Thursday, July 7, 2016

New York Times exposes Kemper

The New York Times published an expose on the Kemper fiasco. It ties in Mississippi Power, former Governor Haley Barbour, and a friendly legislature that greased the wheels for the construction of the plant.  The reporting is thorough and included interviews with several engineers.  Read the entire story for yourself  or read some excerpts published below.

The fortress of steel and concrete towering above the pine forest here is a first-of-its-kind power plant that was supposed to prove that “clean coal” was not an oxymoron — that it was possible to produce electricity from coal in a way that emits far less pollution, and to turn a profit while doing so.

The plant was not only a central piece of the Obama administration’s climate plan, it was also supposed to be a model for future power plants to help slow the dangerous effects of global warming. The project was hailed as a way to bring thousands of jobs to Mississippi, the nation’s poorest state, and to extend a lifeline to the dying coal industry.

The sense of hope is fading fast, however. The Kemper coal plant is more than two years behind schedule and more than $4 billion over its initial budget, $2.4 billion, and it is still not operational.

The plant and its owner, Southern Company, are the focus of a Securities and Exchange Commission investigation, and ratepayers, alleging fraud, are suing the company. Members of Congress have described the project as more boondoggle than boon. The mismanagement is particularly egregious, they say, given the urgent need to rein in the largest source of dangerous emissions around the world: coal plants...

Many problems plaguing the project were broadly known and had been occurring for years. But a review by The New York Times of thousands of pages of public records, previously undisclosed internal documents and emails, and 200 hours of secretly though legally recorded conversations among more than a dozen colleagues at the plant offers a detailed look at what went wrong and why.

Those documents and recordings, provided to The Times by a whistle-blower, an engineer named Brett Wingo, and interviews with more than 30 current or former regulators, contractors, consultants or engineers who worked on the project, show that the plant’s owners drastically understated the project’s cost and timetable, and repeatedly tried to conceal problems as they emerged.

The system of checks and balances that are supposed to keep such projects on track was outweighed by a shared and powerful incentive: The company and regulators were eager to qualify for hundreds of millions of dollars in federal subsidies for the plant, which was also aggressively promoted by Haley Barbour, who was Southern’s chief lobbyist before becoming the governor of Mississippi. Once in office, Mr. Barbour signed a law in 2008 that allowed much of the cost of building any new power plants to be passed on to ratepayers before they are built.....

In the end, the Kemper project is a story of how a monopoly utility, with political help from the Mississippi governor and from federal energy officials who pressured state regulators in letters to support the project, shifted the burden of one of the most expensive power plants ever built onto the shoulders of unwitting investors and some of the lowest-income ratepayers in the country.....

The project did create jobs, but Mark Klinedinst, a retired economics professor from the University of Southern Mississippi, said that more were lost in the region as businesses laid people off to pay for the higher electrical bills caused by Mississippi Power rate increases from plant construction. The University of Southern Mississippi also raised annual tuition $236 per student, partly to offset its additional $1 million in higher electrical costs, he said....

What troubled the engineers most was the poor quality of work: leaking gaskets, cracked ductwork, and pipes missing inspection records, valves and supports. Ryan Brown, a plant engineer, said during a phone call that he was having to “go back and do some sort of repair or rebuild” for every piece of work handed to him by the plant’s construction teams, which were under intense deadline pressure...

The article contains much more information and should be read.   The article includes a very convenient timeline.


Anonymous said...

Story must be wrong Supertalk says it was Obama's fault. Haley can do no wrong.

Anonymous said...

Since the article came from the new yawk times, it is disqualified as news and qualified as public brainwashing, in line with most of their BS.

Anonymous said...

How do you spell relief for MS consumers? S A R B A N E S O X L E Y.

Anonymous said...

I thought everyone already knew that. Some choose to forget it as soon as possible. Some choose not to believe it. Some choose to defend it.
All depends on what morals you have. A few actually researched it and believe it.

Anonymous said...

11:19: Are you an ostrich?

Anonymous said...

Haley had a chance to do something good for his country but picked personal greed instead.The Haleys of this world could have stopped Obama and Hilary but were too busy looking out for themselves. I been watching that boy all his life and what a waste but he made his family rich.

Anonymous said...

NYT 'exposes' Kemper? Damn KF. You mean to tell me that your personal spielmeister can't come to your defense and claim that you spilled this story? What's wrong - is he not working today?

Actually this is a very misleading head for your post of the NYT. There is nothing in this story that hasn't been known for a long time - while this is a good compilation of different parts of this story, there is absolutely no new information here - true fact, rumor, interpretation, or of any kind.

Anonymous said...


Except that most of the readers of this NYT expose have not probably ever heard of this massive boondoggle. The details show just what Haley and Southern have been up to.

Anonymous said...

1:49-The tape recordings of Wingo's friends are new. The possible Sarbanes Oxley violations are becoming clearer here. Tom Fanning must be worried.

Anonymous said...

Plant is a total boondoogle, should have never been built, and tax payers were fleeced. At this point its hard to get blood out of a turnip. So, what say ye experts on what to do with what's already there? Do we just scrap it and let the weeds take over, or push through and see what happens?

1:49 here. said...

3:03 - I agree that the tape recordings are new - at least as far as I am aware. Not sure that the NYT has identified any S/O violation issues of news though - depends on what understanding one had of the details of the issue before.

3:16 - Exactly how do you explain that the 'taxpayers' were fleeced. Exactly what tax dollars have gone into this project? The stockholders of Southern Company may have been fleeced; and depending on the final rulings of the PSC, the ratepayers may - but not determined yet - be screwed. But there is not a fleecing of the taxpayers involved.

2:08 - if your only source of news is JJ, I feel sorry for you because you are getting a very one-sided view of the world. Enough said, sorry you are so ignorant and don't even realize it.

Anonymous said...

The fact that execs at MPC and The Southern CompAny , covered up, lied and attempted to get their customers to pay for the plant is OK?
I'm certainly not an anti business liberal and don't expect business to always expose. It's warts but this went way beyond the pale. Utilities have a pretty good deal in that they profit is based on the value of their investments which is a easily manipulated amount.

Anonymous said...

Different person here, but 160 million was redirected to Kemper in the omnibus spending bill of FY 2016. That's not rate payer money, that's taxpayer money. The money relieved ratepayers, but that is taxpayer money.

Said taxpayer money maybe from a different areas of the country, but it is tax payer money none the less.

Anonymous said...

2:59 - how the hell do you get from 4:11 comments to your statement of fact? Nothing in the comment you refer to says anything about whether SC/MPC did was OK. Quite a jump from there to you.

Anonymous said...

Tree Tops/Tenergys filed suit against Southern Company in Gynette County Georgia in May 2016. Check that out

Anonymous said...

Could someone expand a little bit on what the Sarbanes Oxley ramifications are?

Anonymous said...

Could someone expand a little bit on what the Sarbanes Oxley ramifications are?

As white collar criminals in the US are not typically indicted and locked up anymore, the ramifications are nil.

Anonymous said...

4:11 pm You have a lot of nerve accusing others of ignorance.

Federal dollars were involved and those monies come from...drum roll...taxpayers.

Not only that, but the article mentioned the increase in tuition at Southern. While those increases aren't tax dollars , those parents paying tuition are taxpayers.

Us poor taxpayers also paid for the time our elected officials spent inflicting Kemper upon us and will spend for their time spent dealing with the aftermath. Their time should have been spent on matters that benefit us. Perhaps, you missed the phrase " Time is money". And, you might need to study what the words " public utility" mean.

And, I suppose in your ignorance, you've never contemplated the boon/bust effect on taxpayers when such projects never become operational. Those affected are taxpayers and tax revenues are affected.

Well, I'll try to think that you are either ignorant or didn't take the time to think this through. Otherwise, it'd mean you just aren't that smart and definitely not as smart as you think you are.

Anonymous said...

Just think what this does to economic development in the region served by Ms.Power. How do you recruit a new industry when TVA and Entergy both sell electricity for less in other parts of the state? I realize that the conflict king, Haley Barbour, is at the head of this boil but I want to ask this question anyway. Why are the ratepayers required to pay for an experiment with technology that was developed and owned by Southern Company? The ratepayer would not have shared in the profits if this application would have been viable and sold to others.Of course the Southern Company has increased it's stock dividend for the last 14 years. The stockholders win while the ratepayers are totally abused.

Anonymous said...

Wasn't it Watchdog that's been covering this for two years now?

Anonymous said...

Who were/are the contractors? Nobody benefits from cost overruns like the contractor.

Anonymous said...

The Sarbanes Oxley point is that Brett Wingo, the engineer in charge of scheduling, specifically told the SO CEO Tom Fanning that Kemper could not open on the date reported in the SEC filing of year end 2014. Fanning did nothing to correct the SEC filing reportedly so SO could get tax credits finalized. To misrepresent in a SEC filing material facts Is actionable under the Act. Wonder how Fanning's sleep is affected? There is an ongoing SEC investigation. Cost overruns were also known and I understand not acknowledged. It does not pay to lie to Uncle Sam.

4:11 said...

@7:22 - that's about as big a stretch as anyone on JJ or JFP has ever tried to make.

"The time spent by our public officials and will spend" - is how taxpayer dollars were involved. Damn!! (1) Those public officials get paid a salary, despite what they do or don't do. The time they spent with this - and thousands of other issues - is what they are 'hired' to do.

The article mentions the increased cost at USM. Do the math. Shows what a ridiculous stretch NYT is making here. USM has almost 25,000 students. According to the article the increase electric cost might be $1 million. But they claim the $230+ dollars in increased tuition - and you fell for it. At best you might could say $40 of the increase is to cover increased electric costs if in fact the university has to increase tuition anytime that they have an increase in any cost. Which of course they don't.

If I read the article correctly, it is assumed the project will become operational - thus your next paragraph shows your ignorance, not mine. Even if your theory turns out to be correct that it doesn't become operational, please describe the boom/bust effect on taxpayers if it doesn't. My read is that the current increase in tax revenue from the $6 billion in construction would stop - but that is stopping a benefit to the tax coffers, not costing the coffers.

You and I can make whatever assumptions we wish to make about the other sides "smartness" - I haven't accused you as not being 'smart' (as you have done about me). The only question I made about your comment was the 'cost to the taxpayers'. Obviously you have answered that - the time spent by public officials. Once could argue that the total cost of some public officials is a waste, but to single this one out kinda does define the lack of 'smarts'

Anonymous said...

2:14: I don't follow your garbled nonsense. I am with 7:22. Kemper is an outrage. MS consumers should not have to pay for the stupid ass lignite experimental investment that has not worked out to the tune of extra $4 Bil. If MPC goes BR as a result in Chap 11, that is fine. They just reorganize while the electricity continues. That is all.

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