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Coal Gasification Plant Could Lead To Higher Utility Bills

Utility meter (WFIU/WTIU News)

Officials with Indiana’s largest gas utility say Hoosiers could end up paying more than a billion more dollars on their utility bills if plans for a new coal gasification plant in the Spencer County town of Rockport go forward.

Vectren officials say the coal-gasification plant proposed by Leucadia National and its subsidiary, Indiana Gasification, LLC, was a good idea when it was first proposed in 2006. Back then, says spokesperson Chase Kelley, natural gas prices had spiked to almost five times what they are now.

“So there was this national fear that we were going to run out of gas, that the price was going to continue to skyrocket and bills were going to be just unmanageable,” she says.

Kelley says that changed when producers started mining huge reserves of natural gas in shale rock. She says the price per million British Thermal Units of natural gas has dropped to about $3. That makes it significantly cheaper, about half the price, of what the state would pay Leucadia for the gas manufactured in Rockport.

If the state has to sell that gas at a loss, consumers who buy it will make up the difference in their utility bills so the state breaks even. Vectren says that could translate to an extra 375 dollars paid by each customer over eight years, or $1.1 billion altogether.

John Blair is the president of Valley Watch, an Evansville environmental group that opposes the plant. He says the plans amount to the state competing with private gas companies.

“They also are forcing Hoosier rate payers, residential commercial and small industrial gas consumers, to assume all the risk for the plant,” he says. “And that’s just patently wrong.”

Indiana Gasification includes links on its website to articles that suggest the shale gas bubble which has lowered prices will soon burst, making the price of the Rockport facility’s gas more competitive. Vectren has filed a case with the Indiana Court of Appeals to challenge the plan authored by the Indiana Finance Authority.

Valley Watch and several other groups have since joined the case. Indiana Gasification is also awaiting the results of an environmental impact study and approval of federal loan guarantee from the Department of Energy. Spokespeople for Leucadia National, Indiana Gasification LLC and the Indiana Finance Authority did not return requests for interviews.

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