Sierra Club: Kemper County coal project near $5bn mark

Mississippi Power has again filed a report with the Mississippi Public Service Commission showing cost overruns at the in-construction Kemper County coal gasification power plant, said project critic the Sierra Club in a Sept. 4 statement.

With only 81% of spending complete, this latest report indicates that this Southern Co. (NYSE: SO) subsidiary will almost certainly exceed $5bn in costs for the 587-MW plant, more than double the original cost estimates given by the company, the club said.

“As Mississippi Power executives ask the Public Service Commission for nearly $3 billion dollars in ratepayer funds, no questions asked, they file another status report showing the Kemper plant is now days away from hitting five billion dollars in costs,” said Louie Miller, state director of the Mississippi Sierra Club. “The Kemper boondoggle is now the most expensive power plant in the country, and Mississippi ratepayers are being charged for its costs before it ever produces a single watt of electricity.”

Mississippi Power’s most recent cost report, filed on Aug. 31 and updated through the end of July, showed the total project cost at nearly $4.8bn. Combined with more than $200m in taxpayer funding from the U.S. Department of Energy, this brings the full cost of the Kemper facility to nearly $5bn, the club added. Additionally, Mississippi Power acknowledges that construction and startup activities could delay the plant beyond its May 2014 scheduled service date, the club added.

“The next step for the Kemper plant is the cost review at the Public Service Commission. With a new commissioner representing the majority of Mississippi Power ratepayers, it’s finally time for the Commission to rein in Mississippi Power and it’s out-of-control spending,” added Miller. “Coastal ratepayers know that Mississippi Power has acted irresponsibly because executives believed customers would be forced to pay, no matter what. We know that’s not true, and newly-appointed PSC Commissioner Steve Renfroe should lead a thorough investigation of Kemper costs. There should be no presumption in favor of Mississippi Power at the expense of ratepayers.”

Ex-Chevron exec takes the hot seat at the Mississippi PSC

Mississippi Gov. Phil Bryant announced Sept. 3 the appointment of Renfroe to serve as Southern District Public Service Commissioner. Renfroe will fill the unexpired term of Leonard Bentz, who resigned Aug. 19. The three Mississippi commissioners represent the southern, middle and northern parts of the state.

“Proper regulation of energy infrastructure and resources is critical for both businesses and families, and I’m very pleased Steve agreed to come out of retirement to serve in this important capacity,” Gov. Bryant said.

Renfroe began his career as a math instructor in the Moss Point School District and later worked for Chevron as an environmental specialist and a public and government affairs manager. He retired in 2011 after 35 years with the company.

“I’m very honored to be appointed by Gov. Bryant,” Renfroe said. “Integrity is all about keeping promises, and I promise to make decisions based on what’s best for Mississippians. I appreciate the opportunity to help the commission navigate the next couple of years–and then–I look forward to returning to retirement. I will not run for election in 2015.”

Utility official says right decisions were made, plant nearing completion

Mississippi Power (MPC) officials have said the costs for the Kemper (also known as Plant Ratcliffe) project are being prudently incurred.

For example, John Huggins, Vice President, Generation Development for Mississippi Power, responded in Aug. 9 testimony to a commission question about the prudence of expenses incurred through March 31: “The controls and procedures reviewed and discussed above demonstrate that MPC has and continues to execute the development, design, construction and startup of the Kemper Project in a manner that is consistent with prudent utility practice and industry norms. All decisions made on the Kemper Project were made in light of the information available to and known by management at the time each decision was made. Great effort was made to make the best and most prudent decisions in light of the prevailing circumstances at the time.”

Construction on the Kemper Project commenced in June 2010. “Plant construction is progressing well with almost all of the major pieces of equipment delivered and installed, including the lignite drying system, gasifier components, syngas coolers, steam turbines, CO2 and H2S absorbers, gas turbines and heat recovery steam generators,” Huggins reported. “Construction activities will continue through the end of2013 and well into the first part of 2014.”

Start-up activities are in progress with initial startup activities including the testing of the makeup water reservoir system, plant site substations, and water treatment facility completed. Remaining startup activities include the first fire of the combustion turbines, syncing the steam turbine to the grid, heating up the gasifier, and getting reliable syngas to the combustion turbines.

The neighboring lignite mine, operated under contract by a unit of North American Coal, was placed into service in June 2013.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.