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Coal-Gas Plant Praised

Posted on: Tuesday, 20 March 2007, 00:00 CDT

By BRYAN CORBIN, Courier & Press Statehouse bureau (317) 631-7405 or corbinb@courierpress.com

A long list of lobbyists, industry leaders and legislators sang the praises of a proposed coal-gasification plant for Southwestern Indiana during a Senate committee hearing Thursday.

Among the positives they cited for the $1.7 billion plant that would turn coal into synthetic natural gas is that it would create more than 1,000 jobs and provide a buffer against Middle East natural gas supply disruptions.

So when the lone opponent at a state Senate committee hearing walked up to the microphone to challenge the prevailing opinion in the room, he tugged at his necktie.

"I feel like Rodney Dangerfield up here," said Paul Chase, lawyer and lobbyist for the Citizens Action Coalition of Indiana.

It wasn't that Chase got no respect from senators, who listened politely to his concerns about the fine print.

But after hearing hours of testimony in favor of the coal- gasification plant, the Senate committee voted unanimously for a bill that would extend tax credits to the project and allow utilities to recover costs from ratepayers.

Though the exact site hasn't been announced, the plant is to be located somewhere in Southwestern Indiana. The project developer, Indiana Gasification LLC, plans to use a process called methanation to squeeze pipeline-quality natural gas out of high-sulfur local coal.

The gas would be sold predominantly to three large utilities: Vectren Corp., NIPSCO and Citizens Gas, to help meet their residential and commercial gas demand, under 30-year agreements between the plant and the utilities.

"This is a really, really big deal for the future of Indiana," said Ed Roberts of the Indiana Manufacturers Association, one of several lobbyists who urged senators to pass the bill.

Job opportunities could include 1,000 construction workers to build the plant, another 125 to staff it, plus another 300 mining jobs to supply coal to the plant, according to figures from the governor's office.

At issue are the proposed 30-year contracts between Indiana Gasification and the three utilities that would lock in the purchase price the utilities would pay for the gas.

But the bill would require the Indiana Utility Regulatory Commission, or IURC, to allow the utilities to pass costs on to their customers to recover the additional costs they incur.

The bill's author, Rep. Russ Stilwell, said the legislation is necessary to attract investors to the plant. The bill would not allow future members of the regulatory commission to "claw back" and change the terms retroactively, said Stilwell, D-Boonville.

William Rosenberg of Indiana Gasification testified that even with the utilities' ability to recover their costs through rate increases, consumers still would save an estimated $4 billion to $5 billion in natural gas prices over the lifetime of the plant.

"The real protection (for ratepayers) is they're not buying this gas on the open market," Rosenberg said. "It will be an increase for ratepayers to reflect the higher inflation costs of paying the miners who are operating in Indiana, their salaries, and operating the plant and the mines."

Not only would it increase demand for high-sulfur Indiana coal, he said, but the plant's substitute natural gas would be a buffer against supply disruptions of liquefied natural gas from other parts of the world, Rosenberg said.

Chase didn't dispute the pollution-removing benefits of the gasification approach. But the plant's commercial reliability has not been established and the project needs a federal loan guarantee because it's too risky to get traditional financing on Wall Street, Chase contended, making Indiana "a guinea pig," he said.

Chase expressed concern the IURC would not have the same authority to deny rate increases as it does with other utilities. "This is really a mandate on ratepayers. This requires ratepayers to pay whatever the (operating) cost is going to be," he said.

Noting the long line of witnesses who preceded him, Chase said, "It's hard to stand up here in front of this committee and not support something that seems like it's going to bring economic development to our state and use coal to improve our security. But we don't think that ratepayers should be basically hung out in order to make this happen."

After hearing from 10 witnesses, including lobbyists for the coal- mining industry and electric and gas companies, the Senate Utilities and Regulatory Affairs Committee approved the bill, 10-0.

Now it moves to the full Senate. Previously it passed the House, 84-11.

If the coal gasification plant is ultimately approved, construction could begin in 2008 and take four years.

(c) 2007 Evansville Courier & Press. Provided by ProQuest Information and Learning. All rights Reserved.

Source: Evansville Courier & Press

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