Southern Co. counters critical New York Times story on Kemper project

Southern Co. (NYSE: SO) on July 5 issued a lengthy statement on an article that day in the New York Times that was critical of the Kemper County integrated gasification combined-cycle project, which has run well over budget for its Mississippi Power subsidiary.

One tip-off that Southern would have this reaction is the article’s title: “Piles of Dirty Secrets Behind a Modern ‘Clean Coal’ Project.” The article ties the plant to the Obama Administration’s climate action plan and says the project was an attempt to prove that the phrase “clean coal” was not an “oxymoron.” The article says members of Congress have called the project, which is getting federal financial help, “more boondoggle than boon.”

Said Southern in its response: “Southern Company is proudly inventing America’s – and the world’s – energy future through the development of the world’s most advanced coal plant, Mississippi Power’s Kemper County energy facility. The result of decades of robust, proprietary research and development, the Kemper project has garnered enormous support from energy leaders across the U.S. and around the world. And Mississippi Power is completing the project with an unwavering focus on safety and quality.

“Rather than educate readers on the worldwide benefits of this cutting-edge, first-of-its-kind facility, today’s New York Times article on the Kemper project provides a negative recap of previously disclosed developments that have already been addressed.

“The only element of today’s story that is actually new to the public discussion is the content from the former employee’s secret recordings of private conversations with current company employees. In drawing from the recordings, the Times captured specific phrases from sometimes years-old conversations – without providing appropriate context – to achieve a pre-determined objective and tone.

“In an apparent attempt to deliver a pre-conceived narrative, the article also fails to mention key facts communicated to the reporter that would have clearly illustrated the company’s commitment to completing the project the right way for the benefit of customers. For example, faced with challenges indicative of a first-of-its-kind project, Southern Company has taken charges totaling $2.5 billion, helping ensure the project will deliver the same value to Mississippi Power customers as initially intended.

“Despite the company’s unequivocal belief that the Kemper project is the right project for Mississippi, history tells us that any undertaking this large is bound to have some detractors. While we have found that the plant’s supporters far outnumber its critics, we actively listen to all sides, taking questions regarding the successful completion of the project very seriously. Through our rigorous project oversight efforts – which include regular, detailed analysis by all levels of company leadership and state regulators – the company has investigated, addressed and publicly acknowledged every founded concern regarding the safe and successful completion of the project.

“It is important to note that the company has previously investigated concerns raised by former employee Brett Wingo, who serves as the primary source in the article, both through its internal employee concerns process and by engaging a third party. In addition to its internal investigation, the company sought outside counsel to conduct a separate investigation of concerns he reported to further ensure the integrity and reliability of its internal investigation findings. The investigations into Wingo’s concerns both reached the same conclusion – that his concerns were unsubstantiated and not otherwise supported by the facts.

“The company is also aware that Wingo has raised similar concerns with the Mississippi Public Utilities Staff and that, in 2015, the staff conducted an inquiry based on those concerns. Since the time the former employee first raised his concerns internally – and, subsequently, in more public forums – the company has continued to monitor and investigate his reports. There is nothing in his initial or repeated statements which has in any way changed the company’s conclusion that his concerns were unsupported.”

The Times article said that Southern had declined comment for the story on Wingo’s allegations.

Mississippi Power said in a report filed in May with the Mississippi Public Service Commission (PSC) that it was making progress on the 582-MW Kemper County IGCC project. The report covers events through April 27. The combined-cycle portion of the facility can already generate electricity with natural gas. The engineering work at the site is largely complete. The gasification island design performed by KBR, and the Southern Company Service (SCS) design of the combined cycle island and the balance of plant (BOP) work, was 99% complete during the report period.

The adjoining Liberty Mine is operating and stockpiling lignite coal. Total actual spending for the mine development through March 2016, including mine Allowance for Funds Used during Construction (AFUDC), was unchanged at $232.2m, which is the forecast final cost.

The report noted that Mississippi Power has disclosed that the Securities and Exchange Commission (SEC) is conducting a formal investigation of Southern and Mississippi Power concerning the estimated costs and expected in-service date of the project. “Southern Company and Mississippi Power Company believe the investigation is focused primarily on periods subsequent to 2010,” the report added.

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.