[Congressional Record Volume 142, Number 11 (Friday, January 26, 1996)]
[Extensions of Remarks]
[Pages E107-E108]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        RULING REGARDING THE GREAT PLAINS COAL GASIFICATION PLANT

                                 ______


                           HON. EARL POMEROY

                            of north dakota

                    in the house of representatives

                        Friday, January 26, 1996

  Mr. POMEROY. Mr. Speaker, I rise today to discuss a very troubling 
ruling regarding our Nation's only commercial-size synthetic natural 
gas plant, the Great Plains Coal Gasification Plant. This project's 
importance to North Dakota and the Nation demand the attention of this 
body and the commissioners at FERC.
  Make no mistake, if this decision is approved by FERC, Great Plains 
will close and the impact will be far reaching. The plant directly 
employs 640 people and is associated with nearly 7,000 other jobs. 
Twenty percent less lignite would be mined in North Dakota and Federal 
and State governments would lose $17.5 million in tax revenue. The 
total impact of this project on North Dakota is $490 million annually.
  In late December, an administrative law judge struck down the 
settlements reached by Great Plains, three pipeline companies, and the 
Department of Energy. By doing so, this judge has single-handedly put 
the future of the Great Plains Synfuels Plant in jeopardy.
  The importance of this project to North Dakota cannot be overstated, 
but Great Plains also has relevance to each Member of this body and 
their constituents. For starters, the Department of energy shares 
profits derived from the plant. What's more, the eight-state region 
served by the Plant would be hit by rate increases totalling nearly $30 
million annually, or 10 percent above current costs.

[[Page E108]]

  In addition, there are new technologies benefiting all Americans 
developed at Great Plains on a regular basis. Among the most recent are 
the production of the rare gases krypton and xenon, and using synthetic 
gas to produce anhydrous ammonia and ammonium sulfate, two commercial 
fertilizers.
  I am hopeful that the commissioners at FERC will see this ruling for 
what it is--an administrative law judge run amok, believing he knows 
more than the agency, industry, and consumers working with this project 
on a daily basis. If this ruling were to stand, Great Plains would 
likely have to shut its doors forever. This is simply not right. It is 
time the absurdity of this decision was brought to full attention of 
this body and the American people.
  What we have here is sophisticated parties entering into contracts 
and making investments based upon those contracts. Then along comes an 
administrative law judge who retroactively nullifies the express 
agreements and imposes his judgement. In the process, he single-
handedly destroys the viability of the entire project.
  I would like to outline the most disturbing aspects of this ruling, 
if it were accepted by FERC.
  It requires the plant to sell the product to the pipelines at well-
below the cost of producing the gas. The judge's ruling would set the 
purchase price at almost $1 per dekatherm below the cost of production 
and resulting in a loss of $55 million in 1995. This is totally 
unacceptable.
  The ruling would also require the pipeline companies to retroactively 
refund customers to the tune of $280 million. This cost would no doubt 
be passed on to the plant itself, further jeopardizing Great Plains' 
ability to meet its bottom line.
  Amazingly, the judge provided more relief than was even sought by the 
consumers. The judge strayed far from the matters at hand into issues 
of production capacity at the plant. He ruled that the pipeline 
companies would no longer have to receive what is produced at the 
plant--around 160 million barrels per day. Rather, they would only have 
to receive what was expected to be produced at the plant--131 million 
barrels per day.
  If FERC were to approve the ruling, it would completely set-aside 
FERC's own Opinion 119 agreement between Great Plains and the four 
pipeline purchasers which allowed the project to go forward in the 
first place. Opinion 119 was the basis for further negotiations 
enabling Great Plains to be sold to the Dakota Gasification Co., a 
subsidiary of Basin Electric, with a profit-sharing arrangement with 
the Department of Energy. To abandon Opinion 119 at this time would be 
a disservice to all parties involved--especially when you consider that 
it was the consumer representatives themselves that drafted the pricing 
formula of these gas purchase agreements.
  This issue will be decided by FERC in the near future. I urge each 
Member of that body to give this matter their most careful attention. 
Their decision will have ramifications on the Department of Energy, my 
State of North Dakota, and the energy future of this Nation.

                          ____________________