A coal gasification plant promoted by Gov. Mitch Daniels and lawmakers as a key part of Indiana's strategy to promote renewable energy will not be built.
Indiana Gasification LLC on Tuesday withdrew its application with the Indiana Utility Regulatory Commission for building the $1.5 billion plant in Spencer County.
Indiana Gasification LLC told the commission negotiations to sell the plant's output to Indiana utilities had failed, making it impossible for the project to proceed.
NIPSCO was one of three Indiana utilities that originally entered into negotiations with Indiana Gasification LLC to buy natural gas from the plant.
The utility, serving 445,000 electric and 712,000 natural gas customers in northern Indiana recently withdrew from those talks, said NIPSCO spokesman Nick Meyer.
"We made no financial commitments to the project, and the decision to discontinue negotiations will not impact our customers," Meyer said.
The Citizens Action Coalition of Indiana opposed the plant. The coalition, the state's largest grass-roots consumer group, said the project relied on untested technology and would have driven up rates for utility customers.
The plant would have used a gasification process to convert coal into natural gas and also would have produced electricity.
Duke Energy continues to build a $2.35 billion, 630-megawatt coal gasification plant in Edwardsport, Ind.
Gov. Mitch Daniels announced the Indiana Gasification LLC project two years ago to much fanfare, saying it would help move Indiana into a leadership role in renewable energy.
It also had the backing of U.S. Sen. Richard Lugar, R-Indiana, a proponent of renewable energy.
The Indiana General Assembly passed special legislation to make the Indiana Gasification LLC plant financially feasible. Consumer groups charged that legislation could have led to an expensive bailout of the plant if it proved not to be feasible.
Citizens Gas, with 265,000 customers in Marion County, withdrew its support from the Indiana Gasification LLC project earlier this year. That left NIPSCO and Vectren, a southern Indiana utility, as the only utilities with a known interest in buying natural gas from the plant.
