By SAM HANANEL

Associated Press

WASHINGTON -- The chairman of a congressional oversight committee is asking why a federal agency is approving loans to build new coal-fired power plants like the controversial project under debate in Kansas.

Rep. Henry Waxman, a California Democrat, asked the USDA's Rural Development Utilities Programs division Thursday to explain whether it considered the financial risks associated with Hays-based Sunflower Electric Power Corp.'s plan to build two new coal-fired units near Holcomb.

"I am concerned that financing these huge new sources of greenhouse gas emissions puts taxpayer dollars at risk, as well as undermines the United States government's efforts to address global climate change by reducing greenhouse gases," Waxman said in a letter to the agency's administrator.

If the plant is built, Waxman said, Kansas ratepayers might be stuck with "skyrocketing costs" for power.

Waxman's request comes as Kansas legislators are trying to pass a bill allowing the plants to be built over the objections of Democratic Gov. Kathleen Sebelius.

Sunflower spokesman Steve Miller said the company is not concerned Congress might interfere with plans to build the new plants.

"Our belief is that all bankers take into account the risks associated with any loan," Miller said.

Waxman's letter came on the same day the Kansas Senate passed a bill allowing Sunflower to move forward with its plants. The House is working on a similar measure.

"He's from California. What do you expect?" state Senate Utilities Committee Chairman Jay Emler, a Lindsborg Republican, said of Waxman. "He needs to go take care of his own house and leave us alone."

The $3.6 billion project has been blocked since October, when Sebelius' administration expressed concerns about its potential carbon dioxide emissions and refused to issue an air-quality permit.

Waxman's letter said Sunflower owes the federal government about $200 million in loans for its existing plant in Holcomb. In 2007, the federal agency overseeing rural utilities gave Sunflower permission to take on billions of dollars in new private sector debt to build the two new coal-fired plants.

Sunflower is a partner in the project with two cooperatives, Tri-State Generation and Transmission Association Inc. of Westminster, Colo., and Golden Spread Electric Cooperative, in Amarillo, Texas.

Sunflower says it will use development fees from them to finance its part of the project; in return, Tri-State and Golden Spread can lay claim to almost 86 percent of the plants' generating capacity initially.

"We may choose to -- but we won't have to -- borrow money to participate in the coal projects," Miller said.

Waxman's letter asks the agency to explain whether it assessed "the financial risks associated with the potential for regulation of greenhouse gas emissions with respect to the new Sunflower plant."

"If RUS failed to take this into account, it has put both taxpayer funds and Kansas ratepayers in jeopardy," Waxman said.

While Miller conceded Sunflower was a "troubled borrower" in the 1980s, he said the company worked out its financial problems in 1988. Since then, he said Sunflower has had more than 20 years of positive cash flows and large profit margins. He estimated the company would be debt free by 2021.

"We agree that he should be rightly concerned that an agency is doing the right thing because we're into following the law," Miller said.

In denying the permit last year, Sebelius' secretary of health and environment cited the plants' potential 11 million tons of CO2 emissions a year.

But Sunflower's project includes a bioenergy center to capture CO2 and use it to grow algae that can be converted to biofuels. While critics question whether the technology is ready for use on such a scale, Sunflower said it will reduce emissions to as little as 4.5 million tons a year.

Republican Congressman Jerry Moran, who represents western Kansas and supports the Sunflower project, stressed the utility wants to expand so it can spread its cost among more customers and reduce utility rates to consumers.

"There's aspects of this project that put Kansas at forefront of producing electricity in environmentally sound ways," Moran said.

Moran said Waxman's letter appears to be part of an orchestrated campaign by those who oppose construction of the plants. Moran also questioned Waxman's assumption that potential regulatory issues easily could be quantified.

"It would be very difficult to establish the regulatory cost of new environmental rules and regulations that haven't even been considered by Congress," Moran said.

A spokesman for Sen. Sam Brownback, another Kansas Republican, also questioned Waxman's motives, noting only private funds -- and no federal dollars -- would be involved.

"This appears to be more about Congressman Waxman's political agenda against coal-fired plants than about the energy needs of Kansas," spokesman Brian Hart said.