INDIANAPOLIS - The Indiana Court of Appeals has thrown out a state contract to buy natural gas from a new coal gasification plant under construction in southern Indiana.
The court issued its 2-1 ruling this morning in the case involving the state's 30-year contract to buy natural gas from the Rockport facility.
The decision Tuesday said the state erred when it treated certain industrial customers the same as average homeowners using gas from the utility and overturns the entire contract.
The contract called for the state of Indiana to purchase all of the natural gas produced at the facility for 30 years. The state would then try to resell the natural gas on the open market.
If the state made a profit, customers' bills would be reduced. If the state lost money, that loss would be passed on through higher utility bills to consumers.
Vectren, the company that provides natural gas service to large parts of Indiana, has objected to the state's contract, saying the deal could add $1.1 billion dollars to customers' bills over an eight-year period.
The court did uphold the IURC’s authority to enter into the contract.
"The Court of Appeals found that the Indiana Gasification contract provides customers with a guarantee of savings," Indiana Finance Authority legal counsel Andy Kienle told RTV6.
Kienle said the court ruling provides instructions for amending the contract to meet state statute, and that work to adjust the contract would begin almost immediately.
Gov. Mitch Daniels has championed the plan.