{"id":26,"date":"2013-03-18T13:33:51","date_gmt":"2013-03-18T17:33:51","guid":{"rendered":"http:\/\/www.l-a-k-e.org\/blog\/2013\/03\/188-billion-on-kemper-coal.html"},"modified":"2013-03-18T13:33:51","modified_gmt":"2013-03-18T17:33:51","slug":"188-billion-on-kemper-coal","status":"publish","type":"post","link":"http:\/\/www.l-a-k-e.org\/blog\/2013\/03\/188-billion-on-kemper-coal.html","title":{"rendered":"$1.88 billion and more on Kemper Coal to be charged to Mississippi Power customers"},"content":{"rendered":"

\n\n<\/a>\nRisks at\n\nSouthern Company’s Kemper Coal plant in Mississippi<\/a>?\nPush those costs onto the public, of course!\nSouthern Company and its subsidiary Mississippi Power\ngot the MS Public Service Commissioners to approve super-CWIP\n(Construction Work in Progress)\nfor Kemper Coal: automatic rate increases for MS Power customers for years.\nJust like Southern Company and its biggest subsidiary Georgia Power\ngot the Georgia legislature to approve Super-CWIP for the new nukes\nat Plant Vogtle back in 2009.\nAnd both CWIP projects are already over budget.\nHow about we cancel those boondoggles and build solar and wind instead?\n<\/p>\n

\nAP reported 13 December 2012,\n\nAfter spending $1.88 billion, Southern Co. still faces risks on plant in Kemper County<\/a>,\n<\/p>\n\n\n

\n

\nEach day, as 2,600 construction workers toil away at Plant Ratcliffe\nin Kemper County, the big bet becomes more expensive. The projected\ncost is at least $2.8 billion, almost half a billion dollars above\noriginal expectations, and some estimates say it will go higher.\n<\/p>\n

\nLegal challenges brought by the Sierra Club have led regulators to\nblock the company from billing customers for the costs so far,\nalthough Southern subsidiary Mississippi Power Co. got closer to\nthat goal with a favorable lower court ruling earlier this month.\n<\/p>\n

\nSouthern CEO Thomas Fanning stands by the plant. He says Southern’s\nown technology will mitigate its environmental impact and the need\nto exploit coal as a hedge against uncertainties in the future cost\nof natural gas, which is currently cheap and abundant.\n<\/p>\n

\nBut there are risks.\n<\/p>\n

\nThe Kemper plant is the most expensive project ever built by\nSouthern subsidiary Mississippi Power Co. The company promises\ncompletion in May 2014, but some engineers monitoring construction\nfor state regulators warn the cost could reach $3.1 billion, and\ncompletion isn’t likely until November 2014 at the earliest….\n<\/p>\n

\n“Vogtle and Kemper County, even despite where gas prices are today,\nare exceedingly attractive resources for the future,” Fanning told\nThe Associated Press.\n<\/p>\n

\nSouthern expresses confidence in technology developed and tested at\nWilsonville, Ala. But Burns & Roe, the engineering firm that warns\nthe Kemper’s cost will top $3 billion, warns “there is still a\ntechnology risk,” partly associated with scaling up the gasifier to\nKemper’s larger size.\n<\/p>\n

\nThe company would sell the carbon dioxide to be pumped into the\nground for energy companies seeking to push up more oil from old oil\nfields….\n<\/p>\n<\/blockquote>\n

\nTo push up more oil to burn to produce more carbon dioxide.\nDoes that sound like a good plan to you?\n<\/p>\n

\n

\nThe Mississippi Public Service Commission’s decision to hold off on\nrate increases until legal challenges are resolved stunned\nexecutives and investors, especially considering a 2008 state law\nallowed rate increases during construction.\n<\/p>\n

\n“That decision surprised the investment community and we saw it our\nstock price,” Fanning said.\n<\/p>\n<\/blockquote>\n

\nYes, how dare a public service commission not kowtow to mighty Southern Company!\nSuch reluctance made Fanning have to reassure his financiers.\n<\/p>\n

\nAmy McCullough wrote for Bigger Pie Forum 25 January 2013,\n\nSouthern Co.: We will recover all our money from Kemper plant<\/a>,\n<\/p>\n

\n

\nSouthern Company will seek to recover almost $3 billion plus earnings from customers, sell bonds for the rest….\n<\/p>\n

\nCEO Tom Fanning assured the financial community that Southern\nCompany would indeed recover all the money it has spent (and will\nspend) on the $2.88-billion clean coal plant under construction in\nKemper County, Miss.\n<\/p>\n<\/blockquote>\n

\nBack to the AP article.\n<\/p>\n

\n

\nThe Sierra Club says Southern should convert the plant to burn\nnatural gas, an expense that could still be costly for shareholders\nand ratepayers. Opponents say Mississippi Power would end up\nspending less money than finishing Kemper, but the company would\nprobably try to recoup the money it’s already spent.\n<\/p>\n<\/blockquote>\n

\nJust like\n\nGeorgia Power can charge customers for Plant Vogtle even if it’s cancelled<\/a>.\n<\/p>\n

\nHow about convert Kemper Coal to a field of solar panels?\nNo carbon dioxide produced and no fuel required.\n<\/p>\n

\n

\n“I think they’ve painted themselves into a pretty tight little\ncorner, said Louie Miller, head of the Sierra Club’s Mississippi\nchapter. “They decided they were going to build this thing come hell\nor high water.”\n<\/p>\n<\/blockquote>\n

\nThe AP story delves into Southern Company’s own corporate hagiography\nand points out\n\nSouthern Company went way over budget on Plant Vogtle last time\nit built nukes there.<\/a>\n<\/p>\n

\n

\nFanning argues this time is different because inflation and interest\nrates are low and Southern has gotten better at big construction\nprojects.\n<\/p>\n

\n“Everything that I know, this plant was exceedingly well-built and\nwell organized during the construction period,” Fanning said. “I\nsuppose there is a theoretical risk of prudency. But in my view,\nthis company is executing like no company in the United States.”\n<\/p>\n<\/blockquote>\n

\nExecuting just like Southern Company last time:\n\nalready 19 months late and a billion over budget.<\/a>\n<\/p>\n

\nFanning doubled down:\n<\/p>\n

\n

\n“Now look, I am not a skeptic of natural gas more than any other\nfuel. But you cannot plan to put all your eggs in that basket. That\nis imprudent,” he said. “What Mississippi is doing here is a big\nbet. But ultimately, long-term, it will serve well the interests of\nthe families we serve here in Mississippi.”\n<\/p>\n<\/blockquote>\n

\nFanning knows what’s different from last time.\nSouthern Company has gotten better at shifting all the risk\n\nonto ratepayers, the state, and the federal government<\/a>.\nSO did it in Georgia, and just this month, they did it again in Mississippi:\n<\/p>\n

\nClay Chandler wrote for Mississippi Business Journal 5 March 2013,\n\nPSC approves multi-year rate plan for Kemper coal plant<\/a>,\n<\/p>\n

\n

\nMississippi Public Service commissioners voted 2-1 Tuesday to\napprove a multi-year rate plan for Mississippi Power Co.’s Kemper\nCounty coal plant.\n<\/p>\n

\nTerms of the plan call for the utility to receive $99 million in\nconstruction-work-in-progress funds for the rest of 2013. That will\ncreate a rate increase between 12 and 13 percent for residential\ncustomers who use 1,000 kilowatt-hours per month, starting in April.\nThe average residential customer uses about 1,100 kw\/h per month,\naccording to PSC figures. Power bills will rise by a little less\nthan $20 per month, according to utility estimates.\n<\/p>\n

\nIn 2014, rates will increase by another 3 percent, bringing the\ntotal rate increase associated with CWiP to 15 percent. When\nMississippi Power issues bonds to cover costs exceeding $2.4 billion\n\u2014 company CFO Moses Feagin said Monday that would likely\nhappen in late 2014 \u2014 rates will jump again. The cumulative\nrate impact over the life of the seven-year plan and the bond\nissuance is expected to peak at 22 percent. Those calculations do\nnot include fuel adjustment costs, which could raise or lower rates,\ndepending on the price of fuel.\n<\/p>\n

\nMississippi Power, during a hearing that lasted most of Monday\nafternoon, had asked for more revenue, but Southern District\nCommissioner Leonard Bentz said the $99 million figure was\nappropriate because \u201cwe’re in the middle of people’s budget\nyears. I felt that would be the best amount.\u201d\n<\/p>\n

\nThe multi-year rate plan and the bond issuance were part of a\nsettlement between the PSC and the utility that ended litigation\nbrought when regulators denied last summer a 13 percent rate\nincrease for the project. Gov. Phil Bryant signed last week two\npieces of legislation that codified the settlement.\n<\/p>\n<\/blockquote>\n

\nPoor SO: didn’t get the even higher rates it asked for.\nThat probably will cut its profit margin some tiny amount.\n<\/p>\n

\nI asked SO CEO Fanning last May,\n\nWhat is your exit strategy for when this big bet goes bad?<\/a>\nFanning danced around that question about Plant Vogtle, but\nhe knows the answer, which is the same as for Kemper Coal:\nSO has shifted all the financial risk onto the public.\nWe the ratepayers and taxpayers will get to eat the huge\ndebt SO is running up, just like last time at Plant Vogtle.\n<\/p>\n

\n\n<\/a>\nHow about instead we cancel both projects now before they run\nup the price tag even more?\nWe could be using bonds to build solar plants instead;\n\nDublin High School already is<\/a>,\nwith zero help from Georgia Power or Southern Company.\n<\/p>\n

\n-jsq\n<\/p>\n","protected":false},"excerpt":{"rendered":"Risks at Southern Company’s Kemper Coal plant in Mississippi? Push those costs onto the public, of course! Southern Company and its subsidiary Mississippi Power got the MS Public Service Commissioners to approve super-CWIP (Construction Work in Progress) for Kemper Coal: automatic rate increases for MS Power customers for years. Just like Southern Company and its […]","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_links_to":"","_links_to_target":""},"categories":[97,47,141,216,142,16,70,17,8,18,2,20,104,21,22,3],"tags":[8736,8719,8745,8753,8746,8706,8728,8707,8701,8708,8699,8702,8710,12,7,217,219,8737,8711,8712,218,220,34,108,221,8700,6],"class_list":["post-26","post","type-post","status-publish","format-standard","hentry","category-activism","category-climate-change","category-co2","category-coal","category-cwip","category-environment","category-ethics","category-ga-psc","category-georgia","category-georgia-power","category-government","category-law","category-nuclear","category-planning","category-politics","category-transparency","tag-activism","tag-climate-change","tag-co2","tag-coal","tag-cwip","tag-environment","tag-ethics","tag-ga-psc","tag-georgia","tag-georgia-power","tag-government","tag-lake","tag-law","tag-lowndes-area-knowledge-exchange","tag-lowndes-county","tag-mississippi","tag-mississippi-power","tag-nuclear","tag-planning","tag-politics","tag-profit","tag-regulatory-capture","tag-sierra-club","tag-southern-company","tag-thomas-a-fanning","tag-transparency","tag-valdosta"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p585fK-q","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts\/26","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/comments?post=26"}],"version-history":[{"count":0,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts\/26\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/media?parent=26"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/categories?post=26"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/tags?post=26"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}