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Wednesday, March 25, 2009

Ind. Law - More on: Governor signs first bill of 2009 session

Updating yesterday's ILB entry on the Governor's signing of SEA 423, Eric Bradner of the Evansville Courier & Press has this story today. A quote:

The plant will convert coal into synthetic gas, and under the bill signed Tuesday, the Indiana Finance Authority would act as a go-between for the plant and utilities.

The Finance Authority would buy the pipeline-quality substitute natural gas and then resell it to Indiana utilities.

That's a major step forward for Indiana Gasification LLC's bid to build the plant because it will help the developer qualify for nearly $2 billion in federal loan guarantees for construction.

Daniels said locking in a contract between the Finance Authority and the plant to be located near Rockport would save ratepayers billions of dollars over the 30-year deal by ensuring they're not harmed by up-and-down natural gas market prices.

Developer William Rosenberg said Tuesday that Indiana Gasification has applied for federal loan guarantees that will cover 80 percent of the funding for the $2.2 billion plant.

"There's no way you can have this project without a guaranteed market and a loan guarantee," Rosenberg said. "It's impossible in today's market."

He said Indiana Gasification will be in discussion with both the Finance Authority and the U.S. Department of Energy in the next two or three months, and hopes to have a contract soon for the gas and know if the federal loan application will be approved.

"It will be an active spring of negotiations with the state and federal government," Rosenberg said.

Indiana Gasification then would need the approval of the Indiana Utility Regulatory Commission as well as state environmental permits.

Rosenberg hopes construction on the plant will begin by the end of 2010, with gas production beginning by 2013.

Rick Callahan of the AP has this story. A quote:
Daniels said federal agencies forecast that over the long term it will be cheaper "perhaps by a very large margin" to produce synthetic natural gas from coal rather than buying actual natural gas because of market fluctuations.

But opponents of the bill contend that it could actually lead to higher bills for natural gas users.

Kerwin Olson, program director for the Citizens Action Coalition of Indiana, said that last year coal prices doubled even as natural gas prices were going down.

"Certainly the price of coal is going to affect the cost of this synthetic natural gas," he said. "As far as the ratepayer impact goes, it's unthinkable for us that the state would force ratepayers to enter into a 30-year contract with no review of the price whatsoever.

"The way we see it, that's an erosion of consumer and ratepayer protection."

Posted by Marcia Oddi on March 25, 2009 08:09 AM
Posted to Environment | Indiana Law