http://www.indystar.com/article/20110128/LOCAL/101280347/Timetable-IURC-invites-scrutiny?odyssey=obinsite

Utility watchdog oks short debate period for Rockport project

Written by Ted Evanoff 

Only months after an ethics scandal rocked the state's top utility watchdog, the IURC has set off a new controversy.

Lawyers say the Indiana Utility Regulatory Commission could sharply cut the time available for public debate on a massive energy project proposed at Rockport.

Private investors want to build a coal gasification plant that would be paid for largely by about 1 million Indiana households burning natural gas into mid century.

The IURC has the final say on whether the project goes forward, but a timetable accepted by the agency Thursday wraps up hearings in early May.

"It's not clear to us why there's such a rush. The parties have proposed a rather expedited procedural schedule," said Clayton Miller, an Indianapolis lawyer representing an array of smaller gas utilities, including Ohio Valley Corp.

Now, the IURC's handling of the case is likely to be watched carefully for signs of favoring industry over consumers as in the recent Duke Energy case.

"Indiana's citizens will want to be sure that the questions asked in the Duke case are never asked in relation to this new project," said Robert Schmuhl, a political analyst at the University of Notre Dame.

Those questions were central to an ethics scandal that was uncovered recently at the IURC. Cozy ties between Duke Energy and the state agency raised questions about whether the IURC was protecting the interests of citizens. Duke's coal-fired power plant going up at Edwardsport has been hit by cost overruns routinely approved by the IURC.

After the close ties were revealed by The Indianapolis Star, three key officials departed Duke. And Gov. Mitch Daniels fired the top IURC commissioner, David Lott Hardy, a Fort Wayne utility lawyer he had earlier appointed to the agency.

In spite of the firing, Daniels has sided closely with the proposed Rockport plant, saving it in 2008 when investors were ready to scuttle plans. He said the plant represents an economic gain for the poor coal region of southwest Indiana.

That kind of support from the governor, Schmuhl said, most likely will bring intense scrutiny of the IURC from the public.

"It's certainly not a small undertaking for the state that the governor" is backing, Schmuhl said.

Under the plan, the Indiana Finance Authority, a state agency, would buy almost all the natural gas produced from coal at Rockport for 30 years and resell the gas on the open market. Profits would be used to lower gas bills of households in the state. But losses would raise their bills.

Many gas utilities in the state were reluctant to sign on for the project two years ago and remain hesitant about the plant proposed east of Evansville on the Ohio River.

That unease fed concerns at the first preliminary hearing on the case Thursday.

During the hearing, the IURC accepted a timetable that means it could rule on Rockport about four months earlier than it usually takes to decide complicated cases. The timetable sets the final hearing May 3 and has the IURC rule sometime after July 11.

Lawyers expect a final decision by Labor Day, which means the process could last about eight months from the time the original paperwork was filed with the IURC.

Other cases that take lots of testimony and require careful attention to details in technical reports can often run on for a year, said Jennifer Terry, an Indianapolis lawyer who represents factories that buy natural gas.

"There's going to be a lot of technical details for folks to digest," Terry said. "This is a unique project (at Rockport) that has never been tried anyplace else, certainly not on this scale."

The timetable was assembled in large part by Randolph Seger, an Indianapolis lawyer representing the Indiana Finance Authority.

"It's a good thing for Indiana," Seger said. "We simply want all the benefits from this to be realized as quickly as possible."

During the preliminary hearing Thursday, Miller and other attorneys sat quietly while Seger assembled the timetable in talks with other lawyers. IURC commissioners accepted it with little comment. After the hearing, several lawyers expressed dismay.

"The faster it moves, the less scrutiny it gets," said Jerry Polk, an Indianapolis lawyer representing the Citizens Action Coalition, Sierra Club and Valley Watch, an environmental group in southwest Indiana.

IURC spokeswoman Danielle McGrath defended the commission, saying none of the lawyers objected to the timetable during the hearing. She noted the timetable is tentative and can be adjusted by the agency at another preliminary hearing in coming weeks.

Utilities in the state in 2008 backed away from the Rockport gas project. It would convert 3.2 million tons of coal into gas amounting to 17 percent of the gas burned annually by Indiana households. Big factories also declined to sign on for the gas.

Daniels intervened and saved the project in 2008 when he opened the way for the finance agency to step in as the buyer and pass the costs to households. Indiana's General Assembly sanctioned the deal.

Under the plan, a subsidiary of investor Leucadia National Corp. of New York would build a plant equipped with gasifiers able to convert Indiana coal mined nearby into natural gas like the commodity coming out of gas wells.

Once it sells the gas in the open market, the state finance agency would alert utilities to adjust the bills of their household customers.

Call Star reporter Ted Evanoff at (317) 444-6019