Bond Buyer: ‘Report Urges Muni Market to Provide Relief to Prairie State Municipalities’

The Bond Buyer this morning profiles IEEFA’s series of commentaries and reports published last week on the poorly performing Prairie State Energy Campus and the economic damage it has caused in towns and cities across the Midwest.

The article, by Yvette Shields, highlights IEEFA’s core assertion that investors and the firms that orchestrated the coal-fired deal behind the construction and sale of the plant must “come together to discuss relief for local municipalities.”

“The institute argues that investors and underwriters as well as Peabody Energy, the original backer of the project, have the resources to absorb a reduction in their returns, easing the burden of rising costs on the more than 200 towns on the hook,” Shields writes.

Shields notes that several of the nine joint power agencies involved, Peabody Energy, and Prairie State representatives themselves didn’t respond to requests for comment.

Additional excerpts:

• “Billed as a path to energy ownership and stable rates, the project has sparked controversy for years, starting with cost overruns of nearly 25% that boosted the final price tag. After outages and capacity reductions dragged down its operating performance, operations have been on the rise and rating agencies say the investment remains a good value over the long run.”
• “As the project’s costs increased, so did the costs passed along to local governments and utilities. The cost of power is significantly higher than originally expected and nearly double current prices on the open market, according to Fitch Ratings.”
• “Local utilities are on the hook due to stringent take or pay contracts to purchase power signed with their participating JPA’s, which afford investors strong protections.”

Full article (subscription required).