Indiana court wades into coal gas plant dispute

INDIANAPOLIS (AP) -- The Indiana Supreme Court agreed Thursday to step into a dispute between backers and opponents of a proposed $2.8 billion coal-gasification plant in southwestern Indiana.

The justices said they will hear Indiana Gasification LLC's appeal of a lower court ruling invalidating a section of the company's contract with the Indiana Finance Authority. The contract required the state to buy the plant's synthetic gas at a fixed rate and resell it on the open market for a 30-year period, with Indiana utility customers receiving the profits or shouldering the losses.

"This is just what I expected it to do. And then the next step will be taken, whatever that is," said Senate Utility Committee Chairman Jim Merritt, R-Indianapolis.

Legislation approved in April requires the Indiana Utility Regulatory Commission to consider new ratepayer protections that were not initially in place when regulators first approved the deal. Opponents of the Rockport plant, including natural gas utility Vectren Corp, said the contract would cost Indiana utility customers as much as $1.1 billion in higher rates. The 30-year deal would tie 17 percent of Hoosier gas users' bills to the Rockport plant's rate.

Developers suspended work on the plant days after the bill's passage and said that the project was effectively dead. A spokesman for the developers did not return a phone call seeking comment Thursday.

Vectren spokesman Mike Roeder said both sides had asked the high court to step into the dispute.

"I guess I view it as another step in the process," he said.

The plant about 30 miles east of Evansville, which is also run by New York-based Leucadia National Corp, would turn coal into synthetic natural gas.

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