N.Y.C. Comptroller Wants Coal Plant Review

New York City Comptroller William Thompson Jr. has urged the U.S. Treasury Department to review its policy toward the use of tax-exempt financing for the construction of new coal-fired power plants, the comptroller's office announced yesterday.

"Recent research shows that the risks make them poor candidates for federal support and problematic for investors," Thompson  said in a letter to Eric Solomon, Treasury assistant secretary for tax policy. "I firmly believe that an immediate review and timely action by the Treasury Department might spare the nation's taxpayers a series of expensive losses." 

The plants are environmentally risky and are some of the most costly power projects in the country using tax-exempt financing, Thompson wrote.

Coal-fired power plant projects are likely to have near and long term cost increases that have been undisclosed and that would put the payment of debt service on tax-exempt bonds sold to build those plants at risk, Thompson wrote. He also pointed out that the Agriculture Department's Rural Utility Services instituted a moratorium on new coal plants through at least 2009.

The announcement came a week after New York Gov. David Paterson said that he supported the construction of new coal power plant in Jamestown in western New York. That state expects that plant will seek federal funding.

A spokesman for the Treasury said it was reviewing the letter.

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