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Indiana Supreme Court Rules In Favor Of Rockport Plant

It's a step in the right direction for the coal gasification plant proposed for Rockport, Indiana. Tuesday the Indiana Supreme Court ruled in favor of the developer, Indiana Gasification.
It's a step in the right direction for the coal gasification plant proposed for Rockport, Indiana. Tuesday the Indiana Supreme Court ruled in favor of the developer, Indiana Gasification.

In a unanimous 5-0 decision, the state's high court ruled a contract developers signed with the Indiana Finance Authority is valid. Opponents of the project had argued the contract should be invalidated because it was altered, but the court agreed it was not significantly changed.

Some say this is a "win" for Indiana Gasification, suggesting the developer does not need to seek further regulatory review from the Indiana Utility Regulatory Commission. Opponents like Vectren disagree, citing recently added consumer protection clauses in Indiana statute.

"Because the court effectively said the contract has been changed, you know, our view is it needs to go back to the commission and that the new law will be part of what is reviewed by the commission," said Mike Roeder, Vectren's vice president of government affairs.

Roeder says it appears it's now up to the developer and Indiana Finance Authority to decide what happens next. The City of Rockport is not commenting on the high court's ruling at this time.

Vectren issued the following statement regarding the ruling:

· Today, the Indiana Supreme Court ruled on a narrow definitional issue concerning what class of customers would receive the SNG (substitute natural gas) charges for 30 years. In its decision, the court did not reweigh the contract or IURC (Indiana Utility Regulatory Commission) evidence and remained silent on the question of public policy for Hoosiers.

· The fact remains that this project was a good idea at one time when natural gas prices were volatile prior to the American shale gas revolution. The 2013 Indiana General Assembly recognized the world has changed and amended the SNG law earlier this year to protect consumers. A recent natural gas market study by the State Utility Forecasting Group presented to the IURC shows this gasification arrangement is a loser in virtually all scenarios into the future.

· Today’s court decision will require another review by the IURC. SEA 494, which was signed into law in spring 2013, now applies and, if pursued by the developer, will govern consumer protection of any new contract. It is important the administration and legislators remain focused on the consumer with any future action.

· Based on market-established natural gas prices, the project is estimated to cost the State of Indiana $1.1 billion in the plant’s first eight years of operation. As proposed, this loss will be passed on by the State and will be borne by Hoosier natural gas customers. The Indiana Gasification proposal will not reconcile losses and benefits from the project until the end of the 30-year term, with Hoosier gas customers paying 100 percent of any losses during the term.

· In a public hearing held before the Indiana Senate Utilities Committee in early 2013, faculty from the Indiana University School of Public and Environmental Affairs and the Indiana Business Research Center at the Kelley School of Business testified that if the Rockport substitute natural gas (SNG) project moves forward as proposed, it will negatively impact the state’s gross domestic product (GDP) by up to $1.4 billion and, assuming residential and commercial consumers bear the burden of SNG losses, could cost Indiana up to 1,800 jobs per year from 2017 through 2025.

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