FOR
IMMEDIATE RELEASE:
November 19, 2012
CONTACT:
Jenna
Garland, Sierra Club, (404) 607-1262 x 222
Louie
Miller, Sierra Club, (601) 624-3503
David
Schlissel, Institute for Energy Economics and Financial Analysis, (617)
489-4840
Robert Wiygul, Waltzer, Wiygul, & Garside, (228) 872-1125
New Report Shows Kemper Coal Plant Spiraling Out of
Control
At Less Than 50%
Complete, Plant is Delayed and Over Budget
View Report
JACKSON, MS – In a new report released today, the Institute for Energy
Economics and Financial Analysis reveals that Mississippi Power’s Kemper County
coal plant is in far worse shape than indicated in the company’s recent public
statements. The analysis reveals that the plant, with its untested gasification
technology, is behind schedule in both engineering and construction, and at
less than fifty percent complete, is likely to see further delays and cost
overruns.
“The evidence shows that Mississippi Power’s plant is more expensive,
and is taking substantially longer to complete, than originally planned for by
the company and the Public Service Commission,” said David Schlissel, with the
Institute for Energy Economics and Financial Analysis. “Looking at a similar
plant in Indiana, there’s a strong likelihood that Kemper’s costs will continue
to rise and delays will continue. The picture is not nearly as rosy as
Mississippi Power spokespeople would have the public believe. The Kemper plant
will already be a serious burden for ratepayers, and if trends continue, the
financial impacts will be disastrous.”
The report draws strong comparisons between the Kemper project, an
Integrated Gasification Combined Cycle plant (IGCC), and Duke Energy’s
Edwardsport IGCC in Indiana; the Edwardsport plant is two years farther along
schedule than the Kemper plant, is more than one billion dollars over budget
and is also significantly behind schedule.
Highlights from the report findings include:
- The Kemper project is likely only 40-45%
complete, not the “more than 70 percent complete” that Mississippi Power has
claimed and its construction is behind schedule;
- Direct construction costs are 20% higher than
Mississippi Power predicted in 2010, during the certification process at the
Public Service Commission;
- Mississippi Power’s now estimates that it will
have to spend nearly $200 million more in project financing costs than the
amount certified by the Commission and this figure could rise much higher;
- The most recent review by the Commission’s
Independent Monitor showed that concrete work at Kemper was 23 percentage
points behind schedule at the end of July;
- Steel work was 10 percentage points behind
schedule; and
- Further construction cost increases and delays
during plant startup and testing are likely.
“More than two years after the Public Service Commission originally
approved this plant, we’re looking at a project that has consistently cost more
than planned, has taken longer than planned, and shows no signs of correcting
the course,” said Louie Miller, State Director of the Mississippi Sierra Club. “Sierra
Club has fought this dirty, expensive, and unnecessary plant because in the
end, Mississippi families and businesses will be forced to shell out, at
present, $3.62 Billion dollars and rising, to build a plant that is already
hundreds of millions over budget and is not guaranteed to work on day one. And
once Mississippians start to pay, they will be paying for 40 years, even with
cheaper, cleaner energy sources available. We knew this was a bad deal for
Mississippi Power customers from the beginning. The Public Service Commission
needs to step in and pull the plug before customers are made to foot the bill
for Mississippi Power’s billion-dollar mistake.”
The Mississippi Business Journal predicted the Kemper plant would
raise customers’ electricity rates by more than 45% before the project
experienced cost overruns and delays. In June of this year, Mississippi Power
sought the first short-term rate increase of approximately 15% for six months
for residential customers to pay for construction finance charges. Today’s
report argues that the new and untested nature of the IGCC technology will
likely cause further delays and could incur additional costs, as has happened
at the Edwardsport IGCC facility in Indiana.
“We testified to the PSC in 2010 that Mississippi Power was
understating the likelihood of delays and cost overruns, and with the plant’s
construction and engineering less than fifty percent complete, our testimony
was right on the money. We only need to look to the Edwardsport IGCC Project in
Indiana to see what could happen with Kemper – more delays, more cost overruns,
higher and higher costs,” said Schlissel with IEEFA.
Miller added, “the evidence is clear: Mississippi Power has already
broken their promises, but its captive customer base will be forced to pay the
price. The Public Service Commission can fix this disaster now.”
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