INDIANAPOLIS - Indiana lawmakers and Gov. Mitch Daniels are making another attempt to resurrect a proposed coal-to-gas plant that potentially would bring a $2 billion investment to Spencer County.
A state Senate committee Thursday approved a bill that would try to remove an obstacle to financing the plant by having the state act as a go-between for the plant and utility companies.
Proponents of Senate Bill 423 said it would pave the way for the plant's developer, Indiana Gasification LLC, to line up federal loan guarantees that would allow it to obtain financing and start construction.
Environmental groups that long have opposed the plant also opposed the bill Thursday.
Indiana Gasification wants to build a $2 billion plant that, using a process called coal gasification, would convert high-sulfur coal into a "pipeline-quality" natural gas substitute that in turn would be sold to utility companies to provide as gas to their customers.
Announced in 2006, the project has been delayed repeatedly because the developer and utility companies - Northern Indiana Public Service Co. and Evansville-based Vectren Corp. - never could reach an accord on 30-year contracts for purchasing the gas. The proposal was withdrawn from the Indiana Utility Regulatory Commission in late November.
Rather than Indiana Gasification selling to utilities directly, Senate Bill 423 would allow a state agency, the Indiana Finance Authority, to purchase gas from the plant and immediately resell it to utilities at the same price.
Bill author Sen. Brandt Hershman said having the state act as a "pass-through" is necessary to avoid the snags that derailed the earlier deal.
"The purpose is largely aimed at financial-accounting implications over the signing of a long-term contract that have arisen, particularly in light of financial market-issues we have seen in recent months," Hershman, R-Monticello, said. "The underlying issue here is that the 30-year contract would not go on the utilities' books as a liability, because the contract would be signed with the Indiana Finance Authority."
Gov. Mitch Daniels has been a vocal advocate of the project from the start, and said Thursday that he refused to give up on it.
"I have been involved in this up to my eyeballs for three years now or something like that. It's a very important, promising project; and this is about our third approach to it. And I hope this is the one that makes it work," Daniels said. "I've been personally involved in this for a long, long time, both with the investors and the regulators and with the utilities. I've spoken about this project very openly."
The bill passed Thursday in the Senate Committee on Utilities and Technology by a 10-0 vote and now moves to the full Senate.
Hershman told the committee that neither state government nor Indiana taxpayers would be on the hook for the gas purchases, since the state agency would buy the gas and immediately re-sell it at the same price. The rate impact on utility ratepayers would ultimately be decided by the Indiana Utility Regulatory Commission.
The developer's attorney, Larry J. Wallace, told senators that taxpayers are not at risk if the project isn't built. "In this case, we (the developer) take the risk, we take the construction risk, and if we can't deliver the gas we don't get paid for the gas," Wallace said.
Opposing the bill Thursday was the Citizens Action Coalition of Indiana.
"If this were a financially viable project, they wouldn't need federal loan guarantees," coalition program director Kerwin Olson told senators. "If this were a good deal for energy, where are the utility companies? Why are they not testifying in support of this bill? Why did they not have these contracts? Why did this contract not get signed? Because this was a bad business deal."
John Blair, president of Evansville-based Valley Watch Inc., has been highly critical of the proposal and two previous bills the Legislature has passed to speed the project along.
"And now there's piece of legislation, Senate Bill 423, that even makes it worse and causes the Indiana Finance Authority to buy that from an Indiana gasifier," Blair said later.
The Spencer County Board of Commissioners recently passed a resolution endorsing the gasification project because of the construction, mining and plant-operation jobs it would bring to the Rockport area. That resolution was handed to the Senate committee Thursday.
"In the midst of this international financial crisis, we are extremely excited about the opportunity to bring to this state an investment of over $2 billion which would result in a peak of 1,000 trades jobs. That's extremely important right now in a shrinking economy," Thomas Utter, executive director of the Lincolnland Economic Development Corp., told the committee before they passed the bill. The full Senate could make changes to the bill.