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Rockport plant might not be dead, after all

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A controversial power plant planned for southern Indiana has quickly and quietly moved forward after developers said they no longer planned to pursue the project.

Indiana Gasification LLC, which would convert coal to natural gas in Rockport, received confirmation Jan. 15 that the Indiana Finance Authority “remains willing” to set up a contract to buy gas from the plant, according to letters exchanged between the company and government agency.

Indiana Gasification must jump through more legal hoops before it can go forward, however.

The contract is both critical to the project’s moving ahead and at the center of a years-long battle.

The state, under the 30-year agreement, would buy gas the plant produces and resell it on the open market. Utility customers would absorb profits and losses through their monthly bills.

Supporters say the project and contract would be an economic boon for southern Indiana and reduce volatile gas rates. Opponents argue the technology, and its promise of supplying a stable source of natural gas, is now moot because fracking has opened new gas fields, and because consumers would shoulder all the financial risks of the plant.

The nod from Indiana’s financial office came three weeks after the Indiana Department of Environmental Management approved Indiana Gasification’s plans to extend its permits until June.

The entire effort to build the power plant was virtually dead until a Dec. 17 Indiana Supreme Court ruling revived development and the debate.

The ruling “opened the door” to building the plant, project manager Mark Lubbers told IBJ in an email. He declined a phone interview.

“Based on [the court ruling], we extended our air permit and property options in Rockport,” Lubbers wrote. “We have $27 million invested in the project and the public policy reasons to diversify the supply portfolio of natural gas have never been more compelling.”

Opponents are challenging how quickly the state is working through the legal steps.

“I think the thing that particularly offended us was the lack of opportunity for public comment,” said Jodi Perras, who leads the Sierra Club environmental lobby’s Beyond Coal campaign in Indiana.

Sierra Club, along with another environmental group, Valley Watch, says it did not receive the obligatory 30 days to comment publicly on the permit extensions. The groups are seeking an administrative law judge to intervene on the environmental permits.

Dan Goldblatt, a spokesman for the Indiana Department of Environmental Management, said regulators are not required to offer 30 days to comment on extensions of existing permits, only for new or amended ones.

Meanwhile, Indiana Gasification and the Indiana Finance Authority need to figure out their legal obligations before finalizing a contract.

The finance authority’s Jan. 15 letter says the contract needs to go through the Indiana Utility Regulatory Commission for approval because of a state law created last year—the one Indiana Gasification developers previously said killed the project.

The IURC had approved the contract when legislators began discussing the arrangement during the 2013 General Assembly. Legislators approved a bill that would require the agreement to go back to regulators for another round of reviews to consider protections for ratepayers.

Lubbers believes the reviews aren’t necessary. The December Supreme Court ruling makes it unnecessary to undergo reviews again.

Nothing was filed with the regulatory commission as of IBJ deadline, according to an agency spokeswoman.

Evansville-based gas utility Vectren Corp., one of the biggest opponents of the Rockport plant, is waiting until developers file with the IURC before the company steps in, said Mike Roeder, Vectren vice president of government affairs.

Two major obstacles still need to be overcome before construction would begin on the plant, Lubbers said.

Developers need to make sure costs would be within the $2.7 billion estimate from before the “two-year judicial detour sponsored by plant opponents,” he wrote.

Also, Gov. Mike Pence needs to publicly support the project.

Pence has remained quiet. His predecessor, Gov. Mitch Daniels, whom Lubbers served as an adviser, was a major supporter of the Rockport plant.

“State law requires that the contract go back to IURC for approval,” Pence Press Secretary Kara Brooks said in a prepared statement. “IURC is an independent body. Gov. Pence respects its legal role in this process and any comment on the project would be premature.”•

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  • Public Policy?
    What type of 'public policy' concerns justify the Indiana taxpayers guaranteeing $billions in debt service and operating costs to insure a profit for private investors? With a natural gas surplus projected to be so extensive in this country that there are projects underway to liquify and ship this gas to world markets? Every other coal gasification facility that exists today in the US is either not operating or bankrupt. I have been closely involved with the design and financing for two of these facilities. When coal was more than 50% of our primary energy supply and natural gas was a premium priced fuel due to short supply there was a reason attempt the commercialization of coal gasification. Fracking technology has nailed shut the coffin on coal gasification.
  • Regulatory Review
    How can the IURC make a decision to subsidize this project of this size? These guys make $80K a year and are going to force Indiana ratepayers to foot the $2.7B bill. Someone check the forward curve for natural gas vs. this project.

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