IBJNews

Controversial utility bill heads to governor

Back to TopCommentsE-mailPrintBookmark and Share

A bill that opponents described as a “Christmas tree wish list” for electric utilities is on its way to Indiana Gov. Mitch Daniels for signing.

Senate Bill 251 allows utilities to quickly pass to ratepayers the cost of so-called clean-energy projects, including nuclear power plants and solar and wind power, during the construction phase rather than after the facility is operating. The bill passed the Indiana House 62-34 and the Senate 31-19.

Such a move shifts risks of design, construction and operating away from utility shareholders and on to utility ratepayers “while monopoly utility companies walk away with all the profit,” said Kerwin Olson, program director of utility watchdog group Citizens Action Coalition.

The Indiana Energy Association, which represents electric utilities, has noted that utilities face additional federal pollution-control regulations and need the flexibility to quickly make expensive capital investments to comply with them.

Currently, only so-called clean-coal projects, such as Duke Energy Corp.’s coal-gasification plant in Edwardsport, can tap ratepayers during construction.

The Duke plant has experienced numerous cost-overruns and is now expected to cost at least $3 billion, up from an initial estimate of $1.6 billion. The plant will convert coal to a cleaner-burning gaseous state.

The voluminous bill also includes a crucial provision for Leucadia Nation Corp.’s proposed Indiana Gasification plant in Rockport, by giving private corporations eminent domain power to take land for pipeline right-of-way.

Officials of New York City-based Leucadia have said the $2.7 billion project to make natural gas from coal likely would not proceed without such authority. That project, supported by Gov. Mitch Daniels, also depends on finalizing a deal with the Indiana Finance Authority, which would spend an estimated $6.9 billion over 30 years to buy synthetic natural gas produced at the plant.

Leucadia and the authority estimate the project could save Indiana gas customers more than $100 million by providing a hedge against swings in natural gas prices.

Opponents say the plan is risky because ratepayers and not Leucadia will bear the cost if natural gas prices don’t rise as high as expected. Leucadia will set aside $150 million to offset potential losses for ratepayers.

The Senate bill also includes a so-called renewable energy standard of producing 10 percent of the state’s electricity from renewable energy sources by 2025.
But compliance is voluntary, rather than mandatory as is the case in most states with such a provision. The Hoosier Environmental Coalition this month said a voluntary standard will hurt the state’s chances to attract renewable power investment because lenders tend to invest in states with mandatory standards.

Bill co-author Sen. Beverly Gard, R-Greenfield, has countered that Indiana has already attracted renewable power investment even without an RES standard.  
For example, more than 1,000 megawatts of power are generated from wind farms, mostly in northern Indiana.


 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
ADVERTISEMENT