Governor and Legislature and State Government and Legislation and Energy & Environment and Government & Economic Development and Government

UPDATE: Lawmakers with ties to $2.8B plant dilute measures

April 16, 2013

Two Indiana lawmakers have spent the legislative session watering down opposition to a $2.8 billion coal-gasification plant that would likely benefit their employers.

The news comes as lawmakers decide whether to place new limits on a deal that mandates the state buy synthetic natural gas from the developers of the Rockport coal-gas plant for the next 30 years, a proposition opponents say could leave Indiana ratepayers on the hook for $1.1 billion in rate hikes.

State Rep. Mat Ubelhor, R-Bloomfield, stripped a measure last week that Rockport developers say would have killed the project. And two months ago, Senate Utilities Chairman Jim Merritt, R-Indianapolis, watered down a measure sought by Rockport opponents designed to increase how often Indiana ratepayers were reimbursed for any rate hikes.

The Evansville Courier & Press reports that Peabody Energy, where Ubelhor works as a mine manager, could easily benefit from a $17 million rail spur built by the Indiana Rail Road Co. to haul coal. Merritt is a vice president of corporate affairs for Indiana Rail.

There's no guarantee the 3.8 million tons of coal Rockport developers expect to purchase would come from any Indiana mines, like the Peabody's, but lawmakers approved $140 million in tax credits designed to ensure the coal is purchased in-state. Nor is there any guarantee that Peabody would rely on Indiana Rail to haul the coal.

But opponents of the Rockport plant have howled about the lawmakers' connections.

"When you have a bill dealing with a highly controversial, very expensive Indiana coal plant, and it is weakened on two different occasions ... I can say that there is a questionable appearance in the eyes of the public about how the whole process went down," Kerwin Olson, executive director of Citizens Action Coalition, told the Courier & Press.

Ubelhor denied and Merritt both denied any conflict of interest Monday.

"I'm a coal miner and proud of what I do," he told the Courier & Press. He also said he understands the criticism, will not answer more questions until after lawmakers decide the plant's fate.

Merritt said he has worked hard to find a measure that supports the public.

"The bottom line is," Merritt told The Indianapolis Star, "we put forward the public's interest."

There are no hard and fast rules in the General Assembly for when lawmakers must recuse themselves from a conflict of interest, nor is it against the law for them to support legislation that could benefit their employers.

Lawmakers have increasingly questioned the state's contract with the developers, which would mandate the state buy synthetic natural gas produced at the plant over the next 30 years. Opponents, including representatives regional utility and potential competitor Vectren Corp., have said that deal could cause ratepayers to eat as much as $1.1 billion in additional costs in increased utility rates.

Rockport supporters point to $150 million placed in escrow to buffer against rate hikes, but it would not kick in until the end of the 30-year contract. Sen. Doug Eckerty, R-Yorktown, introduced a measure that would have mandated the Rockport developers reimburse ratepayers for any losses every three years.

That proposal was diluted in Merritt's commitee, shortly after Merritt met with Nat Noland, the head of the Indiana Coal Council, and a supporter of the Rockport project, according to The Star. The paper reports Noland said he did not discuss any potential benefits for Merritt's employer.

Merritt told the Star his work on the measure followed meetings with representatives on both sides of the issue, not just Noland. He also said he saw no conflict with his day job, working for Indiana Rail.

Merritt also told the Courier and Press the new rail spur is far from a guarantee that his company would carry the coal from Peabody to the Rockport plant. Any coal carried from Peabody's Bear Run mine would have to be offloaded onto lines controlled by separate rail companies to reach Rockport, which could prove costly.

"That's compounding the problem - the distance. There's available coal near Rockport, and we couldn't just take it from A to B. It would be on two other railroads," he told the Courier & Press.

Top lawmakers, and Gov. Mike Pence, appear unified behind an approach that would leave the legal question to the Indiana Supreme Court, and then send it back to the Indiana Utility Regulatory Commission for a review if the court maintains the Rockport contract is no longer valid.

House Speaker Brian Bosma, R-Indianapolis, said he is confident that approach will win final approval.

"The governor, Senate leadership and our team — we're on the same page on this," Bosma told the Courier & Press. "We'll find a vehicle."

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