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Sunday, September 30, 2012

Ind. Gov't. - "Hoosiers may pay $1.1B over 8 years to subsidize coal-gas plant"

Adding to the very long list of ILB entries about the controversial Rockville coal gasification plant, the Indianapolis Star today has a front-page story by Tony Cook. The new angle of this story are new estimates by its leading opponent, Vectren, of how much the plant would/will increase ratepayers' bills. The numbers appear at the end of the online version of the story:

My question - is there anything the next Governor of the General Assembly could do, if they wanted to, to stop or alter this project, or are the Indiana ratepayers already locked in? From the story:
Leucadia National Corp.'s planned $2.8 billion coal gasification plant at Rockport has received several important approvals but is waiting on several others.
  • Completed: Leucadia subsidiary Indiana Gasification signed a 30-year contract to sell synthetic natural gas to the Indiana Finance Authority, locking in an important source of guaranteed revenue. The Indiana Utility Regulatory Commission approved the contract in November 2011. More recently, the company received approval for final air and water permits from the Indiana Department of Environmental Management.

  • Pending: The company has applied for a federal loan guarantee from the U.S. Department of Energy that will be critical to moving the project forward. An environmental impact study is under way and was recently amended to include a proposed 440-mile carbon dioxide pipeline. A coalition of utility companies, environmental groups and consumer activists also is appealing the Indiana regulatory commission's approval of Indiana Gasification's sales contract with the state.
My other question is how much is Indiana Gasification's "guarantee" for 30 years in the future really worth in the event the project has failed to produce promised savings? How much may the plant really be worth in that case? From the story:
Mark Lubbers, Indiana project director for Indiana Gasification and a former chief adviser to Daniels, said in an email to The Star that concerns about the low cost of shale gas are overblown. * * *

Lubbers said the debate about Vectren's "absurd" estimates ignores other factors, such as Indiana Gasification's commitment to cover up to $150 million of any losses. The company also "guarantees" $100 million in savings by the end of the 30 years, Lubbers said.

If those savings aren't realized, Indiana Gasification can cover the shortfall in cash or extend its contract with the state at a lower price. Absent those two things, the state could force a sale of the plant to make up the difference.

Posted by Marcia Oddi on September 30, 2012 10:00 AM
Posted to Indiana Government