Dear Blog Readers:

There has been no action on the HB 1072 Conference Committee since its initial meeting on 3/6/2012 while state legislators and the Daniels Administration discussed the tax credit for the Indiana Gasification, LLC SNG plant at Rockport, Indiana. Now with the alternative course of action outlined in the newspaper article below, state lawmakers are expected to take action on a Conference Committee Report for HB 1072.

HB 1072 as it passed the Senate contained the extention of the property tax exemption for solar pv. I am hopeful that this language will remain in the Conference Committee Report (CCR) which needs to be signed today. After the four conferees sign the CCR then it returns to both the House and the Senate for final roll call votes. Please note that another Conference Committee meeting is not required for the conferees to merely sign the CCR. Before the CCR on HB 1072 can be voted on the floor though it must go both to the House Rules Committee and the Senate Rules Committee. Hopefully, the time clock will not run out but this issue may not be resolved until the final hours or hour of the 2012 session. "Knock on wood."

Laura Ann Arnold

Lawmakers dropping Rockport issue as session nears its end

• By Eric Bradner
• Evansville Courier & Press
• Posted March 8, 2012 at 2:23 p.m., updated March 8, 2012 at 3:45 p.m.

INDIANAPOLIS —Developers of the Rockport, Ind. coal-to-gas plant do not need state lawmakers’ help to get a 20-year, $120 million tax credit, after all.

Instead, the Indiana Department of Revenue – an agency under the watch of Gov. Mitch Daniels, a champion of the $2.6 billion plant – will rule on whether the tax credit applies. The agency’s likely answer: Yes.

It’s a work-around to avoid asking reticent legislators to once again change the law to help push forward a plant that Daniels calls a great deal, but Vectren Corp. and other Indiana utilities say will drive ratepayers’ bills upward.

Key Republican fiscal leaders said the Daniels administration had opted to try for that “administrative fix” to forestall potential lawsuits over the tax credit, instead of pressing lawmakers on the issue as the 2012 legislative session reaches its end.

Senate Appropriations Committee Chairman Luke Kenley, R-Noblesville, said legislation related to the tax credit won’t make its way into a bill.

“Everybody likes to let the legislature solve all their problems for them rather than figure out if they’ve got another way to do it sometimes, and I think maybe that’s what happened in this case,” Kenley said.

The Rockport plant’s proponents said working through the Indiana Department of Revenue is fine with them.

“There was never any doubt in our minds that we qualified under the existing law,” said Mark Lubbers, an Indiana consultant for Leucadia National Corp., the Rockport plant’s developer, and a former top Daniels aide.

“Given the fact that Vectren is spending every dime of ratepayer money they can to slow us down, we wanted to clarify the language in a way to mitigate their next nuisance lawsuit.”

Opponents took another view.

“I thought we overthrew the monarchy back in 1776,” said Kerwin Olson, the head of the Citizens Action Coalition, an environmental advocacy group that has opposed the Rockport project.

After negotiations with utilities such as Vectren broke down, Daniels had the Indiana Finance Authority negotiate a 30-year contract to purchase 38 million dekatherms of synthetic natural gas annually from the Rockport plant, and then resell that to Hoosier ratepayers.

The contract, approved by the Indiana Utility Regulatory Commission in November, was a huge boost for Rockport’s developers because it guaranteed their product would have a buyer.

However, during this year’s session, Vectren has used the question of whether the tax credit, which would give the Rockport plant an approximately $6 million per year incentive to purchase Indiana coal, is applicable as a chance to lobby lawmakers to reconsider the whole project.

Their argument: A recent shale-gas boom has driven natural gas prices on the open market down to $2.50 per dekatherm – much lower than the $6.64 per dekatherm average rate over the life of the contract that the Indiana Finance Authority expects to pay the Rockport plant.

Indiana utilities wouldn’t have a financial stake, but 17 percent of all Hoosier ratepayers’ bills would be tied to the Rockport plant’s prices, and utilities would be required to act as an intermediary and bill for that 17 percent.

Thus, Vectren officials have complained, they expect to be blamed by ratepayers if the cost of Rockport’s synthetic natural gas proves higher than the other natural gas the utility is delivering.

Still, Daniels said he expects natural gas prices to fluctuate over time, as they have in recent years. He said Hoosiers are guaranteed savings over the life of the contract, and that it would also help create jobs in Southwestern Indiana.

By dodging the step of having the Indiana General Assembly approve language related to the tax credit before Friday’s adjournment, the Daniels administration keeps lawmakers from stepping into a court battle, as Vectren and others are challenging the IURC’s approval of the Rockport plant.

“I’m pleased that there seems to be a recognition among many legislators that there are questions about this project,” said Mike Roeder, Vectren’s vice president of government affairs and corporate communications.

He said the utility will have to regroup before determining how next to try to prevent the Rockport plant’s construction.

“We’ve been laser-focused on this legislative language because frankly, that’s what the other side believed they needed. They’ve changed strategy, and so we’ll have to evaluate that,” Roeder said.

“This has been as much about the project as it is about the credit. It’s just caused us to say to legislators for several weeks, ‘We don’t think you should give them the tax credit, and by the way, you might just want to take a whole new look at the project.’”

Lubbers said the tax credit is important to another step toward the project’s completion: Securing a federal loan guarantee from the U.S. Department of Energy.

“We have to go through the process, but our case is extremely strong and we feel very comfortable. This kind of ruling has the force of law and will keep the next nuisance lawsuit from Vectren from slowing us down,” Lubbers said in an email.

“Additionally, our financing team feels that this ruling will provide all the assurance we need for the Department of Energy loan guarantee commitment. So, all good.”