In Kentucky, a Searing ‘Buyer Beware’

The Louisville Courier-Journal is out this morning with an editorial that asks whether the scores of towns trapped in long-term high-priced commitments to Prairie State Energy Campus were duped.

The editorial, which follows an expose on Sunday by reporter Jim Bruggers, notes that Prairie State was largely a concoction of Peabody Energy, which built the plant and then sold all but a sliver of ownership to municipalities.

It says that while two cities in Kentucky—Paducah and Princeton—are being economically crippled by the deal, many others are too. The editorial also states bluntly that cities should not rule out filing bankruptcy as a way to get bondholders who have profited from the scheme to come to the table and address the damage created.

Excerpts:

• “The western Kentucky communities bought hook, line and sinker what Peabody Energy was selling: a coal mine with lousy coal, and a boondoggle of a power plant that cost twice as much as planned and hasn’t run very well.”
• “Theirs is a cautionary tale for nine other municipal power providers in Kentucky that are looking for a new source of electricity on the open market: Frankfort, Berea, Barbourville, Bardwell, Corbin, Falmouth, Madisonville, Paris and Providence.”
• “Somebody needs to get to the bottom of this. The Securities and Exchange Commission has issued some subpoenas, including one to Peabody and one to IMPA, so that may lead to something.”

Full editorial.