As Time Runs Out for Southern Company, a Brain Drain Begins at Kemper

Pipes

The syngas cooling area of the Kemper County Energy Facility, where "tube leaks" are being blamed for yet another delay in the plant going online. 

With builder Southern Company still promising that the Kemper power plant will go online soon, a group of key engineers and managers who work on the plant's so-far-inoperable gasifier has left the company.

Earlier this month, Southern Company posted a cluster of want ads on its web site for a "gasification owner,"  a "refinery technician-mechanic," a "refinery technician-entry level," and a "gasification technician."

Those four positions are located at the gasification island, home to the patented TRIG technology developed by Southern Company and Kellogg Brown & Root that is supposed to turn lignite coal from an adjacent mine into a cleaner burning syngas to produce electricity.  The project's twin gasifiers, however, have been troubled by frequent shutdowns and lengthy repairs.

The plant's operations manager, one of the most senior positions at the facility, tasked with day-to-day oversight of the entire power plant and its roughly 100 permanent employees, was also for hire until the posting was pulled from the Southern Company web site over the weekend.

"The Operations Manager will be responsible for providing leadership for the Kemper County Generating Facility," according to the job summary, and must foster "reliable and efficient plant operations of the lignite processing, syngas production, gas cleanup, chemicals production and power generation units."

If the history of the first-of-its-kind plant so far is any guide, it appears that relentless pressure by Southern Company to meet unrealistic construction and operations milestones paired with the failure of the coal gasification equipment to work for more than a few days at a time, and then at only a fraction of rated capacity, has led several demoralized engineers to leave what they see as a sinking ship.

The Mississippi Power Company, the Southern Company subsidiary that operates the plant, notified investors today that the plant will not go online as promised in mid-March but offered no new date, saying that will be provided in a company status update in early April.  This time MPC blamed "certain tube leaks in one of the syngas coolers for gasifier “A” which caused "an outage on gasifier “A” to perform necessary corrective actions."

A New York Times expose last July described what were apparently deliberately faked company estimates of when the plant could begin producing electricity - its commercial operating date, or COD - and correspondingly false estimates of how much Kemper would cost to build, first estimated at $1.2 billion and now at $7.1 billion.  These allegations also figure in an SEC investigation and a series of lawsuits by investors, customers and at least one company involved with the project.

Southern Company chief executive officer Tom Fanning has called the New York Times' allegations "garbage" and claims Kemper will yet perform as promised.

But Fanning also admitted last month that a company "Economic Viability Analysis" found that the plant can't profitably generate electricity from coal and is only economical operating on cheap natural gas. A few weeks later, the credit rating of Southern's Mississippi Power Company subsidiary, owner of the plant, slid to junk status.

With help from engineers familiar with the plant's design, the Climate Investigations Center looked closely at a series of technical reports by an independent watchdog that seem to indicate that the plant and the technology it represents are in deep trouble and may never work properly.  

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Trump Administration Pressing for Appeal, Dismissal of Climate Lawsuit

The Trump administration is asking an Oregon federal judge in the Our Children's Trust case to let a higher court review her decision to permit a historic climate change lawsuit to proceed, and to halt the case pending the outcome of that review.

In 2015, a group of 21 young plaintiffs aged 9 to 20 from all over the United States, along with renowned climate scientist James Hansen, who is acting as guardian for future generations, sued the federal government for allegedly violating their constitutional rights via policies that promote global warming.

The suit, filed by the non-profit Our Children's Trust organization, claims there is a "public trust" obligation by the federal government under the constitution to take necessary measures to protect the climate.  In a November 10, 2016 decision, federal District Court Judge Ann Aiken agreed with the OCT plaintiffs, and ruled they were entitled under the Due Process Clause of the Fifth Amendment to a trial to decide if the government failed in that duty, a startling decision.

In papers filed Monday, in Eugene, Oregon, U.S. Department of Justice attorneys requested permission from Judge Aiken to appeal her decision to the Ninth Circuit Court of Appeals - and also asked that the process be expedited due to "the significance of the issues raised and the burden on Federal Defendants that discovery is likely to impose."

The government has complained that the climate change suit places an enormous burden on it to retrieve and preserve what could be millions of its internal documents given that Our Children's Trust has demanded decades of files from multiple executive branch agencies relating broadly to global warming and energy policy.

Our Children's Trust is also seeking internal records from the powerful oil and gas trade group the American Petroleum Institute, to which major oil companies like ExxonMobil and Shell belong. API has a decades-long record of blocking efforts to cut greenhouse gases, and joined the OCT case as an intervenor, hoping to get the suit thrown out.  Instead, the action proceeded and a federal magistrate has ruled API is now subject to pre-trial discovery of its documents.

In trying to get an appeal prior to a verdict - a process called an interlocutory appeal - the government is reaching for a legal remedy that is supposed to be granted only in fairly rare circumstances - - when a "controlling question" of law is at stake, one over which there's a substantial difference in opinion by the parties, and where addressing it will hasten the termination of the case. 

The government is arguing that OCT's own assertion that such a fundamental constitutional right - - the right to life itself - could be at issue in the lawsuit is a strong argument for review by a federal appeals court.

If the trial judge agrees and allows the government's appeal to go forward, it will be up to the Ninth Circuit Court of Appeals to decide whether to actually accept the government's appeal, and hear from both sides on whether Aiken's decision to allow the OCT case to proceed to trial was justified.

The appeal of that decision is not unexpected. It comes as President Trump's team takes command from the Obama administration at the Department of Justice, which is defending the OCT case.  The government's lawyers raised the possibility of an appeal in a court appearance on February 7th.

It was the Ninth Circuit that killed another pioneering climate lawsuit, Kivalina v. ExxonMobil Corp. et al, in 2012, by upholding a lower court's decision to dismiss the case.  In Kivalina, a native Alaskan fishing village sued a number of energy companies, fossil fuel producers like Peabody Energy and Shell as well as electric utilities like Southern Company, for their role in causing climatic warming in the Arctic that eroded ice barriers that protected the village from encroachment by the ocean.

The Circuit Court decided that the case was asking the judicial branch to take policy actions that were actually the province of the Environmental Protection Agency, under the authority granted by the federal Clean Air Act.

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Southern Company Says Kemper Not Viable as Coal Plant, Blames the PSC

 

PSC with Haley Barbour at Groundbreaking

At the groundbreaking for the Kemper power plant: Mississippi PSC Commissioner Lynn Posey, at podium, with (seated, L to R), Anthony Topazi, chief operating officer, Southern Company, Governor Haley Barbour, and Tom Fanning, chief executive officer, Southern Company, December 16, 2010.

 

In an apparent first salvo in a public relations campaign to shift blame for the Kemper power plant boondoggle away from himself and corporate management and onto state regulators, Southern Company chief executive officer Tom Fanning admitted this week that the Kemper "clean coal" plant is not economically viable burning coal.

The startling reversal came during an earnings call Thursday at a time when Southern faces intense scrutiny from federal and state regulators and the Securities and Exchange Commission - and as its Mississippi Power Company subsidiary, the plant's owner, faces a Moody's downgrade over Kemper's skyrocketing costs and failure to operate despite being three years past its promised operating date.  Southern took a 27 percent hit to its fourth quarter net income thanks to Kemper schedule delays.

During the call, Fanning acknowledged that Kemper can only be feasible if it runs on natural gas as financial analysts questioned him about a just-released "economic viability" study by Southern that found that low gas prices for the long-term mean the plant can't profitably gasify lignite in the gasifiers Southern spent most of $7.1 billion to build.  

Fanning called a "reduction in the longterm gas price forecast" an "overwhelming change, the big change. Obviously, there are others. It is a point in time. When we had this plant certificated, we all thought that gas prices were going to be double digits and there was some spread that were way higher than where we are now."

Fanning's comments came as the company announced it will soon file a rate case with the Mississippi Public Service Commission seeking to recover its costs for the plant.  

Although Fanning has often reassured Mississippians that they are protected by a  $2.88 billion cost cap agreement limiting their liability for the plant's runaway budget,  he has failed to mention that once the plant is declared operational, the cap won't protect them from additional costs of some $4 billion. That includes $200 million a year in operation and maintenance costs, a disturbingly high figure that keeps going up for the novel "clean coal" plant.

To investors, Southern often touts its friendly relationships with state regulators in the four states in which its regulated utilities operate, but the fall 2015 Mississippi PSC election quickly became a referendum on Kemper, replacing two commissioners who reliably rubberstamped MPC's agenda with two new faces, Sam Britton and Cecil Brown, both of whom have pledged not to leave ratepayers holding the bag.

A source close to the Public Service Commission told CIC recently that the PSC staff has run the numbers and that even under the cap, electrical rates could increase by 40 percent or more - a catastrophic burden for MPC's 186,000 disproportionately lower-income customers in 23 counties in southern Mississippi.

 

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Rick Perry Faces Tepid Questioning in Energy Secretary Confirmation Hearing

Rick Perry speaks before the Koch-funded Texas Public Policy Foundation

 

A conciliatory Rick Perry cruised through a half-day Senate confirmation hearing today for secretary of the Department of Energy before a Senate committee in a performance that was long on warm words and vague promises and short on tough questions from a low-energy Democratic contingent.

Even before the hearing before the Energy and Natural Resources Committee ended in the early afternoon, Democrats rushed out a press release claiming the former Texas governor had promised to protect jobs tied to science and innovation - including climate science - at the department.

While Perry said he has "extraordinary respect" for DOE scientific staff,  he repeatedly hedged on the specifics of what exactly would be protected under questioning about a leaked Trump plan to eliminate several units at the agency considered technology incubators, such as the Office of Fossil Energy, which funds so-called "clean coal" projects, as well as the depatment's Energy Efficiency and Renewable Energy unit.

The list of things Perry couldn't promise to do or continue when he takes over at DOE was a long one.  He wriggled out of repeated attempts to coax him into promising not to open the Yucca Mountain Nuclear Waste site in Nevada, a deep storage facility for high level radioactive waste.

"Can you say that testing of nuclear weapons is a dangerous idea?" asked Senator Bernie Sanders, referring to president-elect Trump's seemingly offhand comment that he might resume nuclear testing and the arms race ("Let it be an arms race," Trump said.)

No, he couldn't say it was a dangerous idea, was the thrust of a long wandering reply by Perry, who did however promise to protect the electrical grid and infrastructure from cyberterrorism.

Pushing back against the fossil energy industry's claim that reducing fossil fuel use is a "job killer," Washington Democratic Senator Maria Cantwell, the ranking minority member of the committee, rattled off a list of job-killing harm caused by greenhouse gases in her state, including the depletion of fisheries and extreme weather.  She said a forthcoming Government Accountability Office report would put the damages from climate change-related damage in the trillions of dollars.

 

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Big Oil Stalls Questioning of ExxonMobil's Tillerson in Climate Lawsuit

A maverick climate lawsuit few legal authorities thought would survive more than a few months came within two days of questioning the world's most powerful oil executive under oath.

But that prize remains tantalizingly out of reach after a federal magistrate judge in Oregon yesterday put an 11th-hour hold on the deposition of Rex Tillerson, who was CEO of ExxonMobil until December 31 when he stepped down from leading the petroleum giant to become incoming President Trump's Secretary of State. 

Tillerson was to be questioned today in Dallas, Texas by lawyers representing a group of 21 youth plaintiffs in what is already a landmark climate lawsuit. The deposition would have meant that a small group of plaintiff's lawyers based in Eugene, Oregon would become the first to question the most senior ExxonMobil official in a lawsuit over climate change.

However, Magistrate Judge Thomas M. Coffin instead ordered what a spokesperson for the plaintiff's called "an informal discovery dispute resolution" after oil industry lawyers said they would refuse to produce Tillerson for questioning.

A telephone conference among the parties and Judge Coffin is to be held January 27th, according to Meg Ward, communications and youth engagement director for Our Children's Trust.

Filed on behalf of a group of  of 21 young people, the suit demands that the United States take immediate and aggressive measures to fight global warming. 

The lawsuit charges that since the at least the 1960s, the federal government "has known that carbon dioxide ("CO2") from burning fossil fuels was causing global warming and dangerous climate change, and that continuing to burn fossil fuels would destabilize the climate system on which present and future generations of our nation depend for their wellbeing and survival."

But despite this knowledge, according to the complaint, the government "continued their policies and practices of allowing the exploitation of fossil fuels."

Under a somewhat novel legal theory, pioneering climate scientist James Hansen, the former director of the NASA Goddard Institute for Space Studies, is suing the United States as guardian for "Plaintiff Future Generations" who, it is charged, "retain the legal right to inherit well-stewarded public trust resources and to protection of their future lives, liberties, and property – all of which are imminently threatened by the actions of Defendants challenged herein."

The suit seeks both pro-active action to combat global warming and the end of policies that worsen it. 

This is the first real set-back in what had been an unbroken advance by the plaintiff's toward trial, which Coffin had tentatively set for the summer or early fall of this year.

 

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Southern Company's Kemper Coal Plant Could Get Billions in Tax Credit Bail-Out

If Donald Trump really wants to get rid of federal corporate welfare, he should be frantically tweeting against a congressional plan that could send billions to the grossly mismanaged Kemper power plant by expanding tax credits for injecting carbon dioxide into oil fields.

These so-called "45Q" tax credits would get richer and could even become a permanent part of the federal tax code depending on which of three bills now being considered by Congress becomes law. 

And that could result in the so-called "clean coal" Kemper facility that utility giant Southern Company is building in eastern Mississippi getting between $789 million and $4.5 billion, according to a new report co-authored by Friends of the Earth and Taxpayers for Common Sense and released today.

"Instead of keeping CO2 out of the atmosphere through permanent underground storage, 45Q has primarily served as a subsidy for oil production," says the report. "Most of the credits have been claimed for CO2 collected at natural gas processing facilities and then used by oil producers for enhanced oil recovery. Any expansion of the provision would only serve as an additional oil subsidy on top of the billions of dollars in subsidies the industry already receives each year."

The report also notes another troubling fact - -that CO2 leaks from oil fields using enhanced oil recovery, including through carbon dioxide "blow-outs" in which the gas comes blasting out of the ground very much like an oil gusher. At least three of these incidents have taken place in Mississippi and one in Lousiana since 2007.

CO2 gas, which is heavier than air and settles in hollows and near ground level, can fatally suffocate anyone who breathes it in. The Mississippi blow-outs resulted in evacuations of residents and oil field workers. A blow-out in Tinsley Field, near Yazoo City, Mississippi, killed deer, an armadillo, a blue heron and countless birds and other wildlife, while sending one emergency responder to the hospital. 

This catastrophic event in August and September of 2011 took 37 days to bring under control at a cost of some $53 million.  Specialized equipment and crews had to be brought in from Texas to fight the blow-out, including emergency response teams from companies like Boots & Coots, which worked on the Deepwater Horizon disaster, according to documents from the Mississippi Department of Environmental Quality obtained via a public records request.

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Three coal companies are trying to keep secret how much federal coal they mine

Earlier this year, I looked at just how much the largest US coal mining companies depend on access to subsidized federal coal, most of it extracted from public lands in the Powder River Basin of Montana and Wyoming. The US Interior Department tracks the amount of publicly owned coal mined by each company, but doesn’t publicly report this information. As I recently learned, even a Freedom of Information Act (FOIA) might not reveal just how much publicly owned coal companies are mining.

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American Electric Power says “We don’t agree with or share every position” of ACCCE, yet remains a member of the coal lobby group

coal_lobby_image.png 

 

American Electric Power (AEP), one of the largest utilities in the United States, distanced itself from some of the positions of the American Coalition for Clean Coal Electricity (ACCCE), but made clear that it nevertheless remains a member of the coal lobby group, despite the departure from ACCCE of most other major utility companies. From National Journal: Climate Stances Put Pressure on Major Trade Groups (subscription required):

 

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Two (or three?) more companies confirm departure from coal lobby group ACCCE

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Two more companies - and perhaps three - have confirmed their departure from the American Coalition for Clean Coal Electricity (ACCCE) this week, following the publication of our report detailing major companies’ departure from coal lobby groups.

 

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The coal industry can’t decide: climate denial or subsidies for “clean coal”?

The New York Times yesterday reported on a presentation given to a coal industry conference last year titled “Survival is Victory: Lessons from the Tobacco Wars.” The presentation was prepared by Richard Reavey, a former executive at Philip Morris and now a Vice President at Cloud Peak Energy, a coal company focused on mining taxpayer owned coal in Montana and Wyoming. From the Times:

 

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