Rockport Exemption For Industrial Users Removed By House From Tax Bill

It looks like there are some good judgments being made at the Indiana General Assembly this year. An exemption the Senate put into a tax bill, which would have allowed industrial natural gas consumers to avoid the consequences of a long-term purchase agreement the state of Indiana entered into with the politically-connected developers of a proposed Rockport coal gasification plant, has been axed by the House Ways & Means Committee. The Evansville Courier-Press explains yesterday's committee action:

Questions about a synthetic natural gas plant proposed for Southern Indiana led a House committee Wednesday to strip tax breaks for the $2.6 billion project from a bill that already has passed the Senate.

The Ways and Means Committee also eliminated language from Senate Bill 344 that would have taken industrial customers — those who use so much natural gas they strike their own purchasing contracts — out of the customer deal that led the General Assembly to OK the plant in 2007.

“I am still for the project,” said Rep. Suzanne Crouch, R-Evansville, who voted for the Indiana Gasification plant in 2007 and authored Wednesday’s amendments.

“But I believe the General Assembly has provided enough tools for the project,” Crouch said. “When is enough enough? When do we move from a public-private partnership to a publicly subsidized project?”

Evansville-based Vectren Corp. had lobbied for the provisions removal out of fears that consumer prices for natural gas will be even higher than they already will be if utilities are forced to purchase natural gas from the new synthetic coal gasification plant at Rockport above market rates. The prices set in a 30-year agreement with the state are double current market rates.

Officials from Evansville-based Vectren Energy appear to be largely responsible for the Ways and Means Committee’s action. The company has been lobbying against the tax breaks for the project and has appealed a decision by the Indiana Utility Regulatory Commission to OK the 30-year contract between Indiana Gasification and the Indiana Finance Authority.

“We were pleased to see nearly every member of the committee acknowledge that the natural gas world has changed, and that there are serious questions about building a plant that will burden Hoosiers with 30 years of expensive substitute natural gas,” said Mike Roeder, Vectren's vice president of government affairs and communications.

And at least one Indiana lawmaker has figured out that the plant won't even be using Indiana coal as was promised when the original deal was inked.

Rep. Win Moses, D-South Bend, said he initially supported the idea because it would convert Indiana coal to a cleaner fuel and because it seemed like it would save Hoosiers money.

Now, he said, the plant will not be required to use Indiana coal and the savings are unclear.

“I really hoped the governor would pull the plug,” Moses said.

And the political crony of Gov. Daniels behind the deal still claims it's "a great deal for Hoosiers."

Mark Lubbers, who is spearheading the Indiana Gasification project for parent company Leucadia National Corp., has said the project will be a great deal for Hoosiers. SNG produced at the Rockport plant will cost about $6.60 per dekatherm, which he said will be cheaper than natural gas over the 30 year period.