Indiana Gasification says it largely won Indiana court ruling

An Indiana Appeals Court decision handed down Oct. 30 sides with Indiana Gasification and the Indiana Finance Authority on almost every major issue raised by the appeal of an approval for a coal gasification project at Rockport, Ind., Indiana Gasification said. 

The court sided with IG-IFA on the larger questions of the appeal, the company said. It found that the contract was an enforceable contract, that it was a final contract and that the contract did provide a guarantee of savings to consumers, IG noted.

Indiana Gasification Project Director Mark Lubbers said: “We are very pleased with 95 percent of the Court opinion, and we see a clear path to resolving the technical issue that the court identified.”

The court reversed the Indiana Utility Regulatory Commission’s November 2011 approval based on only one provision in the contract, namely the definition of retail end use customer, which they found in conflict with the underlying state statute. The IG-IFA brief on this question affirmed that the parties to the contract intended no conflict with the statute, Indiana Gasification noted.

Indiana Gasification and IFA have been working through objections by various parties, including natural gas distribution subsidiaries of Vectren (NYSE: VVC), to the commission approval that would allow IFA to buy substitute natural gas (SNG) from the project and re-sell it to Indiana ratepayers. The protesting parties claim that there is too much risk the syngas will cost ratepayers more over time than regular natural gas.

The parties that filed the lawsuit include: Indiana Gas Co. Inc. and Southern Indiana Gas and Electric Co., both d/b/a Vectren Energy Delivery of Indiana Inc.; Ohio Valley Gas Corp.; Ohio Valley Gas Inc.; Sycamore Gas Co.; Arcelor Mittal USA; Haynes International Inc.; Rochester Metal Products Corp.; Vertellus Specialties Inc.; Countrymark Refining & Logistics LLC; Corn Products International Inc.; Citizens Action Coalition; Spencer County Citizens for Quality of Life; and Valley Watch Inc.

Much of argument is over whether this puts ratepayers at risk

“Two of the most significant disputes between the parties at the [IURC] hearing were whether the Contract provides a guarantee of savings for retail end use customers and whether the Contract definition of ‘retail end use customer’ conflicts with its statutory definition,” the court decision said. “Vectren presented evidence that, during the 30-year term, the cost of the Contract to Indiana’s retail end use customers might total between 1.7 and 4 billion dollars, as measured in 2008 dollars. The IFA and IG, in turn, claimed that the Contract will likely provide savings of $500 million and is guaranteed to provide savings of at least $100 million.”

The court concluded: “Based on the foregoing, we conclude that (1) the Utilities and the Industrial Group’s claims are justiciable; (2) the Commission did not exceed its jurisdiction when it approved the Contract; and (3) the Contract’s definition of retail end use customer inappropriately included industrial transportation customers, even though the Legislature did not intend industrial transportation customers to be subject to the SNG Act as retail end use customers. We reverse the Commission’s order approving the Contract.”

The designed annual usage in the IG plant would be about 3.85 million tons of Illinois Basin coal, with the possibility of substituting a portion of this with petroleum coke. SNG production would be about 47 million mmBtu (about 38 million mmBtu will be sold to the IFA). Sulfur in the feedstock will be processed into sulfuric acid, which IG will sell into the industrial market. Heat generated during the gasification process will be used to produce steam for steam turbines that can produce about 300 MW to meet essentially all on-site power needs, with utility interconnection for minor power balancing.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.