CHICAGO — The Indiana Attorney General will not investigate the controversial $4.5 billion bond-financed Prairie State Energy Campus in southern Illinois.

Responding to a request from an environmental group, a representative from Indiana AG Greg Zoeller's office said last week that limited jurisdiction and lack of evidence prompted the decision not to pursue an investigation.

The environmental group, Citizens Action Coalition, requested the probe July 1, a few months after two developers of the coal plant admitted to receiving subpoenas from the Securities and Exchange Commission tied to the project.

The group warned the state AG that cities and towns locked into contracts for the project may have their fiscal stability threatened by higher than expected power costs.

The Ohio attorney general is considering a similar request from a group of city council members in the state, including from Cleveland. A spokesman for Ohio AG Mike DeWine said the office does not comment on whether or not it is investigating a case until or unless it pursues formal court action.

Prairie State includes a coal-fired power plant and adjacent coal mine that began operating in 2012. It has come under fire for construction delays and cost overruns that drove up the price for energy beyond what the public utilities had expected when they bought into the project.

Public utilities in Indiana, Kentucky, Missouri, and Ohio issued $4.5 billion of debt, up from original projections of $1.8 billion. The bonds are secured by payments from more than 200 municipalities that have contracts with the project.

Higher than projected power costs have fueled the ire of municipalities and environmental groups, who have long warned that the plant will be a major contributor to greenhouse emissions despite more advanced controls.

Majority owners include American Municipal Power, the Illinois Municipal Electric Agency, the Indiana Municipal Power Agency, the Missouri Joint Municipal Electric Utility Commission, the Kentucky Municipal Power Agency and the Northern Illinois Municipal Power Agency.

Two developers, AMP and Peabody Energy Corp., which later sold most of its share, have admitted to receiving SEC subpoenas related to the project.

Citizens Action Coalition, an environmental group, asked Zoeller on July 1 to investigate any "potential misrepresentation" that led to the communities extending their contracts.

"Indiana Municipal Power Agency has secured over $800 million of municipal bond financing that currently burdens communities with the obligation of paying hundreds of thousands of dollars for over-priced electricity that is well above what is currently available on the wholesale power market," the letter said. "We believe it is critical to determine now whether these highly leveraged obligations impact the fiscal stability of our state and lending activities of other bond authorities within the state."

In a July 24 response, Terry Tolliver, deputy director of the AG's Consumer Protection Division, said the office would not pursue an investigation for several reasons, including lack of jurisdiction and specific examples of misrepresentations.

The state utility, IMPA, acted within its powers to join the project, and the AG's office "may not substitute its judgement for that of IMPA," Tolliver said.

State law also limits the AG's jurisdiction over utilities that are already subject to regulation by the Indiana Utility Regulatory Commission, he said.

The office still may pursue action if the SEC reveals its findings to his office, Tolliver added.

"We understand your concern regarding the Prairie State Project and the fiscal stability of Indiana's communities; however, additional information would need to be provided to form an adequate basis for an investigation," Tolliver said.

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