The Boundary Dam Power Station in Saskatchewan, owned by SaskPower

Unsealed Kemper Project records could be revealing

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by Steve Wilson  | March 30, 2016  |

Reams of sealed documents relating to the $6.664 billion Kemper Project clean coal power plant could finally face public scrutiny thanks to a decision last week by the Mississippi Public Service Commission.

The three-member PSC voted unanimously to unseal records related to Kemper at an undetermined date at

Photo by Mississippi Power
OVERHEAD VIEW: The Kemper Project’s multibillion dollar cost is a product of delays and construction issues.

its open “work session” meeting last week. It also voted unanimously to release the executive summary from the monthly reports provided to it by the independent monitoring firm, AECOM, on the progress of construction and startup with Kemper. AECOM officials briefed the commission in the open meeting on Kemper’s progress.

Sam Britton, the Southern District commissioner who raised motions for unsealing the records and putting the IM reports online, told Mississippi Watchdog that transparency is an important part of the regulatory process with Kemper.

“We need to keep this process as open as possible,” said. “I believe the same with the independent monitor reports. The independent monitors are out there doing the work, providing us with the reports and I see no reason why we shouldn’t be pushing that out there.”

The unsealed Kemper Project records could be voluminous. There were 35,000 pages alone from the dockets on the certificate of public convenience and need proceedings — which authorized construction of the plant — that were marked confidential. The company was allowed to seal the records under state law when those records involve trade secrets or confidential commercial information. Shawn Shurden, the PSC’s counsel, said legal notice would be given to the company and it would be allowed to file in court to oppose the release of any confidential records that it considered proprietary information.

The first certificate was issued in 2010 and overturned in a 9-0 decision by the Mississippi Supreme Court in a lawsuit brought by the Sierra Club. After the PSC gave Mississippi Power an emergency certificate in March 2010 that allowed it to continue construction, the company and the PSC negotiated a deal in 2012 for a new certificatethat would cap the amount of the plant’s cost at $2.88 billion that could be passed on to customers in the form of rate increases.

The Bigger Pie Forum, a free-market think tank that has been one of the key opponents of Kemper, filed suit in 2012 to get the company to unseal records (here and here) related to the company’s forecasts on natural gas. The records, unsealed after a two-year court fight, showed the company had its consultant, Energy Venture Associates, alter its forecasts with additional data to justify building Kemper, now billions over budget and years behind schedule.

EVA predicted in 2009 that natural gas prices would be between $12.50 and $13 per one million British Thermal Units by 2016. A filing before the PSC by Entegra Power Group says the break-even point for ratepayers on Kemper would require natural gas prices at $11 to $12 per MMBtu. Today, natural gas is $1.80 per MMBtu.

There could also be some insight in the records concerning one of the more curious developments in the Kemper saga. After the PSC voted in December 2012 to issue Kemper’s second certificate, the Mississippi Legislature passed a special purpose entity bond bill in February 2013, which allowed Mississippi Power to finance up to a $1 billion bond from its ratepayers. The company later reported a $540 million cost increase in April 2013.

Bill Kelly, a CPA and subcontractor for AECOM who runs the accounting component of the independent monitor team, said the increase amounted to 95 percent of total project cost and amounted to a “material weakness in internal control over financial reporting” that was later corrected by the company. After the increase, the company began its practice, which continues to the present, of monthly 8-K reports with the federal Securities and Exchange Commission.

“Generally, as any construction cost moves closer to completion, the variability of the forecast of the estimated costs to complete should also diminish,” Kelly said. “However, in the case of this project, the overall forecast of capped costs increased from $2.88 billion to $3.42 billion in one month. This increase was the largest dollar increase in forecasted cap spending since the company began monthly status reports to the commission.”

The plant is designed to turn lignite coal mined on site into a natural gas-like substance called synthesis gas that is burned in the facility’s turbines to generate electricity and remove 65 percent of the carbon dioxide from the gas stream for sale to two oil exploration firms via pipelines. The plant’s gasifier, which converts lignite to synthesis gas, is scheduled to go online in the third quarter of this year.

The plant has been generating electricity on natural gas since August 2014 and has more generation capacity  — 730 megawatts versus 582 megawatts — than on the intended combination of natural gas and synthesis gas. In its request to build the plant in 2008, the utility said only 88 megawatts of the plant’s 582 megawatt capacity would come from natural gas, which would only be used during peak generating times.

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