Watchdog opposes port loan

Backed by a financial analyst’s report, a New Orleans-based consumer group Tuesday asked the State Bond Commission to postpone granting permission for a tax-exempt loan to help expand an Ascension Parish coal port facility.

The Alliance for Affordable Energy says that even under the best financial scenarios, the Burnside project likely would mean an increase in the cost of electricity for customers of utility cooperatives.

The facility aims to export more coal, which could drive up the price of the fuel on which many cooperatives rely, thereby increasing monthly electric bills for customers.

“The Alliance will be requesting a delay,” said Casey DeMoss Roberts, executive director for the nonprofit group that advocates for consumers on utility issues.

The Bond Commission is scheduled to vote Thursday on $130 million in tax-exempt bonds that would help Impala Warehousing LLC, based in Houston, pay for improvements to ship about 10 million tons of coal, primarily to international markets, from a facility on the Mississippi River near Burnside.

State Treasurer John N. Kennedy, who chairs the Bond Commission, said Tuesday that he could not comment on the pending matter.

Trafigura Beheer BV, a Dutch trading company that owns Impala, said in a prepared statement released late Tuesday: “While we are unable to comment on a report that we have not seen, we can say that the Impala Burnside Terminal Project is viable and is set to become a top coal and bulk logistics facility in the United States.”

A good number of the facilities along the river can only receive coal by barge, but the Burnside Terminal will be able to receive coal both by barge and by rail, the statement said.

The 14-page report by The Institute for Energy Economics & Financial Analysis argued that market conditions have changed and that the global coal market can no longer support significant increases in U.S. coal export capacity.

International investment houses have changed their view of investments in coal export projects from “high risk to speculative,” the report states.

The IEEFA is a nonprofit group based in suburban Boston that researches energy and utility issues.

Trafigura disagreed in its statement, saying that coal is an important global commodity and U.S. exports are poised to grow as a result of low natural gas prices.

The Burnside facility expects to start operations by the end of 2013 and eventually will support about 120 permanent jobs.

The report’s author, Tom Sanzillo, IEEFA director of finance, said the promises of jobs, which would pay an average wage of $52,000 per year, are not guaranteed in any legally binding document available publicly.

In fact, he said, the lack of public records about the transaction makes it difficult to make a confident determination.

But what documents are available raise significant questions, he added.

“I’m making a very narrow recommendation because the information needed to fully analyze is not available publicly,” Sanzillo said Tuesday. “I’m recommending that they (the Bond Commission) go back and take a very hard look.”

For instance, no detailed revenue and expense statements have been made public, the price of coal used to calculate the business plan and the debt schedules are unavailable, as are details about the government-sponsored incentives and additional tax agreements, he said.

Sanzillo said using the taxpayer-supported bonds and providing other enticements to this Burnside project crowded out other, perhaps more financially worthy, ventures from the special incentives.