CHICAGO — Peabody Energy Corp. — the company that led efforts to develop the mostly bond-financed, joint power agency-owned Prairie State Energy Campus — disclosed Monday that it has received a subpoena from the Securities and Exchange Commission on the project's development.

The southern Illinois coal-fired plant has come under fire for construction delays and cost overruns drove up the price for energy beyond what public utilities had expected to pay when they bought into the project. The plant is now fully operational.

Public utilities in Illinois, Indiana, Kentucky, Missouri, and Ohio issued $4.5 billion of debt, some it under the federal Build America Bond program, to finance their participation. Peabody initially sponsored the project and still owns a small stake in it.

"In January 2013, the Securities and Exchange Commission (SEC) staff served a subpoena on the Company seeking information and documents relating to the development of Prairie State," the company reported in its annual 10-K filed Monday with the SEC. "The Company is cooperating with the SEC's investigation. Based on current information, the Company believes that such other pending or threatened proceedings are likely to be resolved without a material adverse effect on its financial condition, results of operations or cash flows."

The SEC declined to comment on the investigation. The company issued a statement saying: "We have received an inquiry from the SEC regarding the development of the Prairie State Energy Campus, and we are cooperating with any questions they may have regarding it.  We look forward to sharing information on what is a highly successful project."

Moody's Investors Service last year concluded that while utilities are paying higher than originally anticipated costs for Prairie State power, the long-term economics remain favorable.

The project's value provides incentive for its joint-power authority owners to continue support, Moody's said. Strong contracts securing the Prairie State debt provide rating stability and also should help allay investor concerns.

The state-of-the-art coal plant became fully operational in 2012 after some delays. The campus includes a two-unit 1,629 megawatt pulverized coal, supercritical coal-fired generating facility at a site with an adjacent coal mine.

The project's growing price tag has drawn public and political scrutiny, with some municipalities who are locked into contracts through their participation in local public power agencies calling the project a bad deal.

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

A report last year from the Institute for Energy Economics and Financial Analysis, which describes its mission as moving the United States away from coal and other non-renewable energy resources, warned that some local communities in eight states with a stake in the project could face fiscal stress due to the higher rates they now face.

The cost of the project, first estimated at about $1.8 billion, rose to $3 billion and the utilities and project managers in 2010 negotiated a fixed cost of $4 billion. Current costs for the project are estimated at nearly $5 billion, according to published reports.

Customers in a total of 217 municipalities and 17 electric membership cooperatives in Illinois, Indiana, Kentucky, Michigan, Missouri, Ohio, Virginia and West Virginia will use power from the plant.

Majority owners include the A1-rated American Municipal Power Inc., the A1-rated Illinois Municipal Electric Agency, the A1-rated Indiana Municipal Power Agency, the A3-rated Missouri Joint Municipal Electric Utility Commission, the A3-rated Kentucky Municipal Power Agency and the A2-rated Northern Illinois Municipal Power Agency.

The six collectively sold $4.5 billion in debt to fund their ownership stake and tapped the BAB program for some of their issuance. The bonds are secured by payments from over 200 municipal electric utilities in 10 Midwestern states. Two rural cooperatives and Peabody own small shares. The project was constructed by Bechtel Power Corp.

Last fall, then-U.S. Rep. Dennis Kucinich, D-Ohio, asked the Treasury Department to investigate whether it was proper for BABs, which offer a federal interest rate subsidy, to have been used to finance the power plant. Kucinich, who lost his 2012 re-election bid in a primary, complained that the bond issuance was benefitting "a private, multinational energy firm."

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