In Indiana Gas Company, Inc. and Southern Indiana Gas and Electric Company, et al. v. Indiana Finance Authority and Indiana Gasification, LLC, the Indiana Court of Appeals reversed the Utility Regulatory Commission's order approving a Substitute Natural Gas Purchase and Sale Agreement (Contract) between the IFA and IG, in a 2-1, 42-page opinion.
Here is the opinion. Indiana Gas Company, Inc. and Southern Indiana Gas and Electric Company.pdf
The Indiana Finance Authority and Indiana Gasification, LLC executed a contract in January 2011 that details the sale and purchase of substitute natural gas that IG plans to produce at a $2.7 billion Rockport plant, with delivery set to begin in the first quarter of 2016.
The IFA and IG sought approval of the contract by the Indiana Utility Regulatory Commission and requested that the commission order Indiana regulated gas utilities to enter into utility management agreements with IFA so that IFA could pass proceeds and costs to retail end use customers through the utilities, if necessary. The commission approved the contract in November 2011. Under the terms of that contract, utility customers across the State would reimburse the IFA for any losses it incurred.
The opinion defined the issues as: (1) Whether the Commission erred in approving the Contract when the Contract defined “retail end use customer” in a manner contrary to the statutory definition of the same term. (2) Whether the Commission exceeded its jurisdiction when it approved the Contract. (3) Whether the Utilities and the Industrial Group have standing to appeal the Commission’s approval of the Contract.
The commission didn’t address the scope of the term “retail end use customer” and found that it could be addressed at a future time. The industrial group filed a petition for reconsideration, arguing that industrial transportation customers were exempt from being classified as retail end use customers under statute and did not have to pay the pass-through costs of the substitute natural gas under the contract. The utilities and citizens groups also appealed.
The Court concluded that (1) the Utilities and the Industrial Group’s claims are justiciable; (2) the Commission did not exceed its jurisdiction when it approved the Contract; and (3) the Contract’s definition of "retail end use customer" inappropriately included industrial transportation customers, even though the Legislature did not intend industrial transportation customers to be subject to the SNG Act as retail end use customers.
The Court reversed the IURC order approving the contract because the contract’s definition of “retail end use customer” did not conform to the General Assembly’s intent under the SNG Act. The majority found industrial transportation customers are not subject to the SNG Act as retail end use customers.