Simpson calls Rockport gas deal bogus 

Hawthorne Coal Mine. Sullivan County, Indiana. - COURTESY OF CINDY 47452, VIA FLICKR CREATIVE COMMONS
  • Hawthorne Coal Mine. Sullivan County, Indiana.
  • Courtesy of Cindy 47452, via Flickr Creative Commons


The Democrat running for lieutenant governor said that Gov. Mitch Daniels should not have signed a deal requiring the state to buy most of the synthetic natural gas produced for the next 30 years from a plant planned for Rockport.

Sen. Vi Simpson, D-Ellettsville, said at the Indiana Energy Conference in Indianapolis last week that the contract – a controversial deal that has been approved by the Indiana Utility Regulatory Commission – should be reconsidered by the next administration and the General Assembly and modified where possible.

"At it its worst, this contract, this deal, could be a costly scheme for Indiana ratepayers," including individual ratepayers, farmers and industrial users, Simpson said. "At its best, it's a risky deal."

But Simpson emphasized that she was not speaking for her running-mate – Democratic gubernatorial hopeful John Gregg – and was instead reflecting only her own views. Gregg's campaign confirmed that later Wednesday.

"As she said in her comments, Sen. Simpson was speaking for herself, not the ticket," said Gregg campaign spokesman Daniel Altman. "John is studying the issue."

In fact, neither Gregg nor his opponent – Republican Mike Pence – has said much about the contract or the $2.65 billion Indiana Gasification plant which is being developed by Leucadia National Corp.

Last month, Pence said he was "studying it" after hearing from those with differing opinions on the issue. But later, Pence clarified that he has no plans to reconsider the contract and will honor "the commitments the state has already made."

Pence's running mate – GOP lieutenant governor nominee Sue Ellsperman – has been one of the plant's biggest supporters. She said Wednesday after her speech at the Indiana Energy Conference that the plant will be a good customer for Indiana coal and will increase energy security in the state.

But she also reflected Pence's nuanced position on the plant and the contract.

"We're going to honor the contracts of the previous administration and that's one of the contracts," she said. Pence "will have an open mind moving forward but I think the contract is in place."

She said if lawmakers consider or approve legislation regarding the plant or the contract it "will get a good look."

The Indiana Gasification plant is a sort of public-private partnership that was approved by the General Assembly and heralded by Daniels as a way to use Indiana coal, save utility customers money and create jobs.

Under his direction, the Indiana Finance Authority signed a 30-year deal with the plant to buy most of its synthetic gas and resell it in the energy market. Customers of the state's natural gas utilities will then share in half of the profits the state earns or pay more to make up for most of the losses.

Studies released by Evansville-based Vectren Energy – which opposes the state's deal with Indiana Gasification – have said the plant could force Indiana ratepayers to spend as much as $1.1 billion more on gas than they would have without the state's deal.

But supports of the plant say the study is overblown and that Hoosiers will realize substantial savings in the deal's later years.

Simpson said Wednesday she doesn't oppose the plant itself – only the contract that requires the state to buy its product.

"I'm asking you to do the math," she told those at the conference. "Look at the details of the contract and do the math for yourself. The proponents of the contract have a set of numbers they use and the opponents have a set of numbers they use, and the truth is nobody knows."

The state began negotiating the deal with Leucadia officials when natural gas prices were higher and seemed likely to increase in the future. Over the past two decades, natural gas prices have been particularly volatile, dropping and spiking with changes in the weather and commodities markets.

But critics say the recent emergence of shale gas – which is exhumed from the ground through a process called hydraulic fracturing – has driven natural gas prices lower and make the Indiana Gasification deal questionable.

"In the bigger picture, there is a bigger question: Why in the world is the state speculating in the natural gas market?" Simpson said. "Isn't it against all of the free market principals I believe in and I hope you belive in?"

Investors should be the ones to take the risk of a new clean-coal technology. The risk should not be transferred to ratepayers, she said.

"That's not something we should do," Simpson said.

Lesley Weidenbener is managing editor of TheStatehouseFile.com, a news service powered by Franklin College journalism students and faculty.

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