Eric Bradner on Rockport Gasification Legislation

Eric Bradner, writing for the Evansville Courier Press has an outstanding article describing the current state of legislation concerning the Rockport Gasification plant.

Rockport is a project that will convert coal into synthetic gas. The plant is an expensive, $2.8 billion project. Its financer, Leucadia, is trying to hedge its bets and get help from Indiana to make sure the financing is secure.

After Indiana Gasification’s negotiations with state utilities fell through, former Gov. Mitch Daniels directed his administration’s Indiana Finance Authority to negotiate a deal to help the company secure financing – a controversial move itself, since the company’s Indiana project manager is Mark Lubbers, a former aide and close friend of Daniels.

The 30-year contract would have Indiana serve as the guaranteed buyer of 80 percent of the Rockport plant’s product, at a pre-negotiated price.

The state would buy that synthetic natural gas and then resell it on the open market. If those market rates are lower than the price the state negotiated, Hoosier gas customers would pay for the difference – and opponents, including Vectren Corp., estimate that those costs could be sky-high in the deal’s early years.

The contract has been tied up in legal battles for months. Late last year, the Indiana Court of Appeals voided state regulators’ approval of the deal, ruling that a 37-word provision needed to be removed. Both sides have asked the Indiana Supreme Court to take up the case.

Opponents of the deal want legislation that beefs up ratepayer protections. Proponents of the deal have been working to weaken such legislation and preserve financial incentives for the project.

Bradner’s piece outlines potential conflicts of interests for legislators who are trying to preserve the Rockport deal. Featuring prominently is Rep. Matt Ubehlor, a legislator from Bloomfield who is a coal mine manager for Peabody Energy “which owns five of Southwestern Indiana’s biggest mining complexes – including Bear Run, the largest surface mine east of the Mississippi River.” Also featured is Senator Jim Merritt who is “the vice president of corporate affairs for the Indiana Rail Road Co., which spent $17 million to build a spur to Peabody’s Bear Run mine and negotiated an exclusive deal to haul its coal.”