The new Mississippi Public Service Commission (PSC) recently met last week and listened to several hours of testimony on the status of he Kemper lignite plant. This was one of the first hearings with two new PSC commissioners, Sam Britton from Laurel and Cecil Brown from Jackson. The only incumbent commissioner is the new chairman, Brandon Presley, who has long challenged Mississippi Power Company regarding Kemper.
The PSC heard testimony from its independent monitors. It was not pretty. The list or problems went on for hours including clogged filters, cracked pipes, uncontrolled vibrations and “ratholes” in the main gasifier, which operates under huge pressure and intense heat. These problems emerged just under brief test conditions, using sand rather than grimy lignite. As usual, the starting date has been pushed back and cost overruns continue. We doubt the plant will ever see full-time operation. Meanwhile, Kemper is running on natural gas, which could have been done from the start at one-tenth the cost.
It has not been a good month for Mississippi Power Company (MPC). Its former Kemper project manager, Brett Wingo, is talking to the press now that his court-issued gag order has expired. Wingo said Mississippi Power engaged in “lies, deceptions and half truths . . . we chose not to be truthful and we did it multiple times,” according to a report by Steve Wilson, with MississippiWatchdog.org. If MPC executives were untruthful to stockholders about the problems at Kemper, they could be in serious trouble with the U. S. Securities Exchange Commission.
Meanwhile, a Gulfport law firm has teamed with a nationally-known plaintiff’s attorney to file suit against MPC on behalf of two large coast electricity consumers, Biloxi Freezing and Processing and Gulfside Casino Partnership, and John Carlton Dean. The lawsuit is being file by Gulfport law firm of Owen, Galloway and Myers with an assist from big-time California plaintiffs’ attorney Michael Avenatti. The lawsuit seeks economic damages caused by MPC’s high rates and punitive damages as well. The lawsuit relies extensively on Wingo’s accusations that MPC deliberately deceived the PSC and investors. “In 2012, we had a purposely broken project schedule that was designed to confuse everybody,” the lawsuit quotes Wingo as saying.
We caution the PSC from getting bogged down in Kemper’s engineering problems. That’s not the PSC’s job. The PSC’s job is to make sure the residents of southeast Mississippi are charged “just and reasonable” rates. Mississippi Power was granted a monopoly. In exchange, it agreed to rate regulation by the PSC. Already, MPC’s rates are 25 percent higher than neighboring utility companies. Given the commodity nature of electricity, why should MPC be allowed to charge consumers 25 percent more than other utilities? This is the only real issue on the table – just and reasonable electricity rates.
Kemper is a disaster. It is a costly science project that has failed. It will never produce electricity at “just and reasonable” rates. MPC is merely a wholly-owned subsidiary of the hugely capitalized Southern Company, based in Atlanta. Eating Kemper will give Southern a major case of indigestion, but Southern can pay for Kemper with just one year’s worth of its cash flow. And it should. Southern executives made the mistake. They should pay the price, not one-third of Mississippi. If Southern walks away and puts MPC in bankruptcy, so be it. Nobody’s lights will go out. The MPC plants will continue to operate. Its assets will be purchased by another utility company and we can start fresh without $7 billion in debt hanging over the heads of the people of southeast Mississippi.
On a side note, there was quite a bright spot at last week’s PSC meeting. New commissioner Sam Britton made a motion, which passed unanimously, to open up all the secret sealed files regarding Kemper. What a breath of fresh air! Elections matter.
