Jackson Jambalaya

Kemper: A political decision in 2006, an imprudent 2010 PSC decision based on guesses by Southern/MPC, extremely slow acknowledgement of actual plant costs, an extremely imprudent 2012 new PSC certification of Kemper followed by rapid, massive adjustments to plant costs once major legislative and regulatory approvals were in hand...


Disaster. Engineering only 15-20% complete when construction began in 2010

Recent MPC statements confirm engineering for the experimental, first of a kind Kemper plant was only 15-20% completed when construction began in 2010 and is the main reason 2010 cost projections were $2 billion low. MPC and Southern Company had limited project knowledge when presenting data and filing testimony with the PSC, stressing confidence in the capital costs. Their natural gas price projections were 35-80% above U.S. Energy Information Administration (EIA) forecasts of that period. MPC presented assumptive guesses to PSC in 2009-2010 rather than factual ones. Southern's natural gas price projections appeared to many then, and have since proved, to be wildly high and, along with the grossly understated plant costs, have been decisive in the selection of Kemper lignite over a natural gas fired plant. The earlier political decision was supported by inaccurate and wrong Southern assumptions resulting in an erroneous economic comparison of alternatives and an imprudent decision by the PSC. A prudent outcome does not result from prudent expenditures toward an imprudent goal.

Gasifier costs given PSC half actual, corrections delayed even with warning signs

By late 2009-early 2010, before official PSC approval of Kemper, Duke Energy was two years into construction of an Indiana coal gasifier and generating plant and experiencing repeated, large cost overruns. In the first quarter, 2010, MPC petitioned PSC to increase the cap on Kemper by $800 million while insisting they were not raising the budgeted cost and would not spend it (we won't inhale). Two and three years later, May 7, 2012 and April 23, 2013, MPC announced cost increases totaling $900 million. Those increases were announced immediately after either a favorable court delayed regulatory decision, special bond legislation, or a secretly negotiated agreement with the Mississippi Public Utility Staff. Given public alarm over Duke Energy's gasifier problems throughout 2009-2011, it seems impossible MPC was clueless that the gasifier costs they gave PSC in 2009-2012 were only half of actual costs. Were MPC's requested $800 million cap increase in 2010 (we won't inhale) and the $900 million actual increases of 2012-early 2013 a mere coincidence? (See Exhibit A and B timelines of events related to cost increase announcements)...Rest of article, including some nice pretty exhibits.