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Backers of 30-year gas-purchase deal to press on

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The Indiana Finance Authority and Indiana Gasification LLC said Tuesday that they plan to amend their 30-year contract in which the state agency is buying the company's synthetic natural gas to satisfy an appeals court ruling that reversed regulators' approval of the deal.

The Indiana Court of Appeals ruled the deal should not include certain industrial companies. Under the deal, the Finance Authority will sell the gas on the open market and Indiana utility customers would receive discounts or increases on their bills, depending on whether the agency makes a profit or a loos.

Finance Authority attorney Andrew Kienle said the agency hopes to get a new deal done by the end of the year. He said the agency expects an amended contract will satisfy the court's concerns.

However, the court's reversal of regulatory approval provided an opening for opponents of the deal who contend it will leave utility customers on the hook for costly synthetic gas at a time when natural gas prices have fallen on the open market. An amended deal would need fresh approval from the Indiana Utility Regulatory Commission, and opponents might have time to ask the Legislature to revisit the agreement.

"There should be no doubt that the Indiana Legislature now has the opportunity to reshape this project in such a way that is balanced and fair," said Mike Roeder, a vice president at gas utility Vectren, which contends the deal will cost Indiana residential customers and small businesses more than $1 billion during its first eight years. Roeder said the company was reviewing the ruling.

Gov. Mitch Daniels has championed the contract but had no comment on the court's ruling, his office said. Daniels leaves office in January

Mark Lubbers, a former aide to Daniels who's now Indiana project director for Indiana Gasification, said the ruling, while a temporary setback for the project, clarified some issues that should speed it up by a year.

Indiana Gasification needs to break ground on the $2.8 billion project by the end of 2013 under the terms of its state air pollution permit, Lubbers said, but he expects Vectren to continue to fight the plan both in the courts and in the Legislature.

The Finance Authority signed a 30-year contract with Indiana Gasification, a subsidiary of Leucadia National Corp., to purchase gas from the plant and then sell it on the open market. Profits would be split with Leucadia.

Lubbers said the plant about 30 miles east of Evansville will take four years to build and should start producing synthetic gas by the end of 2017.

The three-member appeals panel, in the ruling written by Justice Patricia Riley, appeared satisfied with Indiana Gasification's promise that the deal will deliver savings to utility customers. It found the contract inappropriately defined companies that transport natural gas for industrial users as retail customers when that wasn't legislators' intent in a 2009 law allowing the deal.

The appeals panel's chief justice, Margret Robb, concurred on most of the majority opinion but issued a dissent saying the court should have struck down only the portion of the contract dealing with the industrial transport companies and let the rest of the contract stand.

Kerwin Olson, executive director of the consumer advocacy group Citizens Action Coalition, agreed with Roeder that the General Assembly should reconsider the law that allowed the deal because it "throws Indiana consumers to the wolves."

"This law needs to go and here's hoping that the Legislature has the courage to do the right thing for their constituents and get this abomination of the law off the books in the upcoming session," Olson said.

Neither of the two major-party candidates running to succeed Daniels as governor, Republican Mike Pence and Democrat John Gregg, have expressed as much support for the project as Daniels has. During a debate last week, Pence said he would consider hearing from lawmakers if they wanted to discuss the project, and Gregg said he had advisers studying it.

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  • BANANA REPUBLIC
    So ratepayers are the lemmings? This is such a BANANA REPUBLIC. Highly corrupt to force a private companies losses down the throats of the small guy. The elitist industrial customers are not subject to it? It is because they know how bad of a crappy deal this is! Please tell us again WHO - LUBBERS - is connected to in his prior life?
  • Boondoggle
    Surely this is a mistake. I guess Mitch and his buddies forgot to grease the skids at the Appeals Court. Sorry Mitch.

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  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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