The 2008 session of the Indiana General Assembly adjourned sine die on Friday, March 14, 2008. Throughout the session media attention was focused on reforming Indiana’s property tax system. While this issue dominated the discussions, hundreds of other bills and resolutions were considered, over 150 of which have or will soon become law.

HB 1001 was the main vehicle through which property tax reform measures were advanced. HB 1001 passed by a vote of 82-17 in the House and 41-6 in the Senate and was signed into law by the Governor on 3/19/08. Key provisions of the final 600-plus page document include:

• An additional $620 million in homestead credits, projected to reduce 2008 tax bills by a statewide average of about 31% from pre-rebate 2007 tax bills (the reduction is projected to be roughly 26% after the 2007 rebate);
• A new homestead credit paid on all funds - $140 million for 2009 and $80 million for 2010;
• A 1.5%, 2.5% and 3.5% cap for property taxes on homestead, rental properties and businesses in 2009. Those figures would each drop by 0.5% in 2010, allowing government units more time to prepare for predicted shortfalls stemming from the caps;
• A 1% increase in the state sales tax, from 6% to 7%, beginning April 1, 2008, to help pay for part of the property tax relief;
• An increase in the renter’s deduction, from $2,500 to $3,000;
• A cap of no more than 2% per year from 2007 levels on property tax increases for seniors with individual incomes of less than $30,000 or joint incomes of less than $40,000 and for whose home’s assessed value does not exceed $160,000;
• An increase in the Earned Income Tax Credit, from 6% to 9%, and repeal of the expiration date;
• State assumption of the full cost for the remaining School General Fund;
• Sate assumption of the full costs for Child Welfare levies;
• Elimination of all State property tax levies (i.e., State Fair, DNR Forestry);
• State assumption for the full cost for incarceration of juveniles in State correctional facilities;
• State assumption of the full cost for Hospital Care for the Indigent;
• State assumption of responsibility for payment of 100% of the total cast of the Pre-1977 Local Police and Fire Pension Payments effective in 2009 (the State currently pays at least 50%);
• State assumption of the full cost for pre-school Special Education;
• $120 million in circuit breaker relief for schools to offset the revenue loss for schools that have an impact of greater than 2% of the levy;
• Allowing schools to have a referendum to offset circuit breaker impacts;
• Allowing counties to increase local option income taxes (LOIT) to pay for budget increases, provide dollar for dollar property tax relief or pay for public safety costs;
• Transferring the assessing duties of Trustee Assessors to the County Assessor effective 7/1/08;
• Transferring to the County Assessor assessment duties of all Township Assessors in townships in which the number of parcels is less than 15,000 effective 7/1/08;
• Requiring a referendum to be held in the 2008 general election in all townships that include at least 15,000 parcels to determine whether to transfer the assessing duties of the Township Assessor to the County Assessor;
• Requiring higher certification requirements for township and county assessors;
• Requiring referendum for elementary school construction projects costing more than $10 million (petition for remonstrance for projects costing less than $10 million);
• Requiring referendum for high school construction projects costing more than $20 million (petition for remonstrance for projects costing less than $20 million);
• Requiring referendum for other controlled projects (projects backed by property taxes) with an estimated cost greater than $12 million or 1% of assessed value (petition for remonstrance for projects costing less than $12 million or less than 1% but least $1).

SJR1, the companion resolution to HB 1001, sets the property tax caps (1% on homesteads, 2% on rental properties and 3% on businesses) in stone through a constitutional amendment that, to become effective, will need to be approved again by the legislature either next year or in 2010. Voters would then have to approve such a change in 2010 for the constitution to be amended in 2012. SJR 1 passed by a vote of 79-20 in the House and 40-7 in the Senate and awaits signature by the Governor.

While lengthy debates on the elements of property tax reform were proceeding, CAC continued to focus its efforts on protecting the utility regulatory process to ensure the reasonableness of gas and electric utility rates and to stimulate development of a renewable energy market for Indiana’s economic, health and environmental benefit. The following is a summary of key bills in which CAC was actively involved:

Good Bills

HB 1280 – Energy Efficient Buildings
Status: Eligible for signature into law.

Authored by Rep. Matt Pierce (D, Bloomington), and joined by co-authors Terri Austin (D, Anderson) and Greg Porter (D, Indianapolis), as introduced HB 1280 would have required large, state, educational, and local public works building projects (other than public schools) – those that are newly constructed, as well as those subject to repair or alteration – to be designed with the goal of achieving the silver rating under the United States Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system, the Green Globes Two Globes level or an equivalent rating system accredited by the American National Standards Institute. These systems rate buildings based on the sustainability of the site, the materials and other resources, water and energy efficiency, indoor environmental quality, and innovation in design.

HB 1280 passed 7-3 out of the House Environmental Affairs Committee as amended on 1/23/08, and passed third reading in the House on 1/30/08 by a vote of 51-45. Sponsored in the Senate by Senators Brandt Hershman (R, Monticello), along with co-sponsors Vi Simpson (D, Bloomington) and Jean Breaux (D, Indianapolis), HB 1280 was amended in the Senate Energy and Environmental Affairs Committee on 2/20/08 and passed by a vote of 7-1. HB 1280 passed third reading in the Senate on 2/27/08 by a vote of 46-1.

As amended in the Senate, HB 1280 simply requires the Environmental Quality Service Council to study whether public entities should be required or encouraged to seek to achieve energy and environmental design ratings in the construction and renovation of buildings and structures, as well as related issues.

Representative and bill author Matt Pierce (D, Bloomington) initially dissented from the Senate amendments in an effort to forge a compromise in the final days of the session that would have preserved the bill’s key benefits - significant cost savings for Indiana taxpayers, improved worker health and productivity, and improved public and environmental health. When it became apparent that Senator Hershman (R, Monticello) would not agree to sign the conference committee report under any circumstance, Rep. Pierce changed his dissent to a concurrence to preserve the interim study rather than nothing at all.

Please take a moment to thank Representative Pierce (h61@in.gov) for his efforts to enact “green buildings” legislation and for his continuing advocacy on this important issue. Please also let Senator Hershman (s7@in.gov) know that his failure to support a legislative directive aimed at developing “green” design and construction for public works building projects constitutes a mandate on Indiana taxpayers to pay higher than necessary utility and maintenance costs for our government buildings, as well as higher costs associated with worker illness, lost productivity and the environmental impact caused by our continued over-reliance on a fossil-fuel-powered economy.

HB 1090 – Climate Registry
Status: Dead

HB 1090 would have required Indiana to become a member of the Climate Registry, a collaboration between states (39 have joined), Canadian provinces and tribes to develop and manage a common greenhouse gas emissions reporting system in anticipation of future mandatory reduction policies. Authored by Representative Ryan Dvorak (D, South Bend), HB 1090 would have ensured Indiana’s place at the table in developing policies related to CO2 air emissions. Given Indiana’s disproportionate contribution to greenhouse gas emissions (1st in the nation in per person CO2 air emissions and 5th in CO2 air emissions from coal-fired power plants overall), Indiana’s participation in the Climate Registry is key to acknowledging our shortcomings and facing our challenges for the betterment of generations to come.

HB 1090 passed 8-2 out of the House Environmental Affairs Committee on 1/23/08 and passed third reading in the House on 1/30/08 by a vote of 53-44. It was sponsored in the Senate by Senator Beverly Gard (R, Greenfield) and assigned to the Senate Utility and Regulatory Affairs Committee, chaired by Senator Brandt Hershman (R, Monticello), who let HB 1090 die by failing to schedule it for a hearing in his committee.

Please thank Representative Dvorak (h8@in.gov) for his efforts to pass HB 1090 to ensure a place at the table in developing policies to address Indiana’s disproportionate contribution to greenhouse gas emissions. Please let Senator Hershman (s7@in.gov) know that continued failure to address Indiana’s over-reliance on fossil fuels to meet its energy needs will needlessly saddle Indiana taxpayers and ratepayers with unreasonably high costs once carbon regulations are enacted.

Bad Bills

SB 0223 – Coal Gasification and Substitute Natural Gas
Status: Signed into law by the Governor.

Authored by Senator Brandt Hershman (R, Monticello), with Senator Ryan Mishler (R, Bremen) as a second author and Senators Karen Tallian (D, Portage), John Waterman (R, Shelburn), and Dennis Kruse (R, Auburn) as co-authors, SB 223 allows an out-of-state venture capitalist firm that seeks to build a coal gasification plant in Southern Indiana to assign tax credits to coal and substitute natural gas producers outside of Indiana. CAC opposed last year’s legislation, which paved the way for construction of this coal plant, as it locked natural gas suppliers, and hence ratepayers, into 30 year contracts for the substitute natural gas, whatever the price, that neither the Indiana Utility Regulatory Commission or other governmental entity could subsequently change or even review. CAC raised concerns that it would also spew millions of new tons of CO2 into Indiana’s atmosphere each year.

Promises made last year to garner support for the coal plant – that it would use Indiana coal and produce substitute natural gas in Indiana – were removed in SB 223 in a classic “bait & switch” scheme designed to secure financing regardless of the negative impact to Indiana ratepayers or the economic best interests of the state.

SB 223 passed 10-0 out of the Senate Utilities and Regulatory Affairs Committee on 1/17/08 and passed third reading in the Senate on 1/29/08 by a vote of 47-0. The bill was sponsored in the House by Rep. Russ Stilwell (D, Boonville) with co-sponsors Reps. Dave Crooks (D, Washington), Jack Lutz (R, Anderson) and Eric Koch (R, Bedford). SB 223 passed out of the House Commerce, Energy and Utilities Committee on 2/14/08 by a vote of 8-0, and passed third reading in the House on 2/28/08 by vote of 88-10. Because it passed the House without any amendments, it became eligible for signature into law by the Governor, who signed SB 223 into law on 3/12/08.

Please let the Governor (mdaniels@gov.in.gov) know your opposition to so-called economic development initiatives that:

1. Promote coal over less expensive, cleaner energy alternatives;
2. Tie the hands of utility regulators to allow unfettered access to the pocketbooks of hard-working Hoosier ratepayers for investments too risky for Wall Street to finance; and
3. Result in a net economic loss to Indiana when externalities such as health and environmental costs are factored in.

HB 1117 – Various Utility Matters
Status: Dead.

Authored by Representative Russell Stilwell (D, Boonville), with co-authors Reps. Eric Koch (R, Bedford), Kreg Battles (D, Vincennes), and Jack Lutz, (R, Anderson), HB 1117 as introduced contained identical language to that in SB 223 (described immediately above). It passed 9-1 out of the House Commerce, Energy and Utilities Committee on 1/24/08 in that form. An amendment offered by Rep. Dale Grubb (D, Covington) on second reading, establishing a 10% tax credit for purchases of energy-generating wind or anaerobic digestion equipment from Indiana businesses, passed by voice vote.

HB 1117 passed third reading in the House by a vote of 81-8 and was heard in the Senate Utilities and Regulatory Affairs Committee on 2/14/08. At the hearing, bill sponsor/committee chair, Senator Brandt Hershman (R, Monticello), stripped out Rep. Grubb’s tax credit language and inserted the language from SB 224 (described below).

As amended, HB 1117 now included the original language, paving the way for a coal gasification plant financed by captive ratepayers locked into long term contracts for the substitute natural gas and over which the IURC and the state has no power to alter, regardless of the availability of cheaper prices offered by other natural gas suppliers. It also contained two tracker provisions that would have weakened the utility regulatory process and allowed utilities to reap massive profits at the expense of ratepayers regardless of the reasonableness or necessity of the investment. Finally, it contained a pseudo-RES (see SB 224 below) that would have ensured:

1. Indiana’s continued over-reliance on coal;
2. Increased air pollution;
3. Increased health risks;
4. Potentially dramatic increases in utility rates when CO2 regulations would be enacted due to Indiana’s disproportionate and growing contribution to greenhouse gas emissions; and
5. Incentives to develop nuclear power over safer and considerably less expensive wind, solar and biomass energy resources.

HB 1117 narrowly passed out of the Senate committee, as amended, by a vote of 6-5, and passed on third reading in the Senate on 2/19/08 by a vote of 33 to12. Thankfully, the bill’s author, Rep. Russ Stilwell, dissented from the Senate amendments once the bill was returned to the House, setting up a conference committee process where negotiations designed to resolve differences in House and Senate versions of the bill got underway in the final days of the 2008 session.

Working closely with Representatives Grubb and Battles, Representative Stilwell, the key House conferee, made a concerted effort to listen to and address targeted concerns raised by CAC. Senator Richard Young (D, Milltown), one of the two Senate conferees, likewise attempted to advocate for CAC’s key concerns in an effort to reach a reasonable compromise that preserved a strong RES. Despite our good faith attempts to forge a consensus document, our efforts were thwarted when Senator Hershman, the other Senate conferee, offered a competing conference committee report in the final hours of the session that not only rejected every one of CAC’s concerns, but contained new language, never before considered by the House or Senate, further ensuring utility profits, further weakening regulatory oversight, and further guaranteeing that a meaningful renewable energy market would never be developed in Indiana.

Faced with such unreasonable demands by an industry so unwilling to compromise in any manner, shape or form, Representative Stilwell had no alternative but to let HB 1117 die in the final hours of the last day of the 2008 session. With the death of HB 1117 comes the end of another attempt this year to strengthen Indiana’s economy and improve its public and environmental health through development of a renewable energy market sector.

Please thank Representative Stilwell (h74@in.gov), Representative Grubb (h42@in.gov) and Senator Young (s47@in.gov) for their willingness to support a meaningful RES and work with us in an effort to address key concerns associated with utility attempts to weaken the regulatory process and reap profits above and beyond their authorized investment rate of return.

Please remind Senator Hershman (s7@in.gov) that Indiana’s Alternative Utility Regulation Statute provides all the flexibility utilities need to obtain regulatory approval for non-traditional investments, and that provisions such as those contained in his version of the conference committee report on HB 1117 only serve to further deregulate the industry and unjustly enrich privately owned utility investors on the backs of Indiana ratepayers.

SB 0224 – Various Utility Matters
Status: Dead

Authored by Senator Brandt Hershman (R, Monticello), and joined by co-authors Senators Ryan Mishler (R, Bremen), Dennis Kruse (R, Auburn) and Jean Breaux (D, Indianapolis), SB 224 contained a pseudo-RES – renewable energy resources were defined to include largely non-polluting, renewable sources of energy (other than energy from burning tires, garbage and other waste in waste-to-energy facilities). However, of the 6% standard to be achieved by the year 2020, 50% of it could be met using “advanced energy resources”, a new term that nevertheless included old, non-renewable resources such as waste coal (extremely high in mercury content) and “clean” coal (that, while capable of reducing sulfur dioxide, nitrogen oxide, mercury and other toxic air emissions, would add to Indiana’s disproportionate contribution to greenhouse gas emissions responsible for global warming), and that could encompass nuclear power.

SB 224 also included two pro-utility trackers that would have weakened the utility regulatory process by requiring the Indiana Utility Regulatory Commission (IURC) to approve investments regardless of whether they are just, reasonable and in the public interest. These tracker provisions could result in significant and unjustified increases in electricity rates.

SB 224 passed out of the Senate Utilities and Regulatory Affairs Committee on 1/22/08 by a vote of 6-3. An amendment offered by Senator Hershman on second reading to further expand the reach of one of the tracker provisions was adopted by voice vote. Meanwhile, Senator Lanane’s (D, Anderson) RES amendment – calling for 25% of Indiana’s electricity to be produced from truly renewable resources by 2025 – was defeated, and SB 224 passed the Senate on third reading by a vote of 39-9. SB 224 was sponsored in the House by Reps. Kreg Battles (D, Vincennes), and co-sponsors Dale Grubb (D, Covington), Jack Lutz (R, Anderson) and Dave Crooks (D, Washington). It was assigned to the House Commerce, Energy and Utilities Committee but failed to receive a hearing and is now dead thanks to Chairman Crooks’ unwillingness to consider anti-ratepayer/pro-utility legislation. In the final days of the legislative session, Senator Hershman offered language from SB 224 in his version of the conference committee report on HB 1117 (described above), but his efforts ultimately proved unsuccessful.

Please thank Representative Crooks (h63@in.gov) for protecting Indiana ratepayers by standing up to ongoing utility lobby efforts to deregulate the industry, for his efforts to pass a strong RES (he was the author of HB 1102, a stand-alone, meaningful RES, that failed to pass his committee 3-8 in the first half of the 2008 session) and for his fair and balanced approach to addressing the competing interests of utilities and ratepayers. With his retirement this year from the legislature, Indiana is losing one of it’s strongest leaders in the renewable energy movement. Please be sure to thank him for the tremendous contributions he has made in advancing this cause and for his willingness to listen to and work with CAC and other environmental groups.

Paul Chase, J.D.
CAC Governmental Affairs Liaison

Thursday, February 21, 2008 was the last day for bills to receive hearings in House and Senate committees in the 2008 session of the Indiana General Assembly. Wednesday, February 27, 2008 is the deadline for bills that received hearings and passed out of committees to be passed on third reading in the House and Senate to remain alive. Here is an update on bills of key interest to CAC:

Good Bills

Please contact your State Senator and Representative and urge them to SUPPORT HB 1280!

HB 1280 – Energy Efficient Buildings

Status: Eligible for second reading in the Senate

Authored by Rep. Matt Pierce (D, Bloomington), and joined by co-authors Terri Austin (D, Anderson) and Greg Porter (D, Indianapolis), as introduced HB 1280 would require large, state, educational, and local public works building projects (other than public schools) – those that are newly constructed, as well as those subject to repair or alteration – to be designed with the goal of achieving the silver rating under the United States Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system, the Green Globes Two Globes level or an equivalent rating system accredited by the American National Standards Institute. These systems rate buildings based on the sustainability of the site, the materials and other resources, water and energy efficiency, indoor environmental quality, and innovation in design.

HB 1280 passed 7-3 out of the House Environmental Affairs Committee as amended on 1/23/08, and passed third reading in the House on 1/30/08 by a vote of 51-45. Sponsored in the Senate by Senators Brandt Hershman (R, Monticello), along with co-sponsors Vi Simpson (D, Bloomington) and Jean Breaux (D, Indianapolis), HB 1280 was further amended before passing out of the Senate Energy and Environmental Affairs Committee on 2/20/08.

As amended, HB 1280 now requires the Environmental Quality Service Council to study whether public entities should be required or encouraged to seek to achieve energy and environmental design ratings in the construction and renovation of buildings and structures, as well as related issues. If passed on third reading in the Senate, differences in House and Senate versions of the bill will likely result in further discussions during the conference committee process to work out a compromise that ensures progress towards energy efficiency in public works building projects yet this year.

HB 1090 – Climate Registry

Status: Dead

HB 1090 would have required Indiana to become a member of the Climate Registry, a collaboration between states (39 have joined), Canadian provinces and tribes to develop and manage a common greenhouse gas emissions reporting system in anticipation of future mandatory reduction policies. Authored by Representative Ryan Dvorak (D, South Bend), HB 1090 would have ensured Indiana’s place at the table in developing policies related to CO2 air emissions. Given Indiana’s disproportionate contribution to greenhouse gas emissions (1st in the nation in per person CO2 air emissions and 5th in CO2 air emissions from coal-fired power plants overall), Indiana’s participation in the Climate Registry is key to acknowledging our shortcomings and facing our challenges for the betterment of generations to come.

HB 1090 passed 8-2 out of the House Environmental Affairs Committee on 1/23/08, and passed third reading in the House on 1/30/08 by a vote of 53-44. It was assigned to the Senate Utility and Regulatory Affairs Committee, where it was sponsored by Senator Beverly Gard (R, Greenfield). HB 1090 failed to receive a hearing in committee, meaning it does not survive the final segment of this year’s legislative process.

Bad Bills

Please contact your State Senator and Represenative and urge them to OPPOSE SB 223 and HB 1117!

SB 0223 – Coal Gasification and Substitute Natural Gas

Status: Eligible for second reading in the House

Authored by Senator Brandt Hershman (R, Monticello), with Senator Ryan Mishler (R, Bremen) as a second author and Senators Karen Tallian (D, Portage), John Waterman (R, Shelburn), and Dennis Kruse (R, Auburn) as co-authors, SB 223 would allow an out-of-state venture capitalist firm that seeks to build a coal gasification plant in Southern Indiana to assign tax credits to coal and substitute natural gas producers outside of Indiana. CAC opposed last year’s legislation, which paved the way for construction of this coal plant, as it locked natural gas suppliers, and hence ratepayers, into 30 year contracts for the substitute natural gas, whatever the price, that neither the Indiana Utility Regulatory Commission or other governmental entity could subsequently change or even review. CAC raised concerns that it would also spew millions of new tons of CO2 into Indiana’s atmosphere each year.

Promises made last year to garner support for the coal plant – that it would use Indiana coal and produce substitute natural gas in Indiana – are now removed in SB 223 in a classic “bait & switch” scheme designed to secure financing regardless of the negative impact to Indiana ratepayers or the economic best interests of the state.

SB 223 passed 10-0 out of the Senate Utilities and Regulatory Affairs Committee on 1/17/08, and passed third reading in the Senate by a vote of 47-0. It was heard in the House Commerce, Energy and Utilities Committee on Thursday, February 14, 2008, where it passed by a vote of 8-0. SB 223 is now eligible for second reading in the House. The House sponsor is Rep. Russ Stilwell (D, Boonville) with co-sponsors Reps. Dave Crooks (D, Washington), Jack Lutz (R, Anderson) and Eric Koch (R, Bedford).

HB 1117 – Various Utility Matters

Status: Eligible for House concurrence or dissent on Senate amendments

Authored by Representative Russell Stilwell (D, Boonville), with co-authors Reps. Eric Koch (R, Bedford), Kreg Battles (D, Vincennes), and Jack Lutz, (R, Anderson), HB 1117 as introduced contained identical language to that in SB 223 (described immediately above). It passed 9-1 out of the House Commerce, Energy and Utilities Committee on 1/24/08 in that form. An amendment offered by Rep. Dale Grubb (D, Covington) on second reading, establishing a 10% tax credit for purchases of energy-generating wind or anaerobic digestion equipment from Indiana businesses, passed by voice vote.

HB 1117 passed third reading in the House by a vote of 81-8 and was heard in the Senate Utilities and Regulatory Affairs Committee on February 14, 2008. At the hearing, bill sponsor/committee chair, Senator Brandt Hershman (R, Monticello), stripped out Rep. Grubb’s tax credit language and inserted the language from SB 224 (described below).

HB 1117 now includes the original language paving the way for a coal gasification plant financed by captive ratepayers who are locked into long term contracts for the substitute natural gas and over which the IURC and the state has no power to alter, regardless of the availability of cheaper prices offered by other natural gas suppliers. It also contains two tracker provisions that weaken the utility regulatory process and allow utilities to reap massive profits at the expense of ratepayers regardless of the reasonableness or necessity of the investment. Finally, it contains a pseudo-RES (see SB 224 below) that ensures (1) Indiana’s continued over-reliance on coal, (2) increased air pollution, (3) increased health risks, and (4) potentially dramatic increases in utility rates when CO2 regulations are enacted due to Indiana’s disproportionate contribution to greenhouse gas air emissions.

HB 1117 passed out of committee by a vote of 6-5, and passed on third reading in the Senate on 2/19/08 by a vote of 33 t o12. It is now returned to the House, where the bill’s author will determine whether to recommend the House concur with or dissent from the amendments made in the Senate. If the House concurs, the bill is eligible for signature into law by the Governor. If the House dissents, differences between House and Senate versions must be worked out in the conference committee process and approved by both chambers for the bill to survive.

SB 0224 – Various Utility Matters

Status: Dead

Authored by Senator Brandt Hershman (R, Monticello), and joined by co-authors Senators Ryan Mishler (R, Bremen), Dennis Kruse (R, Auburn) and Jean Breaux (D, Indianapolis), SB 224 contained a pseudo-RES – renewable energy resources were defined to include largely non-polluting, renewable sources of energy (other than energy from burning tires, garbage and other waste in waste-to-energy facilities). However, of the 6% standard to be achieved by the year 2020, 50% of it could be met using “advanced energy resources”, a new term that nevertheless included old, non-renewable resources such as waste coal (extremely high in mercury content) and “clean” coal (that, while capable of reducing sulfur dioxide, nitrogen oxide, mercury and other toxic air emissions, would add to Indiana’s disproportionate contribution to greenhouse gas emissions responsible for global warming), and that could encompass nuclear power.

SB 224 also included two pro-utility trackers that would have weakened the utility regulatory process by requiring the Indiana Utility Regulatory Commission (IURC) to approve investments regardless of whether they are just, reasonable and in the public interest. These tracker provisions could result in significant and unjustified increases in electricity rates.

SB 224 passed out of the Senate Utilities and Regulatory Affairs Committee on 1/22/08 by a vote of 6-3. An amendment offered by Senator Hershman on second reading to further expand the reach of one of the tracker provisions was adopted by voice vote. Meanwhile, Senator Lanane’s (D, Anderson) RES amendment – calling for 25% of Indiana’s electricity to be produced from truly renewable resources by 2025 – was defeated, and SB 224 passed the Senate on third reading by a vote of 39-9. SB 224 was sponsored in the House by Reps. Kreg Battles (D, Vincennes), and co-sponsors Dale Grubb (D, Covington), Jack Lutz (R, Anderson) and Dave Crooks (D, Washington). It was assigned to the House Commerce, Energy and Utilities Committee but failed to receive a hearing and is now dead. However, the language from SB 224 still survives in HB 1117 (described above).

Please continue to stay tuned for further developments. We appreciate your ongoing interest in our legislative efforts and your activism on behalf of ratepayers who seek to enact sound and sustainable energy policy for Indiana’s economic, public and environmental benefit.

Paul Chase, J.D.
CAC Governmental Affairs Liaison

Only one week remains for bills to pass out of committee in the second half of the session to remain alive in the final weeks of the 2008 Indiana General Assembly. Much attention in the coming week will be focused on property tax reform, as HB 1001, the main vehicle bill, will be heard in the Senate Tax and Fiscal Policy Committee on Tuesday, February 19, 2008. What follows is a brief update on priority bills in which CAC remains actively involved:

Good Bills

Please contact your State Senator and Representative and urge them to SUPPORT the following bills:

HB 1280 – Energy Efficient Buildings
Authored by Rep. Matt Pierce (D, Bloomington), and joined by co-authors Terri Austin (D, Anderson) and Greg Porter (D, Indianapolis), HB 1280 would require large, state, educational, and local public works building projects (other than public schools) – those that are newly constructed, as well as those subject to repair or alteration – to be designed with the goal of achieving the silver rating under the United States Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system, the Green Globes Two Globes level or an equivalent rating system accredited by the American National Standards Institute. These systems rate buildings based on the sustainability of the site, the materials and other resources, water and energy efficiency, indoor environmental quality, and innovation in design.

HB 1280 passed 7-3 out of the House Environmental Affairs Committee as amended on 1/23/08, and passed third reading in the House on 1/30/08 by a vote of 51-45. HB 1280 is scheduled for hearing in the Senate Energy and Environmental Affairs Committee on Monday, February 18, 2008 at 10:00 AM in Room 233. It is sponsored by Senators Brandt Hershman (R, Monticello), along with co-sponsors Vi Simpson (D, Bloomington) and Jean Breaux (D, Indianapolis).

HB 1090 – Climate Registry
HB 1090 would require Indiana to become a member of the Climate Registry, a collaboration between states (39 have joined), Canadian provinces and tribes to develop and manage a common greenhouse gas emissions reporting system in anticipation of future mandatory reduction policies. Authored by Representative Ryan Dvorak (D, South Bend), HB 1090 would ensure Indiana’s place at the table in developing policies related to CO2 air emissions. Given Indiana’s disproportionate contribution to greenhouse gas emissions (1st in the nation in per person CO2 air emissions and 5th in CO2 air emissions from coal-fired power plants overall), Indiana’s participation in the Climate Registry is key to acknowledging our shortcomings and facing our challenges for the betterment of generations to come.

HB 1090 passed 8-2 out of the House Environmental Affairs Committee on 1/23/08, and passed third reading in the House on 1/30/08 by a vote of 53-44. It has been assigned to the Senate Utility and Regulatory Affairs Committee, where it is sponsored by Senator Beverly Gard (R, Greenfield).

Bad Bills

Please contact your State Senator and Represenative and urge them to OPPOSE the following bills:

SB 0223 – Coal Gasification and Substitute Natural Gas
Authored by Senator Brandt Hershman (R, Monticello), with Senator Ryan Mishler (R, Bremen) as a second author and Senators Karen Tallian (D, Portage), John Waterman (R, Shelburn), and Dennis Kruse (R, Auburn) as co-authors, SB 223 would allow an out-of-state venture capitalist firm that seeks to build a coal gasification plant in Southern Indiana to assign tax credits to coal and substitute natural gas producers outside of Indiana. CAC opposed last year’s legislation, which paved the way for construction of this coal plant, as it locked natural gas suppliers, and hence ratepayers, into 30 year contracts for the substitute natural gas, whatever the price, that neither the Indiana Utility Regulatory Commission or other governmental entity could subsequently change or even review. CAC raised concerns that it would also spew millions of new tons of CO2 into Indiana’s atmosphere each year.

Promises made last year to garner support for the coal plant – that it would use Indiana coal and produce substitute natural gas in Indiana – are now removed in SB 223 in a classic “bait & switch” scheme designed to secure financing regardless of the negative impact to Indiana ratepayers or the economic best interests of the state.

SB 223 passed 10-0 out of the Senate Utilities and Regulatory Affairs Committee on 1/17/08, and passed third reading in the Senate by a vote of 47-0. It was heard in the House Commerce, Energy and Utilities Committee on Thursday, February 14, 2008, where it passed by a vote of 8-0. SB 223 is now eligible for second reading in the House. The House sponsor is Rep. Russ Stilwell (D, Boonville) with co-sponsors Reps. Dave Crooks (D, Washington), Jack Lutz (R, Anderson) and Eric Koch (R, Bedford).

HB 1117 – Various Utility Matters
Authored by Representative Russell Stilwell (D, Boonville), with co-authors Reps. Eric Koch (R, Bedford), Kreg Battles (D, Vincennes), and Jack Lutz, (R, Anderson), HB 1117 as introduced contained identical language to that in SB 223 (described immediately above). It passed 9-1 out of the House Commerce, Energy and Utilities Committee on 1/24/08 in that form. An amendment offered by Rep. Dale Grubb (D, Covington) on second reading, establishing a 10% tax credit for purchases of energy-generating wind or anaerobic digestion equipment from Indiana businesses, passed by voice vote.

HB 1117 passed third reading in the House by a vote of 81-8 and was heard in the Senate Utilities and Regulatory Affairs Committee on February 14, 2008. At the hearing, bill sponsor/committee chair, Senator Brandt Hershman (R, Monticello), stripped out Rep. Grubb’s tax credit language and inserted the language from SB 224 (described below).

HB 1117 now includes the original language paving the way for a coal gasification plant financed by captive ratepayers who are locked into long term contracts for the substitute natural gas and over which the IURC and the state has no power to alter, regardless of the availability of cheaper prices offered by other natural gas suppliers. It also contains two tracker provisions that weaken the utility regulatory process and allow utilities to reap massive profits at the expense of ratepayers regardless of the reasonableness or necessity of the investment. Finally, it contains a pseudo-RES (see SB 224 below) that ensures (1) Indiana’s continued over-reliance on coal, (2) increased air pollution, (3) increased health risks, and (4) potentially dramatic increases in utility rates when CO2 regulations are enacted due to Indiana’s disproportionate contribution to greenhouse gas air emissions. HB 1117 passed out of committee by a vote of 6-5 and is now eligible for second reading.

SB 0224 – Various Utility Matters
Authored by Senator Brandt Hershman (R, Monticello), and joined by co-authors Senators Ryan Mishler (R, Bremen), Dennis Kruse (R, Auburn) and Jean Breaux (D, Indianapolis), SB 224 contains a pseudo-RES – renewable energy resources are defined to include largely non-polluting, renewable sources of energy (other than energy from burning tires, garbage and other waste in waste-to-energy facilities). However, of the 6% standard to be achieved by the year 2020, 50% of it can be met using “advanced energy resources”, a new term that nevertheless includes old, non-renewable resources such as waste coal (extremely high in mercury content) and “clean” coal (that, while capable of reducing sulfur dioxide, nitrogen oxide, mercury and other toxic air emissions, will add to Indiana’s disproportionate contribution to greenhouse gas emissions responsible for global warming), and that could encompass nuclear power.

SB 224 also includes two pro-utility trackers that weaken the utility regulatory process by requiring the Indiana Utility Regulatory Commission (IURC) to approve investments regardless of whether they are just, reasonable and in the public interest. These tracker provisions could result in significant and unjustified increases in electricity rates.

SB 224 passed out of the Senate Utilities and Regulatory Affairs Committee on 1/22/08 by a vote of 6-3. An amendment offered by Senator Hershman on second reading to further expand the reach of one of the tracker provisions was adopted by voice vote. Meanwhile, Senator Lanane’s (D, Anderson) RES amendment – calling for 25% of Indiana’s electricity to be produced from truly renewable resources by 2025 – was defeated, and SB 224 passed the Senate on third reading by a vote of 39-9. SB 224 has since been assigned to the House Commerce, Energy and Utilities Committee, where it awaits hearing. It is being sponsored in the House by Reps. Kreg Battles (D, Vincennes), and co-sponsors Dale Grubb (D, Covington), Jack Lutz (R, Anderson) and Dave Crooks (D, Washington).

Please continue to stay tuned for further developments. We appreciate your ongoing interest in our legislative efforts and your activism on behalf of ratepayers who seek to enact sound and sustainable energy policy for Indiana’s economic, public and environmental benefit.

Paul Chase, J.D.
CAC Governmental Affairs Liaison

This week marked the deadline for bills to pass third reading in their respective houses of origin to remain alive. The Senate adjourned on the evening of January 29th, and the House adjourned on the evening of January 30th. Bills that did not receive a hearing in committee, or that did not pass the third reading deadlines in the House and Senate, are now dead, although language from a dead bill can still be inserted in other bills moving through the House and Senate in the second half of the session.

Thanks to all of you who made calls to members of the House and Senate in response to our action alerts on key energy bills. The following is a brief synopsis of those bills and where they now stand:

Good Bills (STILL ALIVE)

HB 1090 – Climate Registry
HB 1090 would require Indiana to become a member of the Climate Registry, a collaboration between states (39 have joined), Canadian provinces and tribes to develop and manage a common greenhouse gas emissions reporting system in anticipation of future mandatory reduction policies. Authored by Representative Ryan Dvorak (D, South Bend), HB 1090 would ensure Indiana’s place at the table in developing policies related to CO2 air emissions. Given Indiana’s disproportionate contribution to greenhouse gas emissions (1st in the nation in per person CO2 air emissions and 5th in CO2 air emissions from coal-fired power plants overall), Indiana’s participation in the Climate Registry is key to acknowledging our shortcomings and facing our challenges for the betterment of generations to come.

Current Status:
HB 1090 passed 8-2 out of the House Environmental Affairs Committee on 1/23/08, and passed third reading in the House on 1/30/08 by a vote of 53-44. It has been assigned to the Senate Utility and Regulatory Affairs Committee, where it is sponsored by Senator Beverly Gard (R, Greenfield). CAC actively supports HB 1090.

HB 1280 – Energy Efficient Buildings
HB 1280 would require large, state, educational, and local public works building projects (other than public schools) – those that are newly constructed, as well as those subject to repair or alteration – to be designed with the goal of achieving the silver rating under the United States Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system, the Green Globes Two Globes level or an equivalent rating system accredited by the American National Standards Institute. These systems rate buildings based on the sustainability of the site, the materials and other resources, water and energy efficiency, indoor environmental quality, and innovation in design.

Current Status:
HB 1280 passed 7-3 out of the House Environmental Affairs Committee as amended on 1/23/08, and passed third reading in the House on 1/30/08 by a vote of 51-45. HB 1280 awaits committee assignment in the Senate, where it is sponsored by Senators Brandt Hershman (R, Monticello), Vi Simpson (D, Bloomington) and Jean Breaux (D, Indianapolis). CAC actively supports HB 1280.

Good Bills (DEAD)

HB 1102 – Renewable Energy Development (DEAD)
HB 1102 was defeated in the House Commerce, Energy and Utilities Committee on 1/24/08 by a vote of 8-3. Authored and championed by the Committee Chairman, Representative Dave Crooks (D, Washington) with co-authorship by Rep. Ryan Dvorak (D, South Bend), HB 1102 would have required electric utilities to provide at least 10% of their electricity from renewable resources, such as wind, solar and biomass, by 2018. CAC strongly supported this bill.

SB 0295 – Renewable Energy Standards (DEAD)
Introduced by Senator Tim Lanane (D, Anderson), SB 225 called on utilities to supply 25% of Indiana’s electricity using only truly renewable resources by 2025. Unfortunately, Senator Beverly Gard (R, Greenfield), Chair of the Senate Committee on Energy and Environmental Affairs, failed to give Senator Lanane’s bill a hearing in committee. Senator Lanane later attempted to amend SB 295 language into SB 224 (below) on second reading in the Senate, but was defeated by a vote of 16-31. CAC strongly supported this bill.

Bad Bills (STILL ALIVE)

SB 0224 – Various Utility Matters
Authored by Senator Brandt Hershman (R, Monticello), SB 224 contains a pseudo-RES – renewable energy resources are defined to include largely non-polluting, renewable sources of energy (other than energy from burning tires, garbage and other waste in waste-to-energy facilities). However, of the 6% standard to be achieved by the year 2020, 50% of it can be met using “advanced energy resources”, a new term that nevertheless includes old, non-renewable resources such as waste coal (extremely high in mercury content) and “clean” coal (that, while capable of reducing sulfur dioxide, nitrogen oxide, mercury and other toxic air emissions, will add to Indiana’s disproportionate contribution to greenhouse gas emissions responsible for global warming), and that could encompass nuclear power.

SB 224 also includes two pro-utility trackers that weaken the utility regulatory process by requiring the Indiana Utility Regulatory Commission (IURC) to approve investments regardless of whether they are just, reasonable and in the public interest. These tracker provisions could result in significant and unjustified increases in electricity rates.

Current Status:
SB 224 passed out of the Senate Utilities and Regulatory Affairs Committee on 1/22/08 by a vote of 6-3. An amendment offered by Senator Hershman on second reading to further expand the reach of one of the tracker provisions was adopted by voice vote. Meanwhile, Senator Lanane’s RES amendment (discussed in SB 295 above) was defeated, and SB 224 passed the Senate on third reading by a vote of 39-9. SB 224 now awaits committee assignment in the House, where it is being sponsored by Representatives Battles (D, Vincennes), Grubb (D, Covington), Lutz (R, Anderson) and Crooks (D, Washington). CAC strongly opposes this bill in its present form and will continue to work for it’s defeat.

HB 1117 and SB 0223 – Coal Gasification and Substitute Natural Gas
These companion bills, authored by Representative Russell Stilwell (D, Boonville) in the House and Senator Brandt Hershman (R, Monticello) in the Senate, would allow a foreign venture capitalist firm that seeks to build a coal gasification plant in Southern Indiana to assign tax credits to coal and substitute natural gas producers outside of Indiana. CAC opposed last year’s legislation that paved the way for construction of this coal plant, as it locked natural gas suppliers, and hence ratepayers, into 30 year contracts for the substitute natural gas, whatever the price, that neither the Indiana Utility Regulatory Commission or other governmental entity could subsequently change or even review.

Promises made last year to garner support for the coal plant – that it would use Indiana coal and produce substitute natural gas in Indiana – are now removed in SB 223 and HB 1117 in a classic “bait & switch” scheme that nevertheless continues to have widespread support in the Indiana General Assembly. HB 1117 passed 9-1 out of the House Commerce, Energy and Utilities Committee on 1/24/08. An amendment offered by Rep. Dale Grubb (D, Covington) on second reading, establishing a 10% tax credit for purchases of energy-generating wind or anaerobic digestion equipment from Indiana businesses, passed by voice vote.

Current Status:
HB 1117 passed third reading in the House by a vote of 81-8 and has been assigned to the Senate Utilities and Regulatory Affairs Committee, where it is sponsored by Senators Brandt Hershman (R, Monticello) and Richard Young (D, Milltown). SB 223 passed 10-0 out of the Senate Utilities and Regulatory Affairs Committee on 1/17/08, and passed third reading in the Senate (without amendment) by a vote of 47-0. It awaits committee assignment in the House, where it is sponsored by Reps. Crooks (D, Washington) and Lutz (R, Anderson). Despite Rep. Grubb’s favorable amendment to HB 1117, CAC will continue to oppose both HB 1117 and SB 223 because of the deceptive and costly coal plant financing scheme that ratepayers will be required to underwrite for the next 30 years even though Wall Street investors are unwilling to do so.

Bad Bills (DEAD)

HB 1044 – Livestock Waste Anaerobic Digestion Systems (DEAD)
An innocuous bill as introduced, author Rep. Dale Grubb (D, Covington) offered an amendment in the House Agriculture and Rural Development Committee seeking to establish a so-called RES – although one containing coal in the definition of “renewable resources” – on par with his failed attempt last year to push a pro-utility agenda that included three “tracker” provisions weakening the utility regulatory process and bestowing unreasonable profits on Indiana’s largest investor-owned monopoly utilities (IOUs) at ratepayer expense. HB 1044 was never voted on in committee and is now dead. CAC strongly opposed the amendment.

HB 1300 – Labeling Standards for Milk (DEAD)
While not included in our earlier reports, HB 1300 is nevertheless important because it would have prohibited farmers from telling consumers that they do not use artificial hormones on their dairy cows. Under HB 1300, labels such as "Our farmers' pledge: no artificial growth hormones," "From cows not treated with the growth hormone rBST," and "free of artificial growth hormones" would have been banned on the basis that they cannot be confirmed through laboratory analysis or can only be supported by sworn statements, affidavits, or testimonials.

Due to intensive and effective activism by consumers, dairy farmers, farm and agricultural organizations, public health, animal protection and environmental groups, food processors and retailers, HB 1300 failed to be called for third reading in the House despite passing out of the House Agriculture and Rural Development Committee by a vote of 10-0 on 1/22/08, and is now dead. CAC actively opposed HB 1300.

Please continue to stay tuned for further developments. We appreciate your ongoing interest in our legislative efforts and your activism on behalf of ratepayers who seek to enact sound and sustainable energy policy for Indiana’s economic, public and environmental benefit.

Paul Chase, J.D.
CAC Governmental Affairs Liaison

While property tax reform issues take center stage in the 2008 session of the Indiana General Assembly, CAC’s efforts continue to focus on development of a sustainable energy policy that promotes the economic, public and environmental health of Indiana while protecting the pocketbooks of ratepayers and taxpayers.

This has been one of the more fast-paced short sessions in recent history, in large part due to the number of energy-related bills that have been heard in committee. Thursday (1/24) was the last day for bills to be voted out of committee to remain alive, and next week will be the deadline for bills to pass their house of origin….at which time the session will already be half over.

HB 1001- Property Tax Relief
The Governor’s plan for property tax relief passed out of the House of Representatives on 1/24/08 by a vote of 93-1. The bill was amended considerably on second reading in a largely respectful process executed with support from both sides of the aisle. The bill will now move to the Senate.

Good Bills

HB 1102 - Renewable Energy Development (Dead)
Unfortunately, our best chance for passage of a purely-focused Renewable Electricity Standard (RES) was defeated in the House Commerce, Energy and Utilities Committee on 1/24/08 by a vote of 8-3. Authored and championed by the Committee Chairman, Representative (Rep.) Dave Crooks (D, Washington) with co-authorship by Rep. Ryan Dvorak (D, South Bend), HB 1102 would have required electric utilities to provide at least 10% of their electricity from renewable resources, such as wind, solar and biomass, by 2018.

Voting with Chairman Crooks and Rep. Dvorak in support of the bill was Rep. Sandra Blanton (D, Orleans), a freshman legislator who replaced retiring Rep. Jerry Denbo. Of the eight Reps. voting against HB 1102, five live in areas with strong wind potential, thereby voting against their district’s best economic interests: Chester Dobis (D-Merrillville), Ed Soliday (R-Valparaiso), Dan Stevenson (D-Highland), Tim Neese (R-Elkhart), and Jack Lutz (R-Anderson).

The remaining three Reps. voting “no” live in areas near to particulate pollution hot spots, voting against legislation that would improve their state’s public and environmental health: Kreg Battles (D-Vincennes), Bob Behning (R-Indianapolis), and David Frizzell (R-Indianapolis). Rep. Paul Roberston (D, Depauw), the twelfth member of the committee, and who indicated to CAC his support for HB 1102’s passage, was absent for the vote, surfacing shortly thereafter to vote on other bills before the committee.

Failure to pass HB 1102 out of committee does not mean the death of an RES for the 2008 legislative session, as a bill in the Senate (SB 224, discussed below), containing a pseudo-RES which we do not support in present form, is likely to remain in play in the second half of the session. However, our chances of passing a true RES; one that decreases – not increases – our disproportionate contribution to greenhouse gas and toxic air emissions and contains provisions that stimulate meaningful economic development in a new energy market, are slim.

SB 0295 - Renewable Energy Standards (Dead)
Rep. Crooks’ visionary leadership in developing true renewable energy policy through HB 1102 is mirrored in the Senate this session in the form of SB 0295, introduced by Senator Tim Lanane (D, Anderson). Senator Lanane’s even more aggressive approach calls on utilities to supply 25% of Indiana’s electricity using only truly renewable resources by 2025. This 25 x 2025 standard was recently adopted in Illinois, 75% of whose RES will be achieved through wind resources (and last time we checked, the wind still blew from West to East, further confirming Indiana’s ability to capitalize on over 40,000 MW of wind energy potential– almost twice the electric generation capacity currently in place in Indiana – as established by the U.S. Department of Energy’s National Renewable Energy Lab).

Unfortunately, Senator Beverly Gard (R, Greenfield), Chair of the Senate Committee on Energy and Environmental Affairs, failed to give Senator Lanane’s bill a hearing; hence, SB 295 is now dead (though its language could still be resurrected).

Despite the coal-fest that continues to dominate in the Indiana General Assembly to the exclusion of a diversified energy portfolio beneficial to Indiana’s future economic, health and environmental well-being, two positive bills have made it out of committee and are winding their way through the legislative process. Each gives hope that our efforts to advance sustainable energy policy this session will bear fruit.

HB 1090 - Climate Registry
This bill would require Indiana to become a member of the Climate Registry, a collaboration between states (39 have joined), Canadian provinces and tribes to develop and manage a common greenhouse gas emissions reporting system in anticipation of future mandatory reduction policies. Authored by Representative Ryan Dvorak (D, South Bend), HB 1090 would ensure Indiana’s place at the table in developing policies related to CO2 air emissions. Given Indiana’s disproportionate contribution to greenhouse gas emissions (1st in the nation in per person CO2 air emissions and 5th in CO2 air emissions from coal-fired power plants overall), Indiana’s participation in the Climate Registry is key to acknowledging our shortcomings and facing our challenges for the betterment of generations to come.

HB 1090 passed 8-2 out of the House Environmental Affairs Committee on 1/23/08 and is eligible for vote on 3rd reading in the House as early as 1/29/08.

HB 1280 - Energy Efficient Buildings
This bill would require large, state, educational, and local public works building projects (other than public schools) – those that are newly constructed, as well as those subject to repair or alteration – to be designed with the goal of achieving the silver rating under the United States Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system, the Green Globes Two Globes level or an equivalent rating system accredited by the American National Standards Institute.

These systems rate buildings based on the sustainability of the site, the materials and other resources, water and energy efficiency, indoor environmental quality, and innovation in design. CAC testified in support of HB 1280 because it will help to improve Indiana’s poor rating (41st among 50 states and D.C. according to the American Council for an Energy Efficient Economy) in energy efficiency investments. The ACEEE estimates that adopting a comprehensive set of policies for advancing energy efficiency, of which building standards is but one component, could lower national energy use by 18% in 2010 and 33% by 2020. Along with policies to advance renewable energy, these policies could dramatically lower U.S. CO2 emissions while saving consumers and business $500 billion net by 2020.

HB 1280 passed 7-3 out of the House Environmental Affairs Committee on 1/23/08 and is eligible for vote on 3rd reading in the House as early as 1/29/08.

Bad Bills

HB 1044 – Livestock Waste Anaerobic Digestion Systems (ammended with a bad Renewable Electricity Standard)
The renewable electricity debate began this session when Rep. Dale Grubb (D, Covington), attempted to amend his version of an RES into HB 1044. An innocuous bill as introduced, Rep. Grubb’s true intent was to offer an amendment in the House Agriculture and Rural Development Committee seeking to establish a so-called RES – although one containing coal in the definition of “renewable resources” – on par with his failed attempt last year to push a pro-utility agenda that included no less than three specious “tracker” provisions that weaken the utility regulatory process and bestow unreasonable profits on Indiana’s largest investor-owned monopoly utilities (IOUs) at ratepayer expense.

Other than the Indiana Farm Bureau, which testified in support of the RES portion of the bill, Citizens Action Coalition, other environmental advocacy groups, and the Indiana Energy Association itself (the trade association representing Indiana’s IOUs), testified in opposition to Rep. Grubb’s amendment. Committee Chairman Phillip Pflum (D, Milton), decided not to take a vote, and when he failed to call HB 1044 in a subsequent meeting of his committee, the bill died.

Though misguided and unsupported even by the utilities he is attempting to benefit with additional tracker language attached to a “dirty” (containing coal) RES, Rep. Grubb is nevertheless undeterred in his mission to claim an RES in his name alone, and without regard for the diminishing window of opportunity to jump start a true renewable energy market while effectively reducing Indiana’s disproportionate contribution to greenhouse gas and other toxic air emissions and the significant costs associated with future carbon dioxide regulation.

SB 0224 - Various Utility Matters
Senator Brandt Hershman (R, Monticello), Chair of the Senate Utilities and Regulatory Affairs Committee, held a hearing in his committee on his version of a pseudo-RES – in the form of SB 0224. SB 224 gives the appearance of an RES – renewable energy resources are defined to include largely non-polluting, renewable sources of energy (other than energy from burning tires, garbage and other waste in waste-to-energy facilities). However, of the meager 6% standard to be achieved by the year 2020, 50% of it can be met using “advanced energy resources”, a new term that nevertheless includes old, non-renewable resources such as waste coal (extremely high in mercury content) and “clean” coal (an oxymoron).

Also troubling from CAC’s perspective is the inclusion of language permitting development of “other non-carbon dioxide emitting or low carbon dioxide emitting electricity generating technologies”. While IGCC (coal gasification) technology, “with the capability for carbon capture and sequestration through storage or enhanced oil recovery” (neither of which are designed to permanently and safely remove CO2 from the atmosphere, a process that, by the industry’s own best estimates, is over a decade-and-a-half away) is cited as an example, the term also embraces nuclear power, an issue we thought we had put to rest once and for all after the Marble Hill debacle.

Another bill provision would allow Indiana’s IOUs to “track” research and development costs associated with greenhouse gas emissions. While CO2 capture and sequestration (CCS) is critical to reduce global warming’s most dire consequences, U.S. taxpayers are already paying for research. Indiana ratepayers should not be required to underwrite incredibly expensive experiments (in the billions of dollars) that may never prove successful (though utilities will no doubt profit from them), and that investors on Wall Street are unwilling to finance.

The point of all of this is that incentives for using coal in new and theoretically improved ways abound. Both Indiana and the federal government are actively supporting the development of “clean coal technology” in the form of federal, state and local tax incentives and rate adjustment mechanisms allowing utilities to “track” construction and operations costs and to earn profits above and beyond what they would otherwise be allowed to earn. While touted as a tried-and-true technology, only a few IGCC plants are currently operating in the U.S., and none have been commercially established on the scale of the Duke-Edwardsport plant, recently approved by the IURC, or others still being pursued (for example, see the discussion on SB 223 below). Additionally, of the 20 or so new IGCC plants that have been proposed (many of which have since been shelved because too risky in view of anticipated and costly CO2 regulation), only one – a long-term D.O.E. project dubbed FutureGen – would be equipped with the technology needed to capture the millions of tons of CO2 these plants would produce every year.

On the other hand, commercially viable “off the shelf” technologies for reducing greenhouse gas emissions, which more than half the states in the U.S. are aggressively pursuing – namely, energy efficiency and renewable energy – are given lip service in SB 224; but with the inclusion of coal and possibly nuclear power, render a renewable electricity standard (RES) meaningless, while guaranteeing further development of non-sustainable CO2-emitting coal plants and hazardous nuclear waste. Yet another tracker provision would reward utilities for upgrading their electric lines and transmission and distribution facilities – quality-of-service investments for which utilities should be penalized, not rewarded, if not making on an ongoing basis.

Nonetheless, SB 224 passed out of committee on 1/22/08 by a vote of 6-3, despite vigorous opposition by CAC and the Indiana Industrial Energy Consumers (INDIEC). SB 224 is eligible for third reading in the Senate as early as 1/29/08. If the Senate votes for its passage, the bill will be in play during the second half of the session.

SB 0223 & HB 1117 - Coal Gasification and Substitute Natural Gas
On the subject of IGCC plants, SB 0223, authored by Senator Brandt Hershman (R, Monticello), and its companion in the House – HB 1117, authored by Rep. Russell Stilwell (D, Boonville), both passed out of committee on a fast track reminiscent of enabling legislation passed last year. These bills would allow a foreign venture capitalist firm that seeks to build a coal gasification plant in Southern Indiana to assign tax credits, passed last session (which we also opposed), to coal and substitute natural gas producers outside of Indiana.

SB 223 and HB 1117 represent a classic “bait & switch” scheme that builds on a proposal legislators were duped into passing last year on the false promise (now clear by the plain language in both bills) that the coal gasification plant – for which commercial reliability has yet to be established (in the words of the principal himself) – would use Indiana coal, and would produce substitute natural gas in Indiana, in accordance with the Governor’s Hoosier Homegrown Energy Plan.

Apart from the millions of tons of new CO2 and other toxic air emissions the proposed plant would annually spew into the atmosphere (Indiana ranks 49th in terms of environmental quality per FORBES.com), we opposed last year’s legislation because it locked natural gas suppliers, and hence ratepayers, into 30 year contracts for the substitute natural gas, whatever the price, that neither the Indiana Utility Regulatory Commission or other governmental entity could subsequently change or even review.

The old adage - “If you fool me once, shame on you. If you fool me twice, shame on me” – befits SB 223 and HB 1117. Ratepayers should be protected from money-making schemes of venture capitalists too risky for Wall Street and based on bait and switch tactics that will do further harm to Indiana’s economic, public and environmental well-being. Nevertheless, and over CAC’s strong objections to these bills, SB 223 passed 10-0 out of the Senate Utilities and Regulatory Affairs Committee on 1/17/08 and is eligible for vote on 3rd reading in the Senate on 1/28/08. HB 117 passed 9-1 out of the House Commerce, Energy and Utilities Committee on 1/24/08 and is eligible for vote on 3rd reading in the House as early as 1/29/08. Assuming both bills pass out of their respective chambers of origin in the exact same form, they could be presented to the Governor for signature into law at the start of the second half of the session.

Stay tuned for further developments on these and other bills making their way through the 2008 legislative session. Future reports will also focus on other matters pending before the Indiana General Assembly of importance to our members.

Paul Chase, J.D.
CAC Governmental Affairs Liaison