Tax-free financing for coal power plants under attack

Environmental activists and others are opening a new frontier in their fight against coal-fired power plants by questioning the use of tax-exempt bonds to help fund such projects.

New York City Comptroller William Thompson earlier this month called on the U.S. Treasury Department to investigate tax-free bond use in financing the plants. He cited the potential for expensive regulatory changes aimed at curbing greenhouse gases, the escalating cost of coal and subsequent risks to investors and taxpayers.

The Sierra Club also has been warning about the use of tax-exempt financing for coal plants owned by public or private entities, according to Becki Clayborn, a regional representative for the group.

"To us, it's a huge risk on taxpayers that doesn't need to be there," she said.

Last fall, the Sierra Club sent letters to municipal members of American Municipal Power-Ohio about financial risks attached to the nonprofit power wholesaler's involvement in the Prairie State coal-fired plant Peabody Energy Corp is building in southern Illinois.

"This massive power plant, which has not yet been built, would not only be a large source of water pollution, air pollution and global warming emissions, but will likely put your municipality at financial risk," the letter said. It pointed to escalating cost estimates for the project and legislation in the U.S. Congress that if passed, could raise the cost of power produced by the plant.

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Gee, why don't all those squawking about a carbon tax that would be revenue neutral complain about higher utility bills because of stunts like this? You are already being taxed by big coal.