SPENCER CO, IN (WFIE) -
A debate is heating up among Indiana power companies, and the developers behind the proposed gasification plant in Rockport.
The gasification plant just recently negotiated a long contract with the State of Indiana to buy that product.
Vectren has now appealed that contract until there is a guarantee this plant will serve as a profit to rate payers, not a loss.
"Our argument is, 'Hey, this plant made sense several years ago, but the world has changed from a natural gas pricing standpoint as such it is no longer needed,'" Vectren's spokesperson, Chase Kelley, said.
Vectren says they had been in contract negotiations to also purchase the substitute natural gas, but says the 30 year contract didn't make economic sense. However, the state did sign the contract, meaning every rate payer is now invested.
"This plant is going to produce gas likely in the $7,$8,$9 range. Why would we want to be forced to carry this price when we can already buy it in the open market at a price that is substantially lower?" Kelley asks.
E3 Gasification argues the price of natural gas is unreliable and its plant will be more consistent by purchasing coal and converting it into SNG.
"It fluctuates between low and high all the time and that's why people are concerned about their home heating prices once in a while, so this is a way to moderate that risk," said William Rosenberg with E3 Gasification.
"Five, six years ago, that's back when the price of gas was very volatile and there were also concerns that we were going to run out of natural gas as a nation. Since 2010, we've seen the emergence of Shale gas, and Shale Gas is found anywhere between 2,000 and 10,000 feet below the surface of the earth. It is abundant, it is domestic, and we are drilling for it in 30 of the 50 states," Kelley said.
The plant could be operational in about five years. Vectren estimates residential customers will have to pay $375 for the following eight years. An average small business would pay $2,000 more and a small industrial customer would pay $250,000 more.
"If this plant moves forward and it is constructed and again, if it is built and starts to sell this gas, it's going to lose and our customers again will see that on their bill," Kelley said.
If the price of SNG was cheaper than natural gas, then customers would share that gain, but Vectren says right now they can purchase natural gas until 2024 for less than SNG.
E3 Gasification say the regulatory commission agreed to the 30-year contract because they promised a $100 million savings for the rate payer.
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