OSHA certified a “continuing pattern of retaliatory treatment” at Kemper “clean” Coal after an employee alerted Southern Company of alleged fraud: SO fired him, refused to hire him back and now he’s suing. Plant “new nukes” Vogtle also had impossible projections from the start and is even later and more overbudget, while anybody from GA-PSC to Georgia EMCs to the Florida PSC or even PowerSouth in Alabama could bring it down. Somebody put Plant Vogtle out of its misery so we can get on with solar power in Mississippi, Alabama, Georgia, Florida, and everywhere else.
Two new cooling towers and construction cranes mark the work sites for nuclear reactors 3 and 4 at Plant Vogtle in east Georgia. The project is currently $3.6 billion over budget and almost four years behind the original schedule. JOHNNY EDWARDS / JREDWARDS@AJC.COM, in
Plant Vogtle: Georgia’s nuclear ‘renaissance’ now a financial quagmire by Russell Grantham and Johnny Edwards, Atlanta Journal-Constitution, 19 May 2017.
Kemper “clean” Coal
Doyle LLP, PRNewswire, 8 August 2017, Whistleblower in Kemper Project Sues Southern Company and CEO: OSHA ruled former company engineer faced “continuing pattern of retaliatory treatment”
BIRMINGHAM, Ala., Aug. 8, 2017 /PRNewswire/ — A former Southern Company engineer that reported safety concerns and falsification of operational reports at the company’s troubled “clean coal” Kemper Project filed a federal whistleblower lawsuit against the company and its chief executive officer, lawyers at Doyle LLP and Heninger Garrison Davis LLC said today.
The legal team for Brett Wingo, a resident of Alabama, filed the lawsuit in federal court in Birmingham, Ala., alleging that company officials, including Southern Company chief executive officer Thomas A. Fanning, repeatedly misled investors and the public about the “commercial operations date” (COD) of the plant in Kemper County, Miss.
Mr. Wingo, who worked for the company from 2007 to 2016, alleges violations of the federal Sarbanes-Oxley Act, the federal Dodd-Frank Act, and Mississippi state law by Southern Company after he repeatedly alerted company management in 2013 and 2014 about concerns, including several warnings that the reported COD was unjustifiably optimistic.
According to the complaint, “In a continuing effort to capture hundreds of millions of dollars of taxpayer subsidies; inflate short-term stock prices; ensure continued payment of unjustifiable executive compensation packages; and impose billions of dollars for decades to come in higher electricity costs for captive consumers in their monopoly utility market, Southern Company management again and again offered false promises about the feasibility, schedule, and safety” of the Kemper Project.
Brett Wingo’s revelations were on the front page of the New York Times, Piles of Dirty Secrets Behind a Model ‘Clean Coal’ Project, by Ian Urbina, 5 July 2016.
Well, Plant Vogtle must be completely different, right?
In January 2017, the U.S. Occupational Safety and Health Administration (OSHA) concluded after investigating Mr. Wingo’s allegations that he had been subjected to a “continuing pattern of retaliatory treatment” by Southern Company after he alerted managers, executives and compliance officers to Kemper Project problems. The company was found to have violated the federal Sarbanes-Oxley Act. OSHA ordered Southern Company to reinstate Mr. Wingo and pay him backpay and damages because of its “callous and reckless disregard” for his rights, and its “irresponsible disregard to the whistleblower protections enforced by OSHA.” It ordered that Southern Company reinstate him immediately. To date, the company has refused to do so.
The Kemper project was purported to be a first-of-a-kind power plant that promised to deliver cleaner, more affordable electricity while using proprietary “clean coal” and integrated gasification combined cycle (IGCC) technology, the lawsuit asserts. Southern Company recently reported that shareholder losses from the Kemper Project exceed $6 billion.
The defendants in the case are Southern Company, Southern Company Services Inc., and Mr. Fanning.
The case is “Brett Wingo v. The Southern Company, et al.,” Case No. 2:17-cv-01328-MHH in the U.S. District Court for the Northern District of Alabama, Southern Division.
That case will be interesting to follow.
And it’s not the only one: Sharon Kelly, DeSmogBlog, 8 August 2017, New Fraud Allegations Emerge at Troubled ‘Clean Coal’ Project As Southern Co. Records Multi-Billion Loss,
A second less-noticed legal filing with Mississippi state regulators accuses Southern of misrepresenting Kemper’s prospects right from the outset, before construction even began. Those claims center on Southern’s projections for what it would cost to operate and maintain the plant once it was up and running, which the filing asserts were so low they were “indefensible”.
In an email to DeSmog, Wingo seconds those claims, saying that he believes management knew back in 2012 that its “operation and maintenance” (O&M) projections were off — but kept the accurate numbers under wraps for years.
“By hiding the true O&M costs for so long, apparently since 2012 and likely longer, Fanning basically ensured shareholders would be forced to absorb $6 billion in losses,” Wingo told DeSmog.
“In 2012, sunk costs on Kemper were only around $1 billion and the natural gas part of the plant substantially complete. It would have been a perfect time to stop a runaway train from running off the end of the tracks,” he added. “But history shows, that’s not what Fanning and Southern Company chose to do.”
That DeSmogBlog article quotes SO CEO Tom Fanning:
“We built the plant, but in the meantime, natural gas prices fell. At the time we started building the plant, natural gas prices were around $10 per million BTU [British thermal units]. Today they’re around $3 per million BTU,” he explained. “As a result, the roject became uneconomic and our regulator in Mississippi issued some guidance that basically said that they would not allow recovery of those costs.”
What Fanning failed to mention was that when Kemper was first on the drawing board, it was supposed to cost $1.8 billion to build — but after years of missed deadlines and budget overruns, the price tag for building Kemper had climbed more than $5 billion, to $7.5 billion, making Kemper the most expensive fossil fuel power plant ever built in the U.S.
Still not nearly as expensive as SO’s two new nuclear units Plant Vogtle.
Plant “new nukes” Vogtle
By this description, Plant Vogtle sounds a lot like Kemper Coal: impossible projections from the start, way late, and way overbudget. Jay Bookman, AJC, 8 August 2017, Opinion: Ga. Power, Southern Co. have nuked a lot of credibility,
Right from the start, experts had warned the Georgia Public Service Commission about the dangers inherent in restarting the American nuclear industry almost from scratch, using new and untested technology in a field in which the margin of error is tiny because the cost of failure is so huge. From the start, Georgia Power and its partners confidently and aggressively dismissed those warnings, basically steamrolling all opposition.
Yet even as it issued those assurances, Georgia Power also made sure that its own corporate interests would be protected in case its critics proved correct. Using its considerable influence at the PSC and in the Legislature, the utility rewrote state law and state policy to ensure that all of the financial risks inherent in such a venture would be placed on the backs of the ratepayers, and none on its own shareholders.
Then it began. As reports of delays and overruns began to filter out, the company would deny or downplay them. When those problems became too obvious to deny, the company often claimed that they had been anticipated all along. And time and again, when it issued new cost projections and completion dates, those estimates would prove wildly optimistic.
For example, under the original schedule, both new units at Vogtle should already be on line and producing power. Those estimates have been repeatedly pushed back to the point that in early 2015, the company was forced to admit that completion was still five years in the future.
Now that schedule has once again been pushed back, with completion still another four to six years away. Put another way, more than two years have passed and hundreds of millions if not billions have been spent, and by the company’s own admission we are no closer to those units producing power than we were in 2015.
Maybe that perpetually sliding timetable reflects a lack of corporate honesty. Maybe it’s a repeated failure by Georgia Power and its parent Southern Co. to fully grasp their undertaking. Probably, it’s a bit of both. Whatever the cause, that long record of inaccurate projections and timelines makes it impossible to build policy on any new projections that the company produces.
Yet later this month, Southern Co. officials will recommend whether to continue dumping billions of dollars into its nuclear expansion at Vogtle. If their recommendation is yes, they will be asking the ratepayers of Georgia to make an enormous multi-billion-dollar leap of faith, even after previous such leaps of faith have fallen short.
Well, this time, the ratepayers will require company in that leap. This time, the PSC must do its job of protecting the public by ensuring that if Vogtle moves forward, Southern Co. will share significantly in the financial risk of doing so.
Matt Kempner, AJC, 6 August 2017, Kempner: Georgia Power’s nuclear tower teeters; EMCs ‘concerned’,
With costs piling up and no end in sight, two South Carolina utilities recently announced they will abandon a nuclear construction project almost identical to the one Georgia has underway at Vogtle.
After years of problems, ballooning costs and the bankruptcy of the main contractor, one of the two co-owners on the Plant V.C. Summer expansion got cold feet and fled. Which immediately caused the project’s main owner, SCANA Corp. to announce it wants to call it quits, too….
Some elected members of the Georgia Public Service Commission rushed to put distance between South Carolina’s project and the Vogtle one they green lighted and showered with love.
“It’s like apples and oranges,” Commissioner Doug Everett said, according to my colleague Russell Grantham.
PSC chairman Stan Wise pounded out a statement highlighting “the dissimilarities of these projects.”
Commissioner Doug Everett’s District 1 covers all of south Georgia. Commissioner Stan Wise has seldom disliked any proposal by Georgia Power.
This is ironic, because just last year, Georgia Power stressed to the PSC just how similar the two projects are. (That served Georgia Power’s interests at the time because it wanted the regulators to give the company essentially the same sweetheart deal that South Carolina regulators had given SCANA.)
A consultant for the Vogtle team concluded the project is “sufficiently similar to Summer Units 2 and 3 so that one could reasonably compare construction outcomes. This is proven by the fact that there are many similarities in the EPC contracts, generally the same primary plant equipment suppliers, similarities in construction milestone dates, similarities in construction contractors, and evidence that GPC and SCE&G have been and continue to collaborate on the design, construction, and training on these projects.”
Here’s a few more similarities: Both projects suffer soaring costs and stretched timetables. Also last week, Southern disclosed figures suggesting the total price of Vogtle may be close to double the original forecast. And the first juice won’t flow from a new reactor before February 2021 at the earliest, it said, more than a year later than the previous target.
Which all sounds very like Kemper Coal.
Here’s another similarity to that Mississippi project, about which Tom Fanning said: “the project became uneconomic and our regulator in Mississippi issued some guidance that basically said that they would not allow recovery of those costs.” At the Southern Company stockholder meeting in May, Fanning said what the Georgia Public Service Commission said would in August factor into the SO “board’s decision on whether to recommend going forward, or not.”
Kempner points out GA-PSC isn’t the only group that could pull the plug on Vogtle.
Georgia Power is managing partner on Vogtle, with just under 50 percent of an ownership stake in the expansion. But also in the mix with almost a third of the ownership is Oglethorpe Power, which represents dozens of community electric membership corporations in Georgia. Most are at risk on this project, too.
The Municipal Electric Authority of Georgia, owned by bunches of small city power systems across the state, has nearly a quarter of the Vogtle ownership. And the city of Dalton has a small piece of the project.
Every one of those players has a different comfort (or fear) level on sticking with Vogtle. I suspect leaders of EMCs may be among the most nervous.
“They are very concerned and prepared to urge a pause,” I was told by Gary Miller.
He’s president of GreyStone Power Corp, one of the largest EMCs in Georgia, with nearly 113,000 customers in several counties including Paulding, Douglas and South Fulton.
Kempner doesn’t mention that four Georgia EMCs, including mine, Colquitt Electric, never bought into those new nukes to start with, because they didn’t think it was a good business deal. Maybe their colleagues in other EMCs and MEAG should listen to them.
And let’s not forget Florida and Alabama are in on this boondoggle:
MEAG, the body representing city utilities, sold rights (and cost responsibilities) for two-thirds of the project’s first 20 years of power to PowerSouth in Alabama and JEA in Jacksonville, Fla. That’s according to Marietta’s mayor, Steve “Thunder” (fun, right?) Tumlin, who is on MEAG’s board.
FPL’s Turkey Point nuclear project
Meanwhile in Florida: Susan Salisbury, Palm Beach Post, 9 August 2017, FPL wants more nuclear units; customers say prove they make sense,
Just weeks after this summer’s announcement that two unfinished nuclear reactors in South Carolina are being abandoned, Florida regulators are poised to once again consider Florida Power & Light’s pursuit of two new reactors. However, hundreds of FPL customers say they want the utility to prove the reactors would be worth the costs. In an email campaign organized by the Southern Alliance for Clean Energy, they’re asking the commission to reject FPL’s “heavy-handed and unprecedented request” for a deferral of a required annual feasibility study for the two proposed Turkey Point reactors.
The feasibility study is meant to answer the question of whether a project makes economic sense for customers.
The hearing before the Florida Public Service Commission begins Tuesday at 1:30 p.m. in Tallahassee, and can be viewed at Floridapsc.com
And if the Florida PSC should turn down FPL’s Turkey Point, Plant Vogtle would be the last new nuke project standing in the U.S.
Georgia PSC, we don’t need any more nuclear buggy whips in an electric car world. Do your duty: end the failed Big Bet at Plant Vogtle.
-jsq
Investigative reporting costs money, for open records requests, copying, web hosting, gasoline, and cameras, and with sufficient funds we can pay students to do further research. You can donate to LAKE today!
Short Link: