Spinning the truth on Leucadia's Rockport SNG plant
by Kerwin Olson
The Indiana Senate Committee on Utilities is prepared to take a vote this week on SB510, the legislation intended to protect captive Hoosier gas ratepayers from the shenanigans of a Park Avenue hedge fund. So this seemed like an ideal time to discuss some talking points that the folks at Indiana Gasification and Leucadia keep using when promoting the illusory benefits of the proposed Rockport SNG facility, which remains to this day nothing more than a power point presentation.
The first is the idea that somehow this investment will diversify Indiana's energy portfolio. George Orwell would be jealous were he alive to enjoy such crafty penmanship. Only in Indiana would we label the building of new coal-fired power plants as diversification. Not only did Duke Energy succeed in the diversification spin to gain support for their fiasco in Edwardsport, now apparently it's Leucadia's turn to paint the mining, transporting and burning of dirty Indiana coal as something new. As we've learned throughout the Edwardsport debacle. the only thing new about these synthetic science projects are the exorbitant price tags.
And what's this about a 30 year no-look contract being a great deal because if ratepayers lose on 17% of their bill that's somehow a win because 83% of the bill was low? I've heard it suggested that overage could amount to upwards of $28/month, so tell that to the senior citizen or disabled veteran on a fixed income making tough and often inhumane choices every day about how to spend each precious dollar and ask them if they feel like they've won when they send that money to Leucadia instead of putting food on the table. That $28/mo means an awful lot to the single mom working a second job so she can afford day care in order to work the first one. Statements such as that show just how out of touch the bankers on Wall Street are with real life on Main Street, and is the same line of thinking that led our nation to the brink of financial ruin.
Let's not lose sight of who we're talking about here: ratepayers held captive by State-Franchised monopolies. That's why Indiana Code 8-1-2-42 exists: to protect consumers who have no choice about where to get service from being gouged by a monopoly. Specifically that law states that the monopoly gas utility cannot charge ratepayers for their gas unless "the gas utility has made every reasonable effort to acquire long term gas supplies so as to provide gas to its retail customers at the lowest gas cost reasonably possible;" However, thanks to HB1722 in 2007, the Rockport SNG project is exempt from that provision, exposing the 1.7 million Hoosier gas ratepayers to the enormous risk of excessive and unreasonable charges.
Additionally, that law was written in 2007 when the plan was to have the Indiana utilities sign the 30 year no-look back contract with Leucadia, not the State of Indiana. Understanding that, a complete review of the 2007 legislation could lead one to believe that the exemption from the least cost provision in State law was designed to protect the Indiana monopoly utilities from Leucadia, not to give the Park Avenue hedge fund an end around State law.
Clearly, State lawmakers recognized the inherent risk to the financial solvency of the Indiana utilities and insured them against that danger. Don't Hoosier consumers deserve the same protection in 2013 that the monopoly utilities received in 2007?