Appeals Court Decision Clears Path for Coal Gas Plant

ROCKPORT, Ind., Oct. 30, 2012 /PRNewswire-USNewswire/ -- The Appeals Court decision handed down today sides with Indiana Gasification and the Indiana Finance Authority on almost every major issue raised by the appeal. 

The court sided with IG-IFA on the larger questions of the appeal.  Specifically they found that the contract was an enforceable contract,[1] that the contract was a final contract[2] and that the contract did provide a guarantee of savings[3].

Commenting on the opinion, Indiana Gasification Project Director Mark Lubbers said, "We are very pleased with 95 percent of the Court opinion, and we see a clear path to resolving the technical issue that the court identified."

The Court reversed the IURC approval based on only one provision in the contract, namely the definition of retail end use customer, which they found in conflict with the statute.

The IG-IFA brief on this question affirmed that the parties to the contract intended no conflict with the statute:

"The record evidence is that the definitional language included in the SNG Contract was meant simply to supplement the definition of "REUC" in the SNG Statute by effectuating the General Assembly's intent."  (Appellees' Brief page 43)

IG's view of this issue is (and has been essentially identical to the position taken by the Industrial Group) that the statutory definition of Retail End Use Customer excluded so-called "transportation" gas customers who buy their natural gas direct, not through a utility.

(The reason these large buyers were excluded from the law is that they have access to longer term hedging strategies and are better positioned to absorb gas price volatility.  Additionally, including them in the contract would cause the expected savings for residential and commercial utility customers to be diminished. )

[1] Opinion p 29  "We therefore find that the Contract meets the common law definition of an enforceable contract."

[2] Opinion p 30. "we conclude that the Contract may be final even if related contracts such as the Subordination Agreement or the UMAs have not yet been negotiated.

[3] Opinion p. 35 "…we now turn to the Contract to determine whether it conforms to our construction of the Legislature's intended meaning when it provided for a "guaranteed savings to retail end use customers." We conclude that it does."

SOURCE Indiana Gasification