By Carolyn Szczepanski in The Pitch
In the marathon controversy over the expansion of the coal-fired power complex in Western Kansas, environmentalists have argued the new facility would be a giant, climate-change-accelerator, coughing up ungodly amounts of the carbon dioxide gas that leads to global warming.
But the latest legal filing from Earthjustice and the Sierra Club lays out another reason the monster power plant in Holcomb could be a disaster. Sunflower Electric Power Corporation, the company that wants to build the plant, has a disturbing history of racking up massive amounts of debt — and leaving taxpayers holding the bag.
Last week, two environmental groups filed a motion in federal court against Sunflower Electric and the Rural Utilities Service. They’re asking a federal judge to stop any progress on the Holcomb plant — given a free pass by Kansas Governor Mark Parkinson — because the RUS violated the National Environmental Policy Act.
What’s the RUS, an arm of the U.S. Department of Agriculture, have to do with Kansas’ coal controversy, you might ask? Here’s the deal.
Basically, in order to construct the first coal-fired power plant in Holcomb, Sunflower needed some help from taxpayers. That’s where the RUS stepped in. According to the legal filing, Sunflower got a cool $543 million loan from the federal government in the early 1980s. But the company was in bad financial shape and couldn’t make good on the payments.
By 2002 its debt had ballooned to $914 million and the RUS estimated that, “If not paid, the balance on the [B note] in 2021 will be over $2.7 billion.” Knowing that money would never be paid back, the RUS essentially bailed them out. The agency forgave a portion of the staggering debt, but required Sunflower get prior approval from the RUS for any major business decision.
When the Kansas cooperative started talking about expansion in Holcomb, the RUS started seeing dollar signs. Between October 2006 and March 2007, Sunflower tried to buy its way out of RUS control, but the negotiation tanked. According to the legal filing, now that RUS has secured a $91 million stake in the expansion, it has given Sunflower the green light to move forward with the new plant.
But the Sierra Club wants the agency to be a little more thoughtful since it has effectively backed the plan with hundreds of millions of taxpayers’ dollars, and forgiven the interest and most of the principal debt. The group argues that RUS should have conducted an environmental impact statement for the new plant before giving the go-ahead.
“The plan to add another dirty coal plant is essentially a project sponsored by the Rural Utilities Service,” Stephanie Cole, an activist with the Kansas Sierra Club, said in a statement. “We believe the RUS has a duty to review all environmental impacts of the proposed new, polluting coal project. Why should taxpayers take both the financial and environmental risks while Sunflower rolls the dice again on a high-risk project?”
Cindy Hertel, a Sunflower spokeswoman, says the filing is just another attempt to throw a wrench in the gears. “This is not new, we’re not surprised by these filings,” she says. “However, it’s our belief that an environmental impact statement is not necessary by RUS, because the rules don’t require it.” She didn’t want to talk about how and why Sunflower dug itself into such staggering debt. Jay Fletcher, a spokesman for the USDA, said the RUS wouldn’t comment on pending litigation.
The Sierra Club isn’t the only group that thinks taxpayers should be concerned. Check out the Great Plains Alliance for Clean Energy blog or read the full legal filing for all the gory financial details.
