Congressman Dennis Kucinich (D-OH) today asked the Department of Treasury to examine whether the use of Build America Bonds to help finance a coal plant in southern Illinois was a lawful use of the economic stimulus funds authorized by Congress in 2009.
Congressman Kucinich has been investigating the deal proposed and promoted by the Peabody Energy Corporation to build a coal plant at a time when coal-fired power was being rejected by the private marketplace as a bad investment. In 2007, Peabody Energy persuaded nine regional power agencies, including Ohio's American Municipal Power (AMP), to become partial owners of a new plant known as the Prairie State Energy Campus (PSEC). The deals put ratepayers on the hook for the cost of the plant as costs skyrocketed from $1.7 billion to nearly $5 billion dollars. Build America Bonds, which provide a taxpayer-funded subsidy, were used to finance the costs of construction of the plant and acquisition of the coal mine and ashfill that make up the PSEC. Two and a half million ratepayers across the Midwest are now paying above-market rates for electricity.
Congressman Kucinich is investigating all aspects of the Peabody deal. He has previously asked the Federal Energy Regulatory Commission and the Securities and Exchange Commission to investigate various aspects of the Peabody deal.
"Congress' intent was clear in including Build America Bonds as a component of the American Recovery and Reinvestment Act so as to broaden and encourage finance options for state and local governments at a time when economic conditions were unfavorable. However, it appears that rather than assisting state and local governmental entities to obtain financing for public works projects, in this case, the benefit of the subsidy provided by the Build America Bonds has largely gone to a private, multi-national energy firm. Meanwhile, electric utility rate-paying communities in Ohio and seven other states have been saddled with substantial debt
"These facts, along with the fact that Build America Bonds have financed such a large part of the costs of the project at a time when private firms rejected such investments raises troubling questions about the use of this subsidy, about whether Congress' intent was followed, and whether Internal Revenue Service regulations are being followed. This is not simply a question of investigating a "bad investment.' It is about an inappropriate use of taxpayer dollars which are then used to saddle consumers with higher utility rates. I ask that your office conduct a thorough review and inform me of the outcome," wrote Kucinich.