Quantcast
Popular
Wikimedia

Major Blow to 'Clean Coal' as 11- Year, $7.5 Billion Flagship Project Fails

By Sharon Kelly

In a major blow to proponents of "clean coal" technology, Southern Co., parent company of Mississippi Power, announced in a Securities and Exchange Commission filing Wednesday that it's throwing in the towel on efforts to generate electricity from coal and will instead use only natural gas at its flagship Kemper County, Mississippi power plant.


The project, which relied on a "gasifier" to turn a cheap and common grade of coal into fuel, is over, at least for now, Southern said.

"On June 28, 2017, Mississippi Power notified the Mississippi PSC that it is beginning a process to suspend operations and start-up activities on the gasifier portion of the Kemper IGCC."

Further, Southern warned that it may record a $3.4 billion loss for the project in the second quarter of 2017, depending on how negotiations with state utility regulators unfold.

If "Mississippi Power does not ultimately obtain rate recovery of the $3.4 billion … , Southern Company and Mississippi Power would be required to recognize a charge to income in the second quarter of 2017 for those unrecovered costs, in addition to any other costs required to be incurred," the SEC filing says.

The filing comes on the heels of a historic vote by Mississippi's state regulators that rejected asking the 187,000 customers who may get electricity from Kemper to pay for the long-delayed and far over-budget "clean coal" experiment. The 582-megawatt plant, initially projected to cost $1.8 billion, has so far run up a bill of more than $7.5 billion in construction and engineering expenses. In comparison, a typical 700-megawatt natural gas plant would have cost roughly $700 million to build, according to the Wall Street Journal.

Earlier this month, Southern told investors that vital machinery for the coal-powered section of the plant had started leaking, and would take 18 to 24 months to repair.

Mississippi Power Co. still plans to try to recover some or all of the $3.4 billion from power customers, Southern Co. said in its SEC filing. The company will pursue that through settlement negotiations and "any available settlement alternatives" and other options to recover its costs.

The state regulators have been gearing up for the potential legal battle, expanding their legal budget from $200,000 to up to $2.5 million and hiring two large law firms with experience in utilities law, as the Climate Investigations Center recently reported.

"The ultimate outcome of these matters cannot be determined at this time," Southern Co. said in its 8-K filed Wednesday.

Over a Decade of Delays

Kemper was supposed to be the nation's first "clean coal" power plant, capable of taking the world's dirtiest but most abundant kind of coal, lignite coal, and turning it into a dirt-cheap fuel providing electricity while churning out roughly the same carbon emissions as a power plant burning natural gas—a plus for the power bill as well as the planet.

Plans for the Kemper project were first announced by Southern Co. in December, 2006. Over a decade later, the power plant is still not fully up and running and its price tag has spiked from $1.8 billion then to $7.5 billion now—making it one of the most expensive power plants per megawatt ever built in the U.S.

Earlier this month, Mississippi officials sent a clear message to the plant's builders: when it comes to "clean coal," we're not buying what you're selling any more.

"Mississippians don't want to pay for a ticket on a plane that isn't going to fly," Paul Patterson, a utilities investment analyst, told the Wall Street Journal.

Instead, the Kemper power plant "should operate using only natural gas," the Mississippi Public Service Commission announced, adding that it was commencing negotiations with Mississippi Power Co. to figure out how to protect the state's electricity customers from having to pay for a plant that seems to have been better at burning through capital than coal.

In its SEC filing Wednesday, Southern Co. said that while the "clean coal" portion of the plant is suspended, Kemper will indeed keep running on natural gas, but added that it planned to dispute some of the $3.4 billion in costs—meaning that legal battles may be only just beginning.

"We are committed to ensuring the ongoing focus and safety of employees while we consider the future of the project, including any possible actions that may be taken by the [Mississippi Public Service] Commission," Southern Company Chairman, President and CEO Thomas A. Fanning said in a statement. "We believe this decision is in the best interests of our employees, customers, investors and all other stakeholders."

The Kemper project has suffered from a long string of delays and cost-over runs. The most recent setback, which was made public by Southern on June 5, will require builders to rip through a dense labyrinth of steel pipes to replace crucial equipment that's already started leaking, adding up to two years of additional work at a cost of $164 million.

Company records, recorded phone calls and other testimony provided to the New York Times last year by a whistleblower showed Southern Co. officials may have deceived investors and the public by knowingly concealing problems along the way. Last May, the Securities and Exchange Commission launched an investigation into those concerns.

Reposted with permission from our media associate DeSmogBlog.

Show Comments ()
Sponsored
Scientists have been shocked at the depth and size of the Amazon reef. Greenpeace

Amazon Reef: BP Drilling Plans Dealt Another Blow by Brazilian Regulator

By Joe Sandler Clarke, Unearthed

BP's plans to drill for oil near a huge coral reef in the mouth of Amazon river have been dealt a further blow after a regulator questioned the company's environmental risk assessment.

Ibama, Brazil's federal environmental agency, rejected an environmental study from the British oil giant, further delaying the company's plans to drill in the region.

Keep reading... Show less
Popular

Judge Stops Walmart Shopping Center From Being Built on Endangered Florida Forest

Environmentalists cheered after a Miami district court judge issued an emergency injunction on Friday to stop bulldozers from razing a stretch of endangered pine rocklands—one of the world's rarest forests, and home to species found nowhere else on Earth—to make way for a Walmart shopping center near Zoo Miami and Everglades National Park.

Judge Ursula Ungaro's decision was made only hours after the Center for Biological Diversity, Tropical Audubon Society, Miami Pine Rocklands Coalition and South Florida Wildlands Association sued the Trump administration for approving the proposed Coral Reef Commons.

Keep reading... Show less
Popular

Investigation: Actual Death Toll From Hurricane Maria Is Close to 1,000 in Puerto Rico

The official death toll from Hurricane Maria has risen to 64, Puerto Rican authorities announced Saturday, factoring in two additional "indirect" deaths from the storm to previously announced numbers.

However, the official number of deaths, which critics say is suspiciously low considering the damage from the storm, is coming under some scrutiny: both a Center for Investigative Journalism report published Thursday and a New York Times review of mortality data published Friday estimate the actual death toll to be closer to 1,000.

Keep reading... Show less

WATCH LIVE: Can the Courts Bring About a Climate Fix? Three Judges Are About to Decide

By John Light

Editor's note: Watch the oral arguments live beginning at 1 p.m. EST above.

Three judges in San Francisco potentially have the power to decide how the U.S. government deals with climate change. Monday, 21 young Americans will make the case that President Trump has endangered their future by aiding and abetting the dirty industries responsible for the global crisis. And they will argue that they can hold him legally accountable.

Keep reading... Show less
Sponsored
Oil Change International

12 Projects That Undermine the One Planet Summit and Put the Climate at Risk

As world leaders and global financial institutions gather for the One Planet Summit on Dec. 12 in Paris, civil society groups have come together under the Big Shift Global campaign to underscore the massive finance gap remaining to shift away from fossil fuels and toward clean energy, in line with the aim of the Paris agreement on climate change to limit warming to below 1.5°C.

Keep reading... Show less

France Awards U.S. Climate Scientists Multi-Year Grants to #MakeOurPlanetGreatAgain

French President Emmanuel Macron will announce the first recipients of the "Make Our Planet Great Again" grants Monday evening.

The winners will receive all-expenses-paid grants to relocate to France and to conduct their climate research through the remainder of President Donald Trump's current term.

Keep reading... Show less
Sponsored
GMO

Monsanto Giving Cash to Farmers Who Use Controversial Pesticide

Looks like Monsanto really wants farmers to use XtendiMax. The agribusiness giant is offering a cash incentive to farmers to apply a controversial pesticide linked to 3.1 million acres of crop damage in nearly two dozen heartland states, according to Reuters.

The cash-back offer comes as several states are considering restrictions on the use of the drift-prone and highly volatile chemical. DuPont Co. and BASF SE also sell dicamba-based formulations.

Keep reading... Show less
Scene from Ed R. Levin County Park in Milpitas, California. Don DeBold / Flickr

Why California Droughts Could Increase Due to Arctic Sea Ice Loss

Receding ice cover in the Arctic ocean could produce more droughts in California, according to a new study.

Published last week in Nature Communications, the study found that sea ice loss in the Arctic—of the proportion expected in coming years—could set off an atmospheric effect that will steer precipitation away from California. Notably, the study linked Arctic sea ice loss with the development of an atmospheric ridging system that also played a central role in the state's 2012-2016 drought.

Keep reading... Show less
Sponsored

mail-copy

The best of EcoWatch, right in your inbox. Sign up for our email newsletter!