INDIANAPOLIS— Opponents of the proposed $3 billion Rockport, Ind. coal-gasification plant are ramping up pressure on state lawmakers for action during this year’s legislative session.
A group that includes the Indiana Farm Bureau as well as 10 Indiana utilities, including Vectren Corp., is pushing for new ways to reimburse ratepayers if the plant’s prices are higher than open-market natural gas rates.
“Customers should not be forced to subsidize this plant through what will essentially be a tax on their monthly gas bills,” said John Browner, the president of Sycamore Gas Co.
Meanwhile, a group of advocacy organizations that includes several environmental groups, senior citizens’ lobbyists and local tax-watchers, are rallying their members to urge lawmakers to block the deal.
“Many older Hoosiers are already under enormous financial stress. They spend a disproportionate share of their income on health care and utility costs,” said June Lyle, state director for AARP. “They should not be further burdened by a deal that will require them to pay above-market rates for natural gas.”
The Indiana Finance Authority signed a 30-year contract to buy the Rockport plant’s synthetic natural gas at a fixed rate that the state says is about $6.60 per unit, and then resell it on the open market.
The deal requires the developer, New York-based Leucadia National Corp., to set aside $150 million to reimburse ratepayers if they’ve lost money — and, if they've lost much more than that at the end of the contract, the state could force larger payments or take over the plant.
Opponents say those reimbursements should happen at a more frequent ratio, though.
Senate Utility Committee Chairman Jim Merritt, R-Indianapolis, scheduled a hearing for today on a measure that would trigger the contract’s ratepayer protection mechanisms every three years, rather than at its 30-year conclusion.
That bill was filed by Sen. Doug Eckerty, R-Yorktown, and in the House, Rep. Suzanne Crouch, R-Evansville, is carrying an identical one.
Mark Lubbers, the Indiana lead for Leucadia, said those bills are naked attempts to kill the entire project.
“Anything that changes the contract kills the plant. Period. No one should be under any illusion; this is the intent,” Lubbers said.
However, those proposals are likely to change. Senate President Pro Tem David Long, R-Fort Wayne, said he would rather have the Indiana Utility Regulatory Commission give the project another review.
He and House Speaker Brian Bosma, R-Indianapolis, both said the nationwide shale gas boom that has left gas prices hovering around $3 per unit — and that utilities like Vectren Corp. say will stay around that price for the foreseeable future — change the economics of the project.
Lubbers said that perception is inaccurate. Natural gas prices were around $3 or $4 per unit in 2009 when lawmakers first approved the Rockport project and also when state utility regulators gave it the green light.
“I know of no reason for the issue to go back to the IURC,” he said. “The idea that low prices caused by shale gas is somehow a new issue is simply false. It was discussed constantly during contract negotiation, and it was the subject of hundreds of pages of testimony at the IURC.”
Some changes to the proposed measures, though, are all but guaranteed, key lawmakers said.
“The bill will not be in the same shape as it is now,” Merritt said on Tuesday. “We’re all concerned about this public policy, and we believe the legislature needs to understand exactly where we are in the industry now and how times have changed with the industry.”