Tag Archives: coal-gasification

The Legislative Process

Yesterday, the Indianapolis Star ran the second part of Matt Tully’s series on ethics at the Indiana General Assembly, or how a bill really┬ábecomes a law.

What struck me most was the irony–the amounts of money spent by vocal proponents of free enterprise and the market economy in pursuit of legislation privileging their positions in that market and/or protecting them against competition. Sunday liquor sales, gaming operations, banking rules, collective bargaining…for a state that ┬ácelebrates capitalism, our lawmakers spend an inordinate amount of time picking winners and losers.

Want an example?

Also appearing in yesterday’s paper was a report on a hearing held by the House Utility Committee on the boondoggle known as the Rockport Coal-Gasification plant.

As readers of this blog will recall from previous posts, then-Governor Mitch Daniels entered into a thirty-year deal with Leucadia National Corporation, represented in Indiana by long-time Republican operative and Daniels friend, Mark Lubbers. (If the name sounds familiar, it’s because Mark Lubbers’ wife Teresa was appointed by Daniels to head up the state’s Commission on Higher Education.) The terms of the deal obligated the state to buy the company’s synthetic gas and resell it on the open market. Indiana ratepayers would get discounts or increases on their bills, depending upon whether the synthetic gas was more or less expensive than gas available on the open market. Seventeen percent of ratepayers’ bills would be tied to the Rockport plant’s rate.

State Senator Doug Eckerty, who opposes the deal, has sponsored a bill that would send the agreement back to the Indiana Utility Regulatory Commission for a full review.

In the committee hearing, Eckerty pointed out that gas prices have plummeted since the plant was first proposed, and that the manufacture of synthetic gas is no longer economically feasible. Coal gasification projects in other states have been abandoned. As he noted, if private sources will not finance these projects, why should taxpayers?

When natural gas prices were high, there was at least a thin justification for a deal that used Indiana ratepayers to guarantee the profits of a private company. Now even that pretense of a public purpose is gone. Mark Lubbers testified that gas prices are volatile, so the plant would protect ratepayers if and when the prices spiked again.

The problem is, whether gas prices rise again is irrelevant. The state should not be picking private-sector winners and losers. I hate to use a sports analogy, but government’s role in the economy is best compared to that of the umpire or referee in a game. When government abandons that role–when it suits up and plays with one of the teams–it is improper. It violates the rules, undermines the sport, and makes cynics of the onlookers.

It’s no different when the game is the free market.