CHAPTER 11.6. ADDITIONAL AUTHORITY; SUBSTITUTE NATURAL GAS CONTRACTS
IC 4-4-11.6
Chapter 11.6. Additional Authority; Substitute Natural GasContracts
IC 4-4-11.6-1
"Account"
Sec. 1. As used in this chapter, "account" refers to the substitutenatural 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 Indianafinance authority.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-3
"Coal gasification facility"
Sec. 3. As used in this chapter, "coal gasification facility" meansa facility that:
(1) uses a manufacturing process that converts coal intosubstitute natural gas; and
(2) not later than June 30, 2009, has applied for a federal loanguarantee through the United States Department of EnergyLoan Guarantee Program Office, Solicitation NumberDE-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 Indianautility 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 meaningset 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 acontract that:
(1) is entered into by the authority and a regulated energyutility; and
(2) provides for:
(A) the delivery, billing, collection, and remittance ofmonies received for SNG delivered in the service area of theregulated energy utility; and (B) reasonable compensation for services provided by theregulated 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 acontract that:
(1) is entered into by the authority and a producer of SNG forthe 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 bythe 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" meansan 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 contractfor services that the authority determines are necessary andappropriate for the delivery of SNG to the city gate point of aregulated 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" meansa customer who acquires energy at retail for the customer's ownconsumption:
(1) from a gas utility that must apply to the commission underIC 8-1-2-42 for approval of gas cost changes; or
(2) under a program approved by the commission throughwhich the customer purchases gas that would be subject to priceadjustments under IC 8-1-2-42 if the gas were sold by a gasutility.
As added by P.L.2-2009, SEC.2.
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 agasification process to convert coal into a gas capable of being usedby 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. The general assembly makes the following findings:
(1) The furnishing of reliable supplies of reasonably pricednatural gas for sales to retail customers is essential for the wellbeing of the people of Indiana. Natural gas prices are volatile,and energy utilities have been unable to mitigate completely theeffects of the volatility.
(2) Long term contracts for the purchase of SNG between theauthority and SNG producers will enhance the receipt of federalincentives for the development, construction, and financing ofnew coal gasification facilities in Indiana.
(3) The authority's participation in and oversight of thepurchase, sale, and delivery of SNG to retail end use customersis critical to obtain low cost financing for the construction ofnew coal gasification facilities.
(4) Obtaining low cost financing for the construction of newcoal gasification facilities is necessary to allow retail end usecustomers to enjoy the benefits of a reliable, reasonably priced,and long term energy supply.
As added by P.L.2-2009, SEC.2.
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, anddelivery of SNG.
(2) Establish and collect rates and charges for SNG.
(3) Enter into contracts for private professional and technicalassistance 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
Sec. 14. (a) The authority, either directly or as an assignee of anenergy utility, may enter into purchase contracts for the purchase ofSNG from coal gasification facilities.
(b) The authority shall submit a final purchase contract to thecommission for approval.
As added by P.L.2-2009, SEC.2.
IC 4-4-11.6-15
Ability of authority to enter into management and relatedcontracts
Sec. 15. The authority may enter into management and relatedcontracts as needed to transport, store, deliver, manage, and bill andcollect 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 publicpurchasing and competitive bidding requirements, the authority mayprocure purchase and related contracts using the processes andprocedures it considers appropriate to obtain a reliable, long termsupply 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, oraccepting assignment of a contract under this chapter, the authorityshall consult with the consumer counselor of the office of utilityconsumer 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 termsof the purchase contract to which the authority is a party.
(b) The commission shall allocate on an annual basis SNGpurchased by the authority to the retail end use customers of aregulated energy utility based on the proportion of the amount of gasdelivered by the regulated energy utility to the total amount of gasdelivered by all regulated energy utilities in the immediatelypreceding calendar year.
(c) SNG is considered sold by the authority when the SNG isdelivered to retail end use customers.
(d) The authority has the right to sell SNG to third parties insteadof retail end use customers if the authority determines that sales tothird parties are necessary and appropriate to manage the delivery ofSNG 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 permitrecovery by the authority of costs related to the SNG sold to theretail 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 byretail end use customers.The mechanism and processes that the authority uses to calculate thecosts must be capable of audit and verification.
(b) The commission shall require a regulated energy utility toinclude in the rates collected from retail end use customers thatpurchase SNG from the authority the price for SNG sold to the retailend use customers by the authority.
(c) The commission shall adopt rules under IC 4-22-2 to carry outthe requirements of this section. A rule adopted under this subsectionmust require that a bill provided by a regulated energy utility to aretail end use customer include a line item for costs associated withthe 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 enduse customers;
is a direct obligation of the retail end use customers to the authority.The regulated energy utility shall collect the payments from the retailend 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 theregulated 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 anyservices under a contract entered into under this chapter, is limitedto the funds available in the account plus any other amountrecoverable by the authority through a provision included in acontract under section 19 of this chapter. An obligation under thissection 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 commissionshall order a regulated energy utility to enter into a managementcontract with the authority to:
(1) distribute and deliver SNG purchased by the authority; and
(2) provide billing, collection, and other services related to thepurchase, distribution, and delivery of the SNG.
(b) A management contract entered into under subsection (a) mustinclude a mechanism by which the regulated energy utility isreimbursed for all costs incurred in performing the management
contract in excess of costs that, as determined by the commission, theregulated energy utility would otherwise have incurred in theordinary 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 itsparticipation in any transaction described in this chapter;
(2) subject to the jurisdiction of the commission except asprovided in this chapter; or
(3) required to obtain the approval of the commission except asprovided 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 thecontract, as well as any entity that provides financing to a party to thecontract, 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 authorityto satisfy its contractual obligations, including the establishmentand collection of the price for SNG from retail end usecustomers;
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 takeownership 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 modifyan 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 separateaccount known as the substitute natural gas account.
(b) The account consists of payments credited to the accountunder 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) ofthis chapter, the authority may adopt rules under IC 4-22-2 toimplement this chapter, including a rule to protect confidential orproprietary financial or trade secret information included in reportsprovided to the authority by SNG producers, energy utilities, orregulated 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 inIC 8-1-2-42.1) may not impair the ability of the authority to deliverand 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 intoa contract to sell SNG to third parties with the net effect of theproceeds and costs of those sales to be reflected in the line item oncustomers' bills as required by section 19(c) of this chapter.
(b) The following apply if the authority enters into a contractunder subsection (a):
(1) The contract between the authority and a producer of SNGfor the sale and purchase of SNG must be a purchase contractand is subject to all the requirements of this chapter.
(2) Contracts for services the authority determines are necessaryand appropriate to effectuate SNG sales and the relatedtransportation and delivery of SNG, including contractsauthorizing third parties to act as the authority's agent in sellingthe SNG, must be related contracts.
(3) Contracts between the authority and regulated energyutilities for the crediting and charging of the proceeds and coststo all retail end use customers, including the billing andcollecting of any net costs, must be management contractssubject 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 theauthority; and
(5) costs associated with supplying working capital, maintainingfinancial reserves, and allowing defaults by SNG purchasers orretail end use customers;shall be allocated to the retail end use customers of each regulatedenergy utility based on the proportion of the amount of gas deliveredby the regulated energy utility to the total amount of gas delivered byall regulated energy utilities in the immediately preceding calendaryear. The commission shall determine a just and reasonable methodfor allocating the credits and charges to the retail end use customers.The mechanism and processes the authority uses to calculate thecosts must be capable of audit and verification.
(d) The obligation of the authority to pay for SNG or for anyservices under a contract entered into under this chapter is limited tothe funds available in the account plus any other amount recoverableby the authority through a provision included in a contract under thissection. An obligation under this section is not supported by the fullfaith and credit of the state.
As added by P.L.113-2010, SEC.7.