New York City’s comptroller called on the fedral government to investigate how tax-exempt bonds are being used to build coal-fired power plants, according to a Reuters report.
William Thompson sent a letter to the U.S. Treasure Department earlier this month, which was released Monday. The letter highlights the financial risks of the tax-exempt funding mechanism in light of future regulatory measures and the rising cost of building power plants.
"Though the energy sector constitutes a relatively small percentage of the tax-exempt program, they are clearly among the most costly on a project-by-project basis and fast becoming more expensive," the letter said.
Thompson pointed to an upcoming sale on Thursday of $300 million revenue bonds, which will be used by American Municipal Power of Ohio to fund a 25% ownership in Prairie State Energy Campus Project’s power plant.
Thompson said American Municipal Power of Ohio is conducting the sale under the "assumption that ratepayers will simply pay any price increases without question." He suggested this assumption may be incorrect, and could lead to future problems in the bond market.
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