« Ind. Law - "Marion County Sheriff's office changing how it deals with sex offenders" [Updated] | Main | Ind. Courts - Judges and lawyers from several counties in NW Indiana honor Chief Judge Margret G. Robb »

Tuesday, October 02, 2012

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

Updating this ILB entry from September 30th, the Fort Wayne Journal Gazette's Tracy Warner, editorial page editor, writes today:

In an agreement that received little notice in northern Indiana, the state’s appointed finance authority signed a long-term deal with a private company that gets Indiana into the natural gas business, at a price that will cost both taxpayers and anyone who uses natural gas to heat their homes, water heaters or other appliances.

Just how big a price is uncertain, but a natural gas provider opposing the deal pegs it at more than $1 billion.

Leucadia National Corp. will use coal to make natural gas at a new plant in Rockport, on the Ohio River about 30 miles east of Evansville. As the Indianapolis Star reported, state government will pay $6.60 per 1 million BTUs of natural gas. When the state and the company first began talking, the state was getting a good price. But since then, natural gas has become much more plentiful – dropping the price to $3 per million.

That means if the plant opened tomorrow, the state government would buy natural gas for twice the price it would garner on the open market.

The state hopes to sell the gas for a profit. If prices go back up, it could turn into a great deal for Indiana. But if prices remain stable, Hoosier taxpayers will have to subsidize big losses. And that $6.60 price will rise with inflation.

It will take a long time for the state to get out of the deal. The finance authority, with Gov. Mitch Daniels’ blessing, signed a 30-year contract requiring the state to buy the natural gas.

Vectren, a natural gas company that opposes the arrangement, said Hoosiers will end up paying more than $1 billion to subsidize the plant and that the average bill of all natural gas customers in Indiana will rise $3.90 a month.

Mark Lubbers, the director of the project for a Leucadia subsidiary, called Vectren’s numbers “absurd.”

Lubbers, by the way, was a former chief adviser for Daniels.

Posted by Marcia Oddi on October 2, 2012 09:21 AM
Posted to Indiana Government