Today, the Indiana Supreme Court issued a ruling that could force consumers of natural gas in Indiana to pay the long-term construction and operational costs of a private sector coal gasification plant in Southern Indiana. Back in 2010, the Indiana Utility Regulatory Commission, or the IURC, signed a contract with Leucadia National Corporation to allow the company to pass on the full costs, plus a profit margin, of construction, production, and distribution of output from its proposed coal gasification plant in Spencer County. This unprecedented deal would force the Indiana Financial Authority, or the IFA, which is the state agency that purchases natural gas from producers for distribution across the state to consumers, to purchase Leucadia’s product even if cheaper alternatives are available. This would last from the start of the operation of the proposed Spencer plant through the following thirty years. The deal, dubbed the Leucadia Tax, was met with opposition by industrial and residential consumers, as well as many public interest organizations. A coalition of citizens groups, consumer advocates, environmental groups, faith leaders, and low-income and senior advocacy organizations banded together to challenge the contract in court. In October of 2012, the Indiana Court of Appeals threw out the contract between the IFA and the Indiana subsidiary of Leucadia. The opposition coalition also lobbied the state legislators to take action to kill the Leucadia Tax. In the Spring of 2013, the General Assembly passed Senate Bill 494, which would allow the IURC to review the Leucadia contract, with a view to renegotiating a contract that would better protect Indiana consumers if the Appeals Court decision was eventually upheld by the Indiana Supreme Court. One member of the coalition formed to stop the Leucadia Tax was the Indiana branch of the Sierra Club. Correspondent David Murphy spoke to Jodi Perras, Indiana Campaign Representative for the Sierra Club’s Beyond Coal Campaign, for today’s WFHB feature exclusive.
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Under rules announced last week by the Environmental Protection Agency, new power plants will be limited in how much carbon they can emit into the atmosphere. The new rule is expected to most dramatically affect coal-fired plants, which will be forced to capture at least some of the carbon they release. Both supporters and detractors of the rules say they will make it more difficult to build new, financially viable coal plants. The Hoosier Chapter of the Sierra Club has often brought attention to the environmental hazards of coal power. Assistant News Director Joe Crawford spoke with Jody Perras, from the Sierra Club’s Beyond Coal Campaign, about the potential effects of the rules for today’s WFHB feature exclusive.
A private coalition of environmental groups has forced Duke Energy Indiana to agree to close its old coal-fired power plants in Terre Haute.
The settlement between Duke and the coalition, composed of the Sierra Club, Citizens Action Coalition, Valley Watch, and Save the Valley, was reached before an Indiana Department of Environment administrative law judge. The settlement requires Duke to cease burning coal at most of its Wabash River coal-fired power plant in Vigo County and to invest in new renewable energy projects.
In return, the environmental coalition will drop its appeal of the air pollution permit issued by IDEM to Duke for its Edwardsport coal-gasification and combined-cycle power plant to the south.
We spoke to Jodi Perras, of the Indiana branch of the Sierra Club, about this settlement, as well as another parallel suit concerning Duke.
She said that Duke agreed to retire their coal-fired units and that there was a commitment from Duke to invest in some clean-energy projects.
The result is that a total of 668 megawatts of coal-fired power will come offline.
Currently, Indiana gets more than 90 percent of its electricity from burning coal.
Besides emitting more green-house gases than other fossil fuels, coal-fired power plants are also the country’s biggest source of mercury, sulfur dioxide pollution, carbon pollution, and many other pollutants that can trigger heart attacks and contribute to respiratory problems.
Duke also agreed to pursue either a new feed-in tariff program to purchase at least 30 megawatts of solar power from its Hoosier customers or to purchase or install at least 15 megawatts of wind or solar generating capacity from new facilities built in Indiana.
A feed-in tariff enables customers to earn money from their own solar panels by selling excess power back to electric utilities.
“Duke said previously that they thought they would retire the units at Wabash river because of the mercury and the toxin rule that’s supposed to go into effect in 2015. Those are old plans from the 50’s or 60’s but the mercury rule is being challenged in federal court. If we were to lose that case, Duke still has to retire those units by 2018,” says Perras.
Four coal burning units are required to close by 2015 and the sixth by 2018. While they have settled this suit, the coalition is still continuing with its parallel suit against Duke before the Indiana Court of Appeals to overturn Indiana Utility Regulatory Commission decisions regarding the Edwardsport plant.
In December of 2012, the IURC approved additional rate increases tied to the Edwardsport coal gasification plant which would allow Duke to pass on rising construction costs to power consumers.
The plant is currently $1.6 billion over budget and still not operating at full capacity after eight years of design, construction, and testing.
“We have briefs that are due on Monday so we have been working on that and there’s an opportunity for the folks involved to do a reply brief. The court of appeals will probably schedule those and it’ll take several months before the court issues a decision,” Perras says.
There are several issue in question in this suit: whether the IURC violated the law by failing to consider the long-term costs to Duke Energy ratepayers of controlling the plant’s carbon pollution.
This issue was raised in testimony by citizens groups and ignored in the IURC’s decision, in violation of Indiana law; whether the IURC should have appointed a Special Administrative Law Judge to conduct a formal investigation into reports of behind-closed-doors communications, undue influence, conflicts of interest, and other misconduct involving high-level officials of Duke Energy and the IURC and whether the IURC failed to act as an impartial judge by directing Duke Energy to hire an outside consultant to monitor problems at Edwardsport and report to the IURC on its progress, and then refusing to place the reports into the public record.
This scandal involving conflict of interest between state regulators and Duke has resulted in several firings and transfers but no reversal of the resulting tainted regulatory rulings.