INDIANAPOLIS— A tough set of oversight measures for the proposed Rockport coal-to-gas plant has won Indiana lawmakers’ approval despite developers’ warnings that the new standards would surely scuttle their $2.8 billion project.
The legislation’s passage in the House and Senate in the wee Saturday morning hours could ease new Republican Gov. Mike Pence’s path out of the 30-year contract inked two years ago by his predecessor, former Gov. Mitch Daniels.
Though the state’s deal to buy and then resell the Rockport plant’s synthetic natural gas is the subject of a legal battle currently pending before the Indiana Supreme Court, developers said even a victory there could not save the project.
“We would have never spent a dime on this plant if the law passed tonight had been in place,” said Mark Lubbers, the project manager for Indiana Gasification LLC, which is being financed by New York-based Leucadia National Corp.
The votes marked the conclusion of a hard-fought battle on what House Speaker Brian Bosma, R-Indianapolis, identified as the most complicated issue of the General Assembly’s 2013 legislative session.
It pitted the developers and their allies in the coal and labor lobbies against an unusual coalition of opponents that included business, consumer and environmental groups that was led by Vectren Corp.
Lubbers said the resulting bill would force the plant through new hurdles that would delay construction by at least two years, and it would put in place the kind of constant regulatory review that developers had sought to avoid.
As a result, he said, the project cannot go forward.
“The legislature has killed 1,500 high-paying jobs and $1 billion of guaranteed consumer savings,” Lubbers said.
“Indiana Gasification invested $20 million in engineering, land acquisition, permitting and regulatory approval in good faith and in reliance on the rule of law. Now, after four years and on the verge of construction, the legislature has changed the law.”
The debate is over the wisdom of the Indiana Finance Authority’s 30-year contract to purchase the Rockport plant’s product at a pre-negotiated rate and then resell it on the open market, with the profits or losses passed on to Hoosier gas customers.
The Sierra Club, which had its members make a total of 6,000 calls and emails to Indiana lawmakers about the issue, dubbed the deal the “Leucadia tax.” Lawmakers who opposed the contract cited a shale gas boom.
House and Senate Republican leaders drafted the legislation to first give developers a chance to win the ongoing court battle – but they’d have to win completely, with the state’s high court approving the contract in its entirety.
Such a result is unlikely, since the Indiana Court of Appeals last year struck one 37-word section. Even if that court’s decision is upheld, it would trigger the new round of regulatory reviews under standards that were not in place when the deal was struck.
Those new standards include requiring the Indiana Utility Regulatory Commission to only allow the deal to move forward if ratepayers would save money during the life of the contract, rather than just by its end, and to require the commission to approve any changes to it.
The measure, contained in Senate Bill 494 and carried by Sen. Doug Eckerty, R-Yorktown, and Rep. Suzanne Crouch, R-Evansville, won the Senate’s approval on a 43-7 vote and cleared the House, 70-28, on its last vote before adjourning for the year.
“We have an opportunity today – a very small window of opportunity – to take another look at a deal we started making six years ago, and it’s a deal that will affect 2 million ratepayers in each and every one of our districts,” Crouch said.
Rep. Matt Pierce, D-Bloomington, said he “messed up” years ago when he voted in favor of the Rockport project and felt the “need to correct my mistake.”
“This is the only opportunity we have and likely will have to give our ratepayers a fighting chance,” Pierce said.
The project had a host of allies from Southwestern Indiana, including Democratic Rep. Kreg Battles of Vincennes.
He said United States energy policy has been “pathetic” and “reactive,” and that the coal-gasification project would tee the state up for lower future prices.
“How proactive are we going to be? Are we going to be big thinkers in this body that looks for solutions not today but in the future, or are we going to live in the now, ignoring the possibilities that can arise?” Battles said.
Rep. Matt Ubelhor, the Bloomfield Republican who is a coal mine manager for Peabody Energy, said the result of lawmakers’ actions would be to “throw away one of the best opportunities to create 2,000 jobs that we’ve ever had.”
“This bill is designed to kill this plant, and that’s exactly what it’ll do,” Ubelhor said. “These jobs are out the gate. So what are we going to do then?”