Commentary

By GRANT SMITH

When it comes to the price of natural gas, the only thing for certain seems to be that it will continue to be volatile in nature as unbridled energy traders make billions of dollars for the oil and gas industry at the expense of the utility ratepayers. The lack of Federal oversight and the continuing market abuse highlight the need for greater scrutiny of these commodity markets; they also highlight the need for state regulators to look long and hard at gas purchasing practices of the regulated gas utilities.

With upward price pressure on natural gas, there has been developing interest in coal gasification for synthetic gas. The Indiana Utility Regulatory Commission recently initiated an investigation into the viability of such technology to determine if a thirty year contract to purchase gas and electricity from a proposed coal gasification plant in southern Indiana would be in the public interest and how the costs for such a facility should be allocated.

It should be noted that the gasification technology proposed is not commercially proven on the scale contemplated. The plant has not been built, and the Commission has not examined the contracts yet. In short, the IURC has many issues to consider before determining if such a contract is really in the public interest.

The Indiana House, however, seems to think they have all these issues figured out when they passed House Bill 1722 a few weeks ago.

The legislation essentially directs the IURC to make Indiana ratepayers the guarantors of a speculative plant with sight-unseen-contracts preempting their ongoing investigation. House Bill 1722 would force ratepayers to pick up the tab not only for the cost of this unproven technology but also for replacement gas if the technology fails – with little or no risk to the supplier. (During plant outages, ratepayers would have to pay to meet the obligations of the synthetic gas contract while simultaneously paying for replacement gas.) HB 1722 locks the IURC and ratepayers into a 30 year contract for gas and electricity supplied by the proposed power plant even if there are other cheaper resources. It prevents the Commission from instituting ratepayer protections if there are changes in “market conditions” or “other circumstances.”

Finally, HB 1722 directly conflicts with and overrides current law which mandates that gas utilities provide service at the cheapest cost to ratepayers.

Therefore, the sole purpose of HB 1722 is to enrich a group of power plant developers and protect the financial interests of utility companies at the expense of ratepayers. It has little to do with energy independence or providing cheaper utility service to Indiana ratepayers. Tell your State Senator’s to let the IURC investigation go forward and oppose any legislation that locks ratepayers into a 30 year contract regardless of costs.

Sincerely,

Grant Smith

Executive Director

Citizens Action Coalition

Editor's Note: Grant Smith is a former Chesterton resident and graduate of Chesterton High School

Posted 3/8/2007