« Ind. Courts - Appeals Court Judge Elaine Brown featured | Main | Ind. Decisions - More on: Right to work law decisions in ND Ind. and 7th Circuit »

Monday, January 21, 2013

Ind. Law - More on "Indiana legislator's bill could upset coal-gas plant plan at Rockport"

Updating this ILB entry from Jan. 15th, Eric Bradner of the Evansville Courier & Press had this long story this weekend, headed "Official with Rockport coal-to-gas plant says contract changes would kill the deal: Lawmakers questioning wisdom of 30-year deal to buy plant's gas at fixed price." Some quotes:

INDIANAPOLIS — State lawmakers’ attempts to rework the deal Indiana struck with developers of the proposed Rockport coal-to-gas plant would kill the nearly $3 billion project, one of its top officials said Friday.

As a shale gas boom drives down natural gas prices, two Republican lawmakers say they question the wisdom of the Indiana Finance Authority’s 30-year contract to buy and then resell the plant’s synthetic gas at a fixed rate.

Both have filed bills that would drastically alter its terms. The bills would trigger the ratepayer protection mechanisms included in the contract every three years, rather than waiting until the end of the deal.

That would stop the plant in its tracks, said Mark Lubbers, a former Gov. Mitch Daniels aide who is helming the Rockport effort for Leucadia National Corp.

“Any ‘true-up’ of savings before the end of the contract term makes the project unfinanceable,” he said.

The House and Senate utility committees could consider the two measures at a rare joint meeting, the chairmen of those committees told the Courier & Press on Friday. * * *

Lubbers meanwhile doubled down on what he said is a rock-solid deal for Hoosier gas customers over the long term, saying Indiana needs a second plant — this one in Lake County — that would convert petroleum coke, rather than coal.

“Two plants would provide better consumer protection and keep even more Hoosier energy spending in Indiana,” Lubbers said. * * *

That deal, signed by Gov. Mitch Daniels, set a rate of between $6 and $7 per MMBtu for the life of the contract. It would have utilities tie 17 percent of ratepayers’ bills to that Rockport price, rather than their open market rate.

It appeared to be a steal when natural gas prices topped $13 per unit as recently as 2008. Since then, though, a nationwide shale gas boom has sent prices plummeting to near $3 per unit now.

And now that Daniels is gone, some lawmakers are looking for ways out of the deal.

“The market has changed, conditions have changed, and so we need to take a fresh look at this situation and there needs to be some changes that will protect the ratepayer,” said Rep. Suzanne Crouch, R-Evansville.

Posted by Marcia Oddi on January 21, 2013 09:56 AM
Posted to Indiana Law