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Press Room:  For Immediate Release 
Explore, Enjoy and Protect the Planet

August 26, 2008

Virginia Cramer, 804-225-9113 ext.102

Consumers Could See Significant Rate Increases
Federal Government Jeopardizes Billions in Loan Repayment by
Authorizing Risky Energy Projects

Washington, DC: The Sierra Club today voiced its concern that consumers could be faced with higher electric bills if the federal government continues to approve unsound investments in new coal-fired power plants across the nation. Already burdened with $36 billion in unpaid loans, the U.S. Department of Agriculture is now allowing rural utilities to take on billions of dollars in additional debt to build new coal-fired power plants, at enormous financial risk to taxpayers.

"In the past weeks families across the country have already seen their energy rates increase dramatically, in some cases almost double," said Bruce Nilles, director of the Sierra Club’s National Coal Campaign. "Approving these plants will push rates even higher as both the cost of energy and the additional debt are pushed off on ratepayers."

The federal government, through the Department of Agriculture’s Rural Utilities Service, is approving rural utilities’ ownership in at least ten new coal-fired power plants across the country. In every instance, the government has failed to fully vet the plants’ potential impacts before authorizing their construction, ignoring key concerns like the financial risk associated with the coal plants’ contribution to global warming, adverse impacts on the environment and the availability of cleaner, cheaper alternatives. The government's failure to fully evaluate the environmental risks of and alternatives to these new coal-fired power plants violates the National Environmental Policy Act.

"The Rural Utilities Service is rubber stamping new coal-fired power plants," continued Nilles. "And in the process is unfairly saddling the American public with huge amounts of debt. We need to be making smarter decisions with our money, especially in today’s economic climate."

Environmental impacts play an integral role in a utility’s ability to repay its loans, a fact recognized by the nation’s largest banks, which already consider the cost of carbon dioxide pollution before granting loans. Other parts of the federal government, including the House Oversight and Government Reform Committee have also recognized the financial risks associated with failing to account for the cost of global warming pollution from new coal plants. The Committee has warned the Rural Utilities Service that future carbon regulations will make coal increasingly costly and that failing to consider those costs will place taxpayer dollars and ratepayers at risk.

"It is irresponsible to approve investments in new coal-fired power plants without considering the environmental and financial risks.  The Rural Utilities Service is placing hundreds of millions of taxpayer dollars in serious jeopardy," said Rep. Henry A. Waxman, Chairman of the House Oversight and Government Reform Committee.

In the past rural utility cooperatives have gone bankrupt rather than pass on cost increases to customers. If that were to happen in this situation, the American taxpayers will be left with billions of dollars in debt which is unable to be repaid.

"Coal is a fuel of the past. Instead of looking for ways to use more of it, like fueling our cars, we should be working to move beyond it to a cleaner energy future. There are real, affordable energy solutions, like efficiency and renewable energy that are ready today to meet our energy needs, without the financial, health and environmental risks associated with coal," said Nilles.

For a copy of the Sierra Club’s letter to the USDA contact


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