Federal Lending For Building Coal Plants Suspended

The Rural Utilities Service (RUS) of the U.S. Department of Agriculture has suspended a low-interest lending program for rural electric cooperatives seeking federal assistance to build new coal-fired power plants during fiscal 2008 or 2009. The suspension is acknowledgement about concern for global warming. The low-interest loans are perceived as subsidizing coal plants that emit greenhouse gases while failing to accurately calculate the financial and environmental risks associated with those plants. The RUS has provided $1.4 billion in low-interest loans for coal-fired plants over the past six years. Rural electric cooperatives rely on coal for 80 percent of their power, well above the 50 percent national average.

The last loan for a generating plant was made in 2006. But rural cooperatives have applied for $1.2 billion in loans to cover all or part of four more coal-fired plants, including controversial ones in eastern Kentucky and southern Illinois. The Sierra Club also has a major program to prevent the building of coal plants around the U.S. Yet the National Rural Electric Cooperative Association is concerned that global warming retrofit expenses and higher coal prices for rural power generation co-ops could pass the increases along to consumers. Power generation co-ops are separate from distribution co-ops, which in the past have forced some generators into bankruptcy rather than pass along higher costs. (The Washington Post)