“Pay No Attention to the Taxpayer Behind That Curtain!”

From the GPACE team

The same kind of reckless and unregulated behavior that derailed the nations banking system has been revealed right here in Kansas.  A legal motion filed by the Sierra Club and Earthjustice now pending in federal court does not paint a pretty picture for the electric utility currently seeking to host the first of several huge coal plants for out-of-state utilities.

Nearly thirty years ago, Sunflower Electric Power Corporation took on huge debt, funded by American taxpayers, to build a coal-fired power plant in Holcomb, Kansas.  Initially the utility predicted that the plant would act as a significant revenue source and that it would help keep rates low in the Sunflower service area.

Neither prediction came true.

By 1987, Sunflower was forced to admit the plant was generating too much electricity in a market flooded by new coal plants built in the 1980′s.  Sunflower raised electricity rates on its customer-owners in an attempt to defray costs from the under-utilized facility.  Eventually Sunflower was forced to restructure over five hundred million dollars in federal taxpayer loans on three different occasions. The company was never able to meet payment of the loans that, with interest, totaled nearly a billion dollars by 2002.

The third restructuring in 2007 might leave average Kansans scratching their heads.  Sunflower Electric and the Rural Utility Service (RUS), a federal agency that supports rural electric companies, worked out an agreement to pay off some of the debt, and forgive most of what was still owed to taxpayers.  A condition of that agreement, however, is construction of up to three more coal plants at Holcomb.  The game was on, and the rules were changed again when the RUS freed Sunflower from federal environmental review of proposed new generation facilities.

The only entity left at the table to oversee Sunflower’s gamble with our money (and our air, water, and health) was the Kansas Department of Health and the Environment (KDHE).

In an attempt to run the table and correct it’s fire-engine-red balance sheets, Sunflower initially proposed to build three new massive coal plants not for its Kansas member-customers, but for out-of-state utilities. That initial proposal was scaled back to two plants, which were then denied air-quality permits by KDHE Secretary Rod Bremby.  This ignited a political fracas that consumed two full legislative sessions and held hostage the state’s energy policy.

All for one company’s Hail Mary wager with our tax dollars.

Furthermore, in the deal brokered by Governor Parkinson last May, Sunflower won a concession that it had failed to achieve through the legislative process: Sunflower is now protected from having its rate increases and expansion plans reviewed by the Kansas Corporations Commission, leaving rate payers exposed to poor decision making and volatile rate spikes.  Because Sunflower is a co-operative electricity producer and not an investor-owned utility, there are no shareholders who must be informed of risk-and-reward potentials.

During this whole process, Sunflower representatives testified time and again before state legislative committees. They used words like “tyranny” and “civil rights” to describe the way in which the KDHE decision impacted their standing in the “free market” (they used that phrase repeatedly, too).

One can’t help but wonder in what reality their free market exists. Sunflower owes us our tax dollars and an explanation – not backroom deals and the promise of “economic development” with a wink and smile.

In a free market, if you can’t swim, you sink.

States and communities across the region are taking great strides toward a twenty-first century renewable energy economy.  Coal-plant projects across the country – even one proposed by another utility right here in Kansas – are being delayed or abandoned due to the financial risks and regulatory uncertainty associated with coal-fired generation.

There are options for powering America. There are other means to meet the relatively slow demand growth for electricity in rural parts of Kansas over the next twenty years.  And there are better ways to create jobs and economic development in a state rich with wind, natural gas, and solar resources.  Kansas could be an exporter of renewable energy – along with the goods and technology to support it.  Kansas could reduce the huge amount of coal we import, and the many millions of dollars we send to mine owners in Wyoming.

The inability of Sunflower to be in a position to capitalize on these options is no reason to ignore them.  Why should taxpayers simply trust that Sunflower will win our money back, after decades of losing it?  Sunflower Electric might light the lamps on Main Street, but by betting huge amounts of taxpayer money on risky business deals – even as it decries government regulation – it’s acting more like Wall Street.

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