On Tuesday, Feb. 19, House Bill 1117 passed the state Senate by a vote of 33 to 12, paving the way for Indiana Gasification LLC along with the rest of the utility industry to pass costs on to ratepayers without regulatory oversight. “Any benefit homeowners might see this session from property tax relief would be taken away with passage of this legislation in the form of increased heating and electric bills. Ratepayers should be outraged. In these times of economic hardship we must have balance in regulatory oversight of our $6.5 billion utility industry. Instead utility companies would be given a blank check,” said Grant Smith, Executive Director for the Citizens Action Coalition of Indiana.
The legislation authored by Senator Brandt Hershman (R, Monticello) in the Senate and its companion House bill 1117, authored by Representative Russell Stilwell (D, Boonville) in the House would allow a 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 (HB 1722) 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. 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.
Although a number of legislators and the Governor are ignoring the costs of Global Warming, Wall Street is not. On Feb 4th, 2008 the major investment banks including Citigroup Inc, J.P.Morgan Chase & Co. and Morgan Stanley said they will begin requiring utilities seeking financing for plants to prove the plants will be economically viable even under potentially stringent federal caps on carbon dioxide, the main man-made greenhouse gas. Carbon capture and sequestration is extremely costly and unproven technology.
HB 1117 was amended to include a sham renewable electricity standard of only 6% by 2020, one of the weakest standards in the country because it is one of the only standards that would actually include waste coal and "clean coal", and would allow up to 50% of the standard to be met with these non-renewable, polluting resources. "This standard will do little to bolster the renewable energy market and is another example of the utility industry co-opting the legislative process", says Smith.
The bill was also loaded up with utility tracking provisions which would result in hundreds of millions of dollars in increased gas and electric rates, shifting risk from the utility industry to the average homeowner already struggling with rising energy costs, property taxes and debt.
The legislation expands the ability of utilities to track the costs of new investments into rates while they avoid regulatory scrutiny to determine their reasonableness. In short, this legislation gives the utilities the best of both worlds by having a weak regulatory environment that ensures the ability to use the rate-paying public as their bank to finance unneeded risky investments and eliminating any incentive to control costs.