BRADENTON, Fla. — A Kentucky attorney who once called for the Paducah Power System to file for bankruptcy because of its interest in the troubled Prairie State power plant now says he finds no basis for filing a lawsuit aimed at striking down the deal.
In a letter to PPS on Thursday, Mark P. Bryant said the small utility's investment in the Washington County, Ill., coal plant developed by Peabody Energy Corp. was a "bad business decision."
After months of investigation into the deal, Bryant said his firm "declined to file a lawsuit against Prairie State, Peabody Energy, or others who may have played a part in such a dubious investment."
Even if a legal basis for action had been found, Bryant said the statute of limitations had run out preventing a suit from being filed. He urged the utility to extricate itself from the Prairie State Energy Campus, and return to the Tennessee Valley Authority for its power needs.
Bryant had requested "paperwork" from the utility under Kentucky's open records law to explore if there were any grounds for a lawsuit as a means of obtaining rate relief for customers, according to PPS spokeswoman Andrea Underwood.
The utility did not believe there was any basis for a suit, she said.
"However, we wanted to eliminate any doubt for our customers," Underwood said.
PPS agreed to give the attorney "all he asked for and more" in terms documents, Underwood said. She did not specify what additional documents were turned over to the attorney.
Paducah Power "did not officially hire him or pay him anything," Underwood said.
"While we felt confident there was no foundation for a lawsuit, we wanted to explore every opportunity for rate relief and make sure our Prairie State agreements had been thoroughly reviewed by an independent entity," she said. "We believe Mr. Bryant has been very thorough and that his work reinforces the direction we've taken with our recovery plan."
Last September, Bryant attended a meeting of the Paducah City Commission that was called in response to public concern over rising electric rates due to power cost adjustments and higher-than-anticipated expenses at Prairie State.
At that meeting, Bryant said, "I have received information that Paducah Power has $32 million in assets and about $600 million in debt. Why don't we immediately bankrupt this company and start getting our rates down quickly?"
His firm began looking into Paducah's contract regarding Prairie State. At the time, Bryant did not return The Bond Buyer's calls for comment.
The utility's board later adopted a resolution stating that it would not file for bankruptcy. The board also enacted a "rate recovery plan" that delayed a power cost adjustment and implemented actions to improve the utility's financial position.
The plan failed to stave off a hit to the utility's credit rating, and in January Fitch Ratings downgraded PPS' bonds to BBB from A-minus.
Paducah Power has about $158.6 million of outstanding revenue bonds issued to finance its own generating assets and a fiber optic network. PPS also has about $400 million in off balance sheet obligations owed to the Kentucky Municipal Power Agency for its portion of ownership in Prairie State.
KMPA, a joint power agency created by Paducah and the Princeton Electric Plant Board, owns a 7.82% stake in Prairie State, and has $517 million of outstanding debt secured by the revenues from take-or-pay power sales agreements with two municipal electric systems.
KMPA is one of nine JPAs and cooperatives that issued municipal debt to help finance their ownership in Prairie State.
On March 20, Hermann, Mo., one of 35 municipalities in the Missouri Joint Municipal Electric Utility, filed a breach of contract lawsuit seeking to exit its contract with MJEU.
Other municipalities are seeking investigations into the plant, and the Securities and Exchange Commission has issued subpoenas for information from Peabody and some JPAs.