Climate and energy

First, because Kansas media is currently inundated by clean coal ads that mysteriously feature only bright sunny pictures of wind and solar panels, plus lots of happy children :) let’s all recall the Wichita Eagle’s parody ad:

Now. Onto deeply serious stuff, as befits a highly professional organization such as CEP. Where staff spends no time at all messing around on YouTube.

As reported in KC Primebuzz and by now numerous other sources, California Democratic Representative Henry Waxman, who is chairman of the House Oversight and Government Reform Committee, yesterday launched an inquiry into the federal loan practices regarding rural utilities (.pdf).

Huh? What? Here’s the context: Recently, Wall Street banks have pulled back on financing the construction of coal-fired power plants for investor-owned utilities, because of concerns over carbon liability and cost increases due to upcoming greenhouse gas regulation.

Investor-owned utilities are financed by private investors. However, the expansion of rural electric cooperatives (and some other entities, see this link for more info) is financed by taxpayer funds, through the Rural Development Utilities Program/ Rural Utilities Service (RUS).

Specifically, Waxman is worried that RUS is not concerned with the impact of throwing taxpayer dollars into coal development, at a time when private investors are bailing out. The future costs to taxpayers of developing giant greenhouse gas emission sources could also be very expensive. It also doesn’t make much sense for the federal government to try to limit emissions on one hand, while financing more coal plants on the other. Quotable:

Encouraging new uncontrolled coal-fired power plants to be built without adequately accounting for future carbon control costs raises the risks of both loan defaults and large and unanticipated rate increases for ratepayers. Large rate increases would obviously harm economic development, which is the central purpose of the RUS program, while extensive defaults would threaten RUS’s ability to continue providing these loans.

Waxman is concerned about all RUS financing. Scarily for Kansas, though, he singled out Sunflower Electric in his letter. Evidently, this example stands as a worst case scenario. Waxman recognizes that the Department of Justice refers to Sunflower as a “financially troubled borrower” that already owes $200 million on the existing Holcomb plant. However, RUS has still approved Sunflower’s application to build two additional plants at the site. (I have a hard time imagining my banker extending similar terms to an applicant with iffy credit.) Moreover, Sunflower’s cost estimates for the new plants did not include the cost of meeting future federal standards regarding carbon regulation.

The upshot, according to Waxman:

If this plant is built, Kansas ratepayers may be stuck with billions of dollars in stranded assets and skyrocketing costs for power.

Some interesting reactions from Kansas legislators:

Kansas House Speaker Melvin Neufeld, an Ingalls Republican and a supporter of the expansion, reviewed the letter briefly and handed it back to a reporter, saying, “I don’t really care what Washington does.” (KC Primebuzz)

“He’s from California. What do you expect?” state Senate Utilities Committee Chairman Jay Emler, a Lindsborg Republican, said of Waxman. “He needs to go take care of his own house and leave us alone.” (Hays Daily News)

With absolutely no offense meant to either Neufeld or Emler… um… that’s taxpayer money. Money that comes from us paying federal taxes. Kansans might not care for the federal oversight or the investigation of how a Kansas entity spends those funds, but, er, the federal government does have the right. Er. Um. Sorry! And now we have attracted their attention. Agh.

I completely support my federal government. Totally. At the same time ,I’d rather not wave any red flags. I’m more the cautious, pragmatic sort. If there is any way to avoid unnecessary upheaval, I will probably find it.

And while I dearly hope it doesn’t come to this – there could come a day when I am forced to post another “Oops! the feds!” headline. That might be regarding the EPA. That federal agency might decide that Kansas, having placed severe restrictions on the KDHE, no longer has the capacity to comply with federal clean air law. Thus, the EPA will intervene.

Again. I support the EPA. No offense meant. None. I am not waving any red flags whatsoever.

(Mainly because I am hiding under my desk.)

Happy weekend, all!

— Maril Hazlett, www.climateandenergy.org