Government probe into power plant triggers rate hike fears in Cleveland, Midwest cities
Records being seized at plant powering Cleveland
Ron Regan, newsnet5.com
11:18 PM, Mar 7, 2013
3:57 PM, Mar 28, 2013
CLEVELAND - A government probe into a $5 billion electric generating plant supplying power to Cleveland and cities across the Midwest is triggering concerns over future rate hikes.
The U.S. Securities and Exchange Commission has subpoenaed records related to the development of the Prairie State Energy Campus in southwestern Illinois.
The plant came under scrutiny following an exclusive 5 On Your Side investigation in July 2012 that revealed the $5 billion facility had failed to generate electricity for four full months while municipalities across the Midwest were paying millions on bond payments.
Our investigation also found a mechanical problem was blamed for shutting down the just opened plant.
Following our report, there were congressional calls for an investigation into the plant.
Cleveland and 60 other communities spent $3.7 million on bond payments while receiving no electric power.
Meanwhile, Cleveland city council was unaware of the government probe until informed by NewsChannel5.
Cleveland Councilman Mike Polensek said he was "unaware" of the SEC's investigation into Peabody Energy -- the company that initially developed the plant.
"We have not been briefed," said Polensek, "The Director of Public Utilities and the Director of Cleveland Public Power need to brief us since we have a financial stake in that facility and we could take a major hit."
Cleveland was urged to buy into the power plant by Cleveland Public Power Director Ivan Henderson, who also is a member of American Municipal Power that helped create the bond financing of the plant.
The Securities and Exchange Commission said it will not confirm or deny an ongoing investigation but documents obtained by NewsChannel5 reveal that Peabody Energy referenced the government probe in its just-released annual report.
"The Securities and Exchange Commission staff served a subpoena on the company seeking information and documents relating to the development of Prairie State. The company is cooperating with the SEC's investigation.
The company says it believes pending or threatened proceedings can be resolved without a material adverse effect on financial conditions.
Meanwhile, Ohio Citizens Action Executive Director Sandy Buchanan said, "We all know the SEC does not do this sort of thing lightly and only move in when they believe there is a serious problem to be investigated."