Lindsay Kalter
GHG Monitor
02/22/13
The Indiana Senate’s Utility Committee voted this week to leave the fate of a proposed coal gasification plant to the state Supreme Court. The $2.8 billion Rockford project, under development by Indiana Gasification, a subsidiary of Leucadia National Corp., plans to gasify 3.5 million tons of Illinois Basin coal annually, converting the feedstock into substitute natural gas that would be sold to the state. The committee held a hearing last week on Senate Bill 510, which would have forced the developer to reimburse every three years any losses the state might incur as a result its 30-year purchasing agreement—legislation that, if passed, would render the project financially infeasible, according to Indiana Gasification. But instead of voting on the original bill, the committee’s chairman, Republican Sen. Jim Merritt, put forth an amended version during the Feb. 21 vote that would remove those provisions and allow the Indiana Supreme Court to determine the agreement’s validity.
The modified legislation, which passed the Utility Committee 7-2, mandates that, if the Supreme Court deems Indiana Gasification and the Indiana Finance Authority’s 30-year purchasing agreement unconstitutional, the issue will be sent back to the Indiana Utility Regulatory Commission for further consideration. The amendment also orders the state utility regulators to conduct a study on the projected volatility of Indiana’s natural gas market by the end of the year.
Project’s Future Still Bleak, Developers Say
Leucadia’s plans for the gasification project hinge on a 30-year contract between Indiana Finance Authority and Indiana Gasification, in which the IFA agreed to buy gas from the plant and sell it on the open market. At the Feb. 14 hearing, Leucadia’s Indiana lead, Mark Lubbers, said that attaching the price of natural gas to a different commodity would provide cost security for ratepayers. But proponents of the original bill who attended the previous hearing said the agreement could be costly for consumers and limiting for the state’s natural gas providers, and called into question the lengthy and unchecked nature of the contract.
Plans for the Rockford plant—which would also pipe CO2 to the Gulf Coast for enhanced oil recovery operations through a contract with Denbury Resources—have been fraught with contention. The Indiana Court of Appeals declined a request last week to conduct a more detailed review of the plant, requested by a coalition of natural gas companies and environmental groups who wanted the court to review the finance agreement. And although the amended Senate Bill 510 stripped some of the more stringent demands of its previous version, those close to the project say it will cause enough complications to have the same project-killing effect. The bill now moves to the Senate floor, where it must pass its second and third readings before Feb. 26.
