase in costs relates to expenses recovered through margin.

Depreciation & Amortization

Depreciation expense was $43.9 million for the quarter, an increase of $3.2 million compared to 2008. Plant additions include the approximate $100 million SO2 scrubber placed into service January 1, 2009 for which depreciation totaling $1.1 million is directly recovered in electric utility margin.

Taxes Other Than Income Taxes

Taxes other than income taxes were $22.8 million for the quarter, a decrease of ($3.4) million compared to the prior year quarter. The decrease is attributable to lower utility receipts, excise, and usage taxes caused principally by lower gas prices and is tracked in revenues.

Other Income-Net

Other-net reflects income of $1.5 million for the quarter, a decrease of ($0.5) million compared to the prior year quarter. The decrease is primarily attributable to lower capitalization of funds used during construction as a result of lower borrowing costs.