Developers of the proposed coal-to-gas plant in Rockport defended their $2.6 billion plan’s economics during a legislative hearing Wednesday at the Indiana Statehouse.
Two energy industry experts hired by project financer Leucadia National Corp. told the House Utility Committee that they predict companies will slow down their production of shale gas until current gas prices close in on doubling their current rate of three dollars and ninety six cents. They also believe that natural gas prices will soon be on the rise.
Shale gas production has risen rapidly over the last few years, which has led to lower prices for natural gas. Shale gas makes up the core of the argument for the project’s opponents. Opponents are arguing that the synthetic natural gas that the new plant would produce is too expensive and thus the project should be stopped before the plant is even built.
Opponents of the project also point to the provision in the Indiana Finance Authority’s contract with Leucadia National where the state buys the gas at a pre-negotiated price and then re-sells it on the open market. Opponents say the provision is proof that the project will not succeed on its own merit.
State lawmakers, business lobbying groups, and environmentalists said during the hearing that they have greater optimism that natural gas prices will wind up beating the Rockport plant’s rates. The project has been dubbed Indiana’s “Leucadia Tax” by some opponents as 17 percent of all ratepayers’ gas bills will be tied in with the rates laid out in the state’s contract with the plants’ developers.
Both sides petitioned the Indiana Supreme Court to weigh in on legal issues stemming from the 30-year contract last week. If the court orders changes to the deal, the whole project would head back to the Indiana Utility Regulatory Commission for further review, this time looking to see if the deal is in the public’s best interest.