Analyst disputes claim that Kemper plant is 70 percent completed

A week after Mississippi Power Co. said its Kemper County coal plant was 70 percent complete, a report by an energy analyst commissioned by the Sierra Club disputed that claim.

David Schlissel, an analyst with the Institute for Energy Economics and Financial Analysis, in a report commissioned by longtime Kemper opponent the Sierra Club, said the company’s independent monitor reports prove that the plant is not 70 percent complete. Schlissel released the results last week in a conference call with the media.

“It’s nowhere near that,” Schlissel said of the 70 percent assertion. Schlissel said what jumps out in the IM reports is the amount of concrete that has yet to be poured at the facility, and the amount of steel work left, both of which are listed as being double-digit percentage points behind schedule. Schlissel said the plant was likely around 40 percent finished.

Schlissel also expressed concern that what he called the plant’s “uncapped costs,” which include the pipeline, the lignite coal mine and financing costs, would continue to rise. Monitors hired by MPC said in their September filing with the PSC that those costs had risen to $744 million.

The Sierra Club served as primary opposition for the plant during evidentiary hearings in 2009 and 2010. When the Mississippi Public Service Commission in summer 2010 granted the facility a certificate of public convenience and necessity — and capped the costs that MPC could pass to ratepayers at $2.88 billion — the environmental advocacy organization filed a challenge to it in Harrison County Chancery Court. The Mississippi Supreme Court eventually ruled that the PSC’s order granting the plant’s certificate did not cite sufficient evidence from the record of proceedings, and sent it back to the Commission. Commissioners eventually issued another certificate, and the Sierra Club began another round of litigation in chancery court.

Robert Wiygul, an Ocean Springs attorney who represents the Sierra Club, said on the conference call it’s likely the Harrison County chancellor would issue a ruling by the end of the year. Whoever is on the losing end of that ruling will almost certainly appeal to the Mississippi Supreme Court, Wiygul said.

Commissioners ruled this summer that it would not entertain any rate increase requests from MPC related to the plant until the Mississippi Supreme Court has its say on the latest round of legal action. That decision came after a hearing in which MPC had asked for a 13 percent rate increase that would have generated about $58 million. MPC estimated during evidentiary hearings that the plant’s rate impact on the company’s 186,000 customers would peak at 33 percent in 2014, when the plant is scheduled to begin commercial operation, before declining. That figure has since been reduced, because the utility estimates revenue from the plant’s by-products will be higher than originally thought. Documents MPC filed with the PSC in 2009 said the plant would raise rates by an average of 45 percent at peak impact.

Mississippi Power said in a Nov. 13 press release that the plant was still on track and on budget for completion at a cost of $2.88 billion. The reservoir that will store cooling water for the plant is now being filled with treated effluent from the City of Meridian.

The utility, pointing to figures in the latest IM report, also refuted the Sierra Club’s notion that using coal as the primary fuel source at the plant would be more economical than natural gas. Converting the plant to natural gas has been one of the Sierra Club’s main objectives during its opposition.

“The independent monitor’s findings lend further confirmation the project is the best solution for meeting Mississippi Power customers’ long-term energy needs,” said Tommy Anderson, vice president of generation development at MPC.

 

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