Regulators approve deal on $2.65B gasification plant

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A $2.65 billion southern Indiana coal-gasification plant took a major step forward Tuesday when state regulators approved a separate state agency's 30-year contract to buy synthetic natural gas from the plant.

The Indiana Utility Regulatory Commission endorsed the plan that Gov. Mitch Daniels has promoted as locking in low rates for Indiana's natural gas users, increasing the use of Indiana coal and creating about 200 jobs.

"This decision will make possible hundreds of new jobs while ensuring a long-term supply of reasonably priced natural gas which we will buy from Hoosiers, not foreign governments or someone elsewhere," Daniels said in a prepared statement. "Best of all, it's an important boost to an economically struggling part of the state."

The plant will be built and operated at the Ohio River city of Rockport, about 30 miles east of Evansville, by Indiana Gasification LLC, a subsidiary of New York-based investment firm Leucadia Corp., whose top Indiana executive is former Daniels senior advisor Mark Lubbers. The company has said it wants to have the plant operating by 2015.

Under the deal, the Indiana Finance Authority will spend an estimated $6.9 billion over three decades to buy synthetic gas from Indiana Gasification LLC. The agency then will sell the gas on the open market.

Indiana's 1.5 million natural gas customers will save money if the synthetic gas costs less than market rates, but will pay higher gas bills if the market rates are lower.

Consumer activists have said the deal could lock Indiana customers into higher gas bills if commodity prices for coal rise while natural gas falls.

Kerwin Olsen, executive director of the private consumer advocacy group Citizens Action Coalition of Indiana, criticized the deal as "crony capitalism." He said forecasts show Indiana gas customers will pay twice as much for fuel under the deal as they would otherwise.

"We're not surprised. We fully expected the commission to rubber-stamp the Daniels agenda," Olsen said.

The project still needs environmental permits and zoning approval. It also is seeking a federal construction loan guarantee.


  • free enterprise
    The mantra of socialize risk, privitize profit appears to be the way Mitch and the republican chipmunks sing.
  • Indiana's Enron
    Coal To Gas Plant - Indiana's Enron

    Small Ratepayers and Taxpayers take all the risk with projected inflated fuel prices. All upside profits go to private company risk free.

    Fact Sheet;

  • Gas Issue
    Joe, I, too, am concerned about the deal and its connections. At the same time, I'm always skeptical of many of the positions taken by Citizens Action. They are hardly bipartisan. There's always two sides to a story, so I plan to do some digging into this before I decide which side is right.

    For now, I'm skeptical.
  • Republican Subsidy
    Another Republican providing a taxpayer subsidy to wealthy private investors! Why would anyone guarantee purchasing synthetic gas from coal a prices exceeding the likely cost of natural gas over the next 30 years? We are on leading edge of a natural gas surplus in this country produced by fracking of shale deposits and our 'let the private sector do it' Republican govenor wants to use taxpayer funds to subsidize a facility whose private secter owners will not provide a dime of funding. Another Edwardsport-style theft of taxpayers money by wealthy Republicans.
  • Same Deal Hits A Snag in Illinois
    Nicor sues over South Side synthetic-gas plant

    Naperville-based Nicor filed suit Nov. 14 against the developers of the project and the Illinois Power Agency, alleging, among other things, that it would be required to purchase more of the expensive gas from the plant than is permitted by the state law authorizing the project.

    The lawsuit is the latest blow to New York-based developer Leucadia National Corp., which earlier this year won a hard-fought victory when the governor signed a bill that forces the state's largest gas utilities either to sign 30-year contracts to buy the output from the $3-billion coal-to-gas plant or face three rate reviews over the next six years by state utility regulators.

  • Good Boy!
    Good Boy Mitch, now you just have a few more corporations to pay bakc and you will be all squared away. Tax payers who?

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