Clean Coal Officially Dead in Mississippi as Southern Company Battered by Kemper Fall-Out

Clean coal officially died in Mississippi today as state regulators voted unanimously to issue an official order denying further money for the Kemper coal plant and beginning a settlement process with its builder, Southern Company.

The order provides a legal framework for the state Public Service Commission's June 21st vote proposing the plant continue to operate on natural gas, as it has since August 2014, instead of spending additional money to try to use Kemper's non-functional multi-billion dollar gasifier to generate power from lignite coal.

"The commission today is taking firm steps towards resolving all substantive matters associated with the Kemper Project," says the 35-page PSC order.

The order gives Southern Company subsidiary Mississippi Power, the plant's owner, 45 days to reach a settlement with the commission about Kemper's future, followed by a 45-day open comment period and then a final vote by the PSC. 

Sources close to the PSC said negotiations are already well along, and Public Utilities Staff Executive Director Virden Jones told the Associated Press he believes the utility is open to an agreement along the lines laid out in today's order. But should negotiations fail, the PSC warned Southern that it could issue an order to show cause "which could potentially result in the revocation of the Kemper Project certificate," which would mean the plant could no longer legally operate.

That order very closely followed the PSC's proposal of last month freezing rates with the understanding that a rollback may be necessary to remove any impact on consumers from some $4.3 billion spent on the coal side of the power plant and a temporary rate increase passed in 2015 to support the natural gas-powered combined cycle equipment which produces electricity.

Officials from Mississippi Power, Southern Company and the North American Coal Corporation,which operates the now-useless lignite mine adjacent to the 582-megawatt power plant, jammed today's PSC meeting in the state capital of Jackson, taking up most of the seats in the room, according to participants.

Southern has good reason to be vigilant - and worried.

For one, Southern announced it has given Mississippi Power a $1 billion cash infusion to offset money lost on the plant,  which is an extremely complicated piece of engineering designed to gasify coal in a reactor, then capture and store carbon dioxide from the inexpensive but dirty brown lignite and spin off other waste products into industrial-grade sulfuric acid.

For another, the Kemper fiasco, combined with the bankruptcy of the builder of its Vogtle nuclear plant in Georgia, has driven down Southern's stock price by 7 percent over the last two weeks, wiping out $3.7 billion of the company's value.

Mississippi oil man Thomas Blanton, who sued and got the state Supreme Court to order a rebate of a large rate increase that was to help pay for Kemper, blamed the company's current plight on "arrogance." He warned that "the really hard work has to be done over the next 90 days, which is reducing this whole deal to writing in order to protect the consumers from the horrible mistake that Kemper represents."

Sierra Club state director Louie Miller praised the PSC's "strong leadership."

"I can't say enough about how these three commissioners put a bullet in the head of Southern Company's big bet gone bad," said Miller, referring to the company-authored book Big Bets, a history of Southern that stresses the energy giant's vaunted willingness to take risks on giant infrastructure projects like Kemper and Vogtle.

But the fact that Southern issued a notice that it was suspending further attempts to operate Kemper's gasifier just days after the PSC's June 21st initial decision to deny it funding led one source close to the PSC to suggest that Southern may have welcomed the forced conclusion to the endless money-losing saga of Kemper as a way to save face with investors.













Mississippi Regulators Veto Any More Money for Southern Company's Kemper Plant in Stunning Vote


In a historic vote this morning, Mississippi state regulators slammed the brakes on the Kemper coal power plant, saying they will refuse to ask utility customers to pay anything for Kemper's non-functional multi-billion dollar "clean coal" gasification technology and will re-designate the plant as a natural gas facility.

In a joint press release explaining their unanimous decision, the three Mississippi Public Service commissioners said they seek a solution that "eliminates ratepayer risk for unproven technology and assures no rate increase to Mississippi Power customers," and that they want Mississippi Power, the Southern Company subsidiary that built Kemper, to consider rolling back existing rates.

"I think it's high time we finally turn the corner on this project and also strongly protect our ratepayers, who should only have to pay for what actually delivers electricity," said PSC chairman Brandon Presley in an interview. Presley was, until recently, the lone opponent of a bloated, runaway project that saw costs jump from $2.3 billion in 2010 when work began to $7.5 billion now. 

The 2015 PSC election quickly turned into a referendum on the unpopular project. Two new commissioners were chosen, Sam Britton and Cecil Brown, both of whom promised to rein in Kemper and re-examine public support for the project, which was supposed to have gone on-line as a coal facility in the spring of 2014.  Instead, the plant has run on natural gas since August 2014.

Important personnel shifts are also part of the new picture at the PSC, as longtime counsel Shawn Shurden has announced he is leaving. Meanwhile, the commissioners said at the meeting today that Frank Farmer, a special assistant state attorney general, is taking the lead on "all pre-hearing matters" regarding Kemper, according to a transcript.

The PSC's decision on the power plant, located near DeKalb in eastern Mississippi, was hailed by consumer and environmental groups.

"I applaud the commission for doing what needed to be done, and driving a stake through the heart of this so-called clean coal project," said Louie Miller, the Sierra Club's statewide director. "I think this is the beginning of the end of a long nightmare for Mississippi Power customers. This is a boondoggle that should never have been built in the first place"

NY Attorney General: Phony CO2 Accounting, Extensive Document Destruction by ExxonMobil

Former ExxonMobil CEO and now-Secretary of State Rex Tillerson personally approved a scheme for accounting for the financial impact of greenhouse gas emissions on the company's business that deliberately misled investors, one that continued right through ExxonMobil's May 31st shareholders', according to an explosive court filing by the New York Attorney General, Eric Schneiderman.

Schneiderman claims that beginning in 2007, ExxonMobil used one set of figures in describing carbon-related risks to investors but internally used another, secret set.  The net result was to vastly understate the financial danger to the company.

The June 2nd court filing also accuses ExxonMobil of destroying countless documents despite the fact that it had a legal obligation to preserve all records potentially relevant to the attorney general's investigation, which is probing possible fraud in ExxonMobil's disclosures about climate change to investors and the public. 

"These failures directly resulted in the destruction of months, and in many cases, more than a year’s worth, of emails and other electronic documents belonging to key custodians including the company’s top management and reserves analysts," the attorney general writes.

Material from a secret email account maintained by Tillerson under the name "Wayne Tracker" was also evidently destroyed. 

An ExxonMobil lawyer acknowledged that she "knew in 'early 2016' about the second email address for Rex Tillerson – the Wayne Tracker email address –and that she did not disclose that email address to OAG, stating that it would 'be an interesting test of whether the Attorney General’s office is reading the documents,' " according to the filing in state court in Manhattan.  (Emphasis in the original.)

This omission led to "months of automatic destruction of relevant correspondence involving Mr. Tillerson," the court papers charged.

Courts can impose substantial financial and other sanctions - and even criminal penalties - for destruction of evidence.  

The attorney general did present a number of preserved emails that seem to show Tillerson's fingerprints on the decision-making for how to minimize to the public the likely impact of a carbon-constrained business environment - such as new national and international greenhouse gas regulations  - not only on ExxonMobil's business operations, but on the value of its oil and gas assets.

A May 2011 email exchange between ExxonMobil managers describes two different price calculations for the potential cost to the company of a ton of emitted carbon dioxide, one used internally and one presented to the public as the  "proxy" for GHG costs that the company supposedly used in calculating the impact on ExxonMobil's bottom-line.

"I have pointed out the difference in past reviews," writes Tom R. Eizember, then Planning Manager for Corporate Strategic Planning at the company.

"Rex has seemed happy with the difference previously - appeared to feel it provides a "conservative" basis (but only if viewed from the perspective of claiming economics credits to reduce emissions; it is not conservative vs EO from the perspective of debiting actions that increase emissions)," Eizember continues.

The AG's court filing provides a significant amount of new, explosive information about what the investigation, which began in 2015, is undercovering about the world's largest oil company's climate secrets. These are backed up by 33 exhibits that include internal corporate emails, a transcript of an investor conference call, and XOM's own reports on carbon risk.









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