2013 Indiana Code TITLE 4. STATE OFFICES AND ADMINISTRATION ARTICLE 4. LIEUTENANT GOVERNOR CHAPTER 11.6. ADDITIONAL AUTHORITY; SUBSTITUTE NATURAL GAS CONTRACTS
Download as PDF
IC 4-4-11.6
Chapter 11.6. Additional Authority; Substitute Natural Gas
Contracts
IC 4-4-11.6-0.5
"2011 order"
Sec. 0.5. As used in this chapter, "2011 order" refers to the order
of the commission issued on November 22, 2011, approving a
purchase contract entered into on January 14, 2011.
As added by P.L.228-2013, SEC.1.
IC 4-4-11.6-1
"Account"
Sec. 1. As used in this chapter, "account" refers to the substitute
natural gas account established by section 27 of this chapter.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-2
"Authority"
Sec. 2. As used in this chapter, "authority" refers to the Indiana
finance authority.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-2.5
"Business day"
Sec. 2.5. As used in this chapter, "business day" means a day
other than a Saturday, Sunday, or legal holiday (as defined in
IC 1-1-9-1).
As added by P.L.228-2013, SEC.2.
IC 4-4-11.6-3
"Coal gasification facility"
Sec. 3. As used in this chapter, "coal gasification facility" means
a facility that:
(1) uses a manufacturing process that converts coal into
substitute natural gas; and
(2) not later than June 30, 2009, has applied for a federal loan
guarantee through the United States Department of Energy
Loan Guarantee Program Office, Solicitation Number
DE-FOA-0000008 for the financing of the facility.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-4
"Commission"
Sec. 4. As used in this chapter, "commission" refers to the Indiana
utility regulatory commission created by IC 8-1-1-2.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-5
"Energy utility"
Sec. 5. As used in this chapter, "energy utility" has the meaning
set forth in IC 8-1-2.5-2.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-6
"Management contract"
Sec. 6. As used in this chapter, "management contract" means a
contract that:
(1) is entered into by the authority and a regulated energy
utility; and
(2) provides for:
(A) the delivery, billing, collection, and remittance of
monies received for SNG delivered in the service area of the
regulated energy utility; and
(B) reasonable compensation for services provided by the
regulated energy utility under the terms of the contract.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-7
"Purchase contract"
Sec. 7. As used in this chapter, "purchase contract" means a
contract that:
(1) is entered into by the authority and a producer of SNG for
the sale and purchase of SNG;
(2) has a thirty (30) year term;
(3) provides a guarantee of savings for retail end use customers;
and
(4) contains other terms and conditions determined necessary by
the authority.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-8
"Regulated energy utility"
Sec. 8. As used in this chapter, "regulated energy utility" means
an energy utility that is subject to IC 8-1-2-42.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-9
"Related contract"
Sec. 9. As used in this chapter, "related contract" means a contract
for services that the authority determines are necessary and
appropriate for the delivery of SNG to the city gate point of a
regulated energy utility.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-10
"Retail end use customer"
Sec. 10. As used in this chapter, "retail end use customer" means
a customer who acquires energy at retail for the customer's own
consumption:
(1) from a gas utility that must apply to the commission under
IC 8-1-2-42 for approval of gas cost changes; or
(2) under a program approved by the commission through
which the customer purchases gas that would be subject to price
adjustments under IC 8-1-2-42 if the gas were sold by a gas
utility.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-10.5
"Savings"
Sec. 10.5. As used in this chapter, a "savings" occurs, with respect
to a purchase contract subject to review by the commission under
section 14.5 of this chapter, when the purchase price of SNG paid by
the authority under the purchase contract is less than the average
market price of natural gas during intervals determined by the
commission as set forth in section 14.5(b)(4) of this chapter.
As added by P.L.228-2013, SEC.3.
IC 4-4-11.6-11
"Substitute natural gas" or "SNG"
Sec. 11. As used in this chapter, "substitute natural gas" or "SNG"
means pipeline quality gas produced by a facility that uses a
gasification process to convert coal into a gas capable of being used
by a utility to supply gas utility service to retail end use customers in
Indiana.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-12
Findings
Sec. 12. (a) The general assembly makes the following findings:
(1) The furnishing of reliable supplies of reasonably priced
natural gas for sales to retail customers is essential for the well
being of the people of Indiana. Natural gas prices are volatile,
and energy utilities have been unable to mitigate completely the
effects of the volatility.
(2) Long term contracts for the purchase of SNG between the
authority and SNG producers will enhance the receipt of federal
incentives for the development, construction, and financing of
new coal gasification facilities in Indiana.
(3) The authority's participation in and oversight of the
purchase, sale, and delivery of SNG to retail end use customers
is critical to obtain low cost financing for the construction of
new coal gasification facilities.
(4) Obtaining low cost financing for the construction of new
coal gasification facilities is necessary to allow retail end use
customers to enjoy the benefits of a reliable, reasonably priced,
and long term energy supply.
(b) In addition to the findings set forth in subsection (a), the
general assembly makes the following findings:
(1) With respect to pending litigation concerning contracts
entered into under this chapter, the general assembly defers to
the constitutional role and independence of the judicial branch.
(2) The general assembly recognizes the expertise and
independence of the commission in matters concerning
Indiana's natural gas ratepayers.
(3) Legislative power includes the power to amend and repeal
existing laws. The legislature has no power to enact a law or to
make a contract or arrangement that in any way surrenders or
abridges this legislative power. The act of one (1) legislature is
not binding upon a future legislature.
(4) An action by a general assembly, including the enactment of
legislation, to protect the public interest is a proper exercise of
the police power and is not intended to impair a long term
contract for the purchase of SNG.
(5) New discoveries of natural gas supplies and development of
advanced drilling techniques may affect the determination of
whether a long term contract for the purchase of SNG is in the
public interest.
(6) Realizing savings at intervals during the term of a contract
for the purchase of SNG protects retail end use customers and
serves the public interest.
As added by P.L.2-2009, SEC.2. Amended by P.L.228-2013, SEC.4.
IC 4-4-11.6-13
Powers of authority
Sec. 13. The authority may do the following:
(1) Enter into contracts for the purchase, transportation, and
delivery of SNG.
(2) Establish and collect rates and charges for SNG.
(3) Enter into contracts for private professional and technical
assistance concerning SNG contracts.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-14
Ability of authority to enter into purchase contracts; approval of
purchase contracts, amendments, and other agreements by
commission
Sec. 14. (a) The authority, either directly or as an assignee of an
energy utility, may enter into purchase contracts for the purchase of
SNG from coal gasification facilities.
(b) The authority shall submit the following to the commission for
approval:
(1) The following:
(A) A purchase contract that is:
(i) originally submitted to the commission for approval
before January 1, 2012; and
(ii) subsequently amended, supplemented with addenda or
agreements, or otherwise modified to amend the definition
of retail end use customers in the purchase contract.
(B) A purchase contract entered into after December 31,
2012.
(2) Any amendments, addenda, or other modifications made or
added at any time to a purchase contract, regardless of when the
purchase contract is entered into.
(3) Any other agreements entered into between the authority
and a producer of SNG.
As added by P.L.2-2009, SEC.2. Amended by P.L.228-2013, SEC.5.
IC 4-4-11.6-14.5
Approval, rejection, or modification of purchase contract by
commission; findings; final order; expedited appeal; adoption of
rules by commission
Sec. 14.5. (a) This section applies if an opinion by a court of
appeal that does not affirm the 2011 order in its entirety is certified
under Rule 65 of the Indiana Rules of Appellate Procedure.
(b) After notice and a hearing, the commission may approve,
reject, or, before approval, require modification of a purchase
contract submitted to the commission under section 14(b)(1) of this
chapter if the commission finds that such action is in the public
interest. The commission shall consider the following before finding
that an action under this subsection is in the public interest:
(1) Whether the purchase contract is structured in a way that
lessens the impact of any price volatility in the natural gas
market on retail end use customers.
(2) Whether the assumptions underlying the model used to
calculate the purchase price of SNG under the purchase
contract, including assumptions about the future price of natural
gas and coal and the value of future byproducts of the coal
gasification facility, adequately apportion financial risk
between the SNG producer and retail end use customers.
(3) The findings of any study conducted by the commission on
the natural gas market and reported to the general assembly.
(4) Whether a purchase contract allows retail end use customers
to realize savings during the term of the purchase contract at
intervals established by the commission.
(5) Any other factors the commission considers necessary.
The commission shall issue a final order not more than one hundred
eighty (180) business days after the date on which the authority
submits the purchase contract to the commission under section
14(b)(1) of this chapter.
(c) A party that seeks to appeal an order issued under subsection
(b) shall do so only through an expedited direct appeal to the Indiana
supreme court under rules to be adopted by the Indiana supreme
court.
(d) The commission may adopt rules under IC 4-22-2 to carry out
the requirements of this section. A rule adopted under this subsection
must establish filing and other procedural deadlines for all parties to
a hearing under subsection (b).
As added by P.L.228-2013, SEC.6.
IC 4-4-11.6-15
Ability of authority to enter into management and related
contracts
Sec. 15. The authority may enter into management and related
contracts as needed to transport, store, deliver, manage, and bill and
collect for the delivery and sale of SNG to retail end use customers.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-16
Procurement requirements
Sec. 16. Notwithstanding any other law, including public
purchasing and competitive bidding requirements, the authority may
procure purchase and related contracts using the processes and
procedures it considers appropriate to obtain a reliable, long term
supply of SNG.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-17
Consultation with consumer counselor
Sec. 17. Before negotiating the terms of, entering into, or
accepting assignment of a contract under this chapter, the authority
shall consult with the consumer counselor of the office of utility
consumer counselor appointed under IC 8-1-1.1-3.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-18
Taking title to and selling SNG
Sec. 18. (a) The authority may take title to SNG under the terms
of the purchase contract to which the authority is a party.
(b) The commission shall allocate on an annual basis SNG
purchased by the authority to the retail end use customers of a
regulated energy utility based on the proportion of the amount of gas
delivered by the regulated energy utility to the total amount of gas
delivered by all regulated energy utilities in the immediately
preceding calendar year.
(c) SNG is considered sold by the authority when the SNG is
delivered to retail end use customers.
(d) The authority has the right to sell SNG to third parties instead
of retail end use customers if the authority determines that sales to
third parties are necessary and appropriate to manage the delivery of
SNG to retail end use customers.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-19
Cost recovery; adoption of rules
Sec. 19. (a) If the authority sells SNG to retail end use customers,
the authority shall sell the SNG at a price that is sufficient to permit
recovery by the authority of costs related to the SNG sold to the
retail end use customers, including the following:
(1) Costs of purchasing SNG.
(2) Costs of transporting SNG.
(3) Costs of delivering SNG.
(4) Costs incurred by the authority in administering this chapter.
(5) Costs associated with supplying working capital,
maintaining financial reserves, and allowing for defaults by
retail end use customers.
The mechanism and processes that the authority uses to calculate the
costs must be capable of audit and verification.
(b) The commission shall require a regulated energy utility to
include in the rates collected from retail end use customers that
purchase SNG from the authority the price for SNG sold to the retail
end use customers by the authority.
(c) The commission shall adopt rules under IC 4-22-2 to carry out
the requirements of this section. A rule adopted under this subsection
must require that a bill provided by a regulated energy utility to a
retail end use customer include a line item for costs associated with
the purchase and delivery of SNG.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-20
Payments for SNG
Sec. 20. (a) A payment for SNG:
(1) to which the authority holds title; and
(2) that is delivered by a regulated energy utility to its retail end
use customers;
is a direct obligation of the retail end use customers to the authority.
The regulated energy utility shall collect the payments from the retail
end use customers as an agent of the authority.
(b) Payments made under subsection (a):
(1) are the property of the authority;
(2) shall be segregated and held in trust for the authority by the
regulated energy utility that collects the payments; and
(3) shall be credited to the account.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-21
Financial obligations of authority
Sec. 21. The obligation of the authority to pay for SNG, or for any
services under a contract entered into under this chapter, is limited
to the funds available in the account plus any other amount
recoverable by the authority through a provision included in a
contract under section 19 of this chapter. An obligation under this
section is not supported by the full faith and credit of the state.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-22
Mandatory management contracts
Sec. 22. (a) Upon the request of the authority, the commission
shall order a regulated energy utility to enter into a management
contract with the authority to:
(1) distribute and deliver SNG purchased by the authority; and
(2) provide billing, collection, and other services related to the
purchase, distribution, and delivery of the SNG.
(b) A management contract entered into under subsection (a) must
include a mechanism by which the regulated energy utility is
reimbursed for all costs incurred in performing the management
contract in excess of costs that, as determined by the commission, the
regulated energy utility would otherwise have incurred in the
ordinary course of business.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-23
Authority is not energy utility
Sec. 23. Notwithstanding any other law, the authority is not:
(1) considered an energy utility solely by virtue of its
participation in any transaction described in this chapter;
(2) subject to the jurisdiction of the commission except as
provided in this chapter; or
(3) required to obtain the approval of the commission except as
provided in this chapter.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-24
Impairment of contracts
Sec. 24. If the authority enters into a contract under this chapter,
the state covenants and agrees, for the benefit of the parties to the
contract, as well as any entity that provides financing to a party to the
contract, that the state will not take or permit any action that would:
(1) impair the contract; or
(2) otherwise limit, alter, or impair the ability of the authority
to satisfy its contractual obligations, including the establishment
and collection of the price for SNG from retail end use
customers;
until the contract has been performed in full.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-25
Limits on power of authority
Sec. 25. This chapter does not authorize the authority to take
ownership of the transportation, transmission, generation,
production, or distribution assets of an energy utility.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-26
Energy utilities obligated to provide energy service
Sec. 26. This chapter may not be construed to reduce or modify
an energy utility's obligation to provide energy service.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-27
Substitute natural gas account
Sec. 27. (a) The authority shall establish and administer a separate
account known as the substitute natural gas account.
(b) The account consists of payments credited to the account
under section 20(b)(3) of this chapter.
(c) The authority shall use the account to provide funding and pay
expenses to satisfy the obligations of this chapter.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-28
Adoption of rules
Sec. 28. In addition to the rules adopted under section 19(c) of
this chapter, the authority may adopt rules under IC 4-22-2 to
implement this chapter, including a rule to protect confidential or
proprietary financial or trade secret information included in reports
provided to the authority by SNG producers, energy utilities, or
regulated energy utilities.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-29
Customer choice programs
Sec. 29. The terms of a customer choice program (as defined in
IC 8-1-2-42.1) may not impair the ability of the authority to deliver
and sell SNG to retail end use customers.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-30
Third party contracts
Sec. 30. (a) To carry out this chapter, the authority may enter into
a contract to sell SNG to third parties with the net effect of the
proceeds and costs of those sales to be reflected in the line item on
customers' bills as required by section 19(c) of this chapter.
(b) The following apply if the authority enters into a contract
under subsection (a):
(1) The contract between the authority and a producer of SNG
for the sale and purchase of SNG must be a purchase contract
and is subject to all the requirements of this chapter.
(2) Contracts for services the authority determines are necessary
and appropriate to effectuate SNG sales and the related
transportation and delivery of SNG, including contracts
authorizing third parties to act as the authority's agent in selling
the SNG, must be related contracts.
(3) Contracts between the authority and regulated energy
utilities for the crediting and charging of the proceeds and costs
to all retail end use customers, including the billing and
collecting of any net costs, must be management contracts
subject to section 22 of this chapter.
(c) The:
(1) proceeds of the sales of SNG;
(2) costs of purchasing, transporting, and delivering the SNG;
(3) authority's administrative costs;
(4) costs incurred in carrying out this section by an agent of the
authority; and
(5) costs associated with supplying working capital, maintaining
financial reserves, and allowing defaults by SNG purchasers or
retail end use customers;
shall be allocated to the retail end use customers of each regulated
energy utility based on the proportion of the amount of gas delivered
by the regulated energy utility to the total amount of gas delivered by
all regulated energy utilities in the immediately preceding calendar
year. The commission shall determine a just and reasonable method
for allocating the credits and charges to the retail end use customers.
The mechanism and processes the authority uses to calculate the
costs must be capable of audit and verification.
(d) The obligation of the authority to pay for SNG or for any
services under a contract entered into under this chapter is limited to
the funds available in the account plus any other amount recoverable
by the authority through a provision included in a contract under this
section. An obligation under this section is not supported by the full
faith and credit of the state.
As added by P.L.113-2010, SEC.7.
Disclaimer: These codes may not be the most recent version. Indiana may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
