Obamacare and Mississippi Power’s Kemper County Lignite Plant are a lot alike. Both are big expensive over-hyped complicated unworkable government experiments. Both are destructive. The Chicago Tribune (an unlikely critic) recently wrote this about Obamacare: “… it flunked Economics 101 and Human Nature 101.” It explains why and concludes with: “The next President and Congress either reckon with Obamacare’s failures or … wait for the thud.”
Mississippi’s Public Service Commission can either reckon with Kemper’s failures now or wait for the thud. It’s waiting for the thud. It said as much at an “open mic” hearing in Meridian last Tuesday. Specifically, it said it’s in a holding pattern. It’s waiting for Mississippi Power to get the plant’s gasifier fully operational and submit a request for a rate increase. Don’t hold your breath.
Dithering. It’s too embarrassing and painful for the PSC to acknowledge and deal with Kemper’s obvious failures which it facilitated. So it dithers. Meantime, it’s painful for customers. That’s because customers are paying a 15% rate increase the PSC approved last November for part of Kemper cost.
The PSC’s job is to regulate public utility monopolies. Its authority comes from the legislature. It can authorize capacity additions and rate increases to pay for them if they prove to be prudent. It is supposed to see that customers get reliable affordable electricity and that companies supplying electricity get a reasonable return on their (prudent) investments.
It has failed Mississippi Power’s customers. Their rates were the highest in the state even before the pre-emptive 15% increase. The increase was for $800 million cost of Kemper’s turbines and some extras. They have been running on natural gas. They are just part of the plant and a fraction of the cost of the rest of Kemper which is now over $6 billion. That’s the thud that’s coming.
The PSC has tied itself in a regulatory knot. It has said the turbines are conditionally prudent (i.e., used and useful or economical) pending the determination that the rest of the plant is prudent too. The rest of the plant is the experimental gasifier that is supposed to partially burn lignite to make a synthesis gas substitute for natural gas.
The CEO of the Southern Company, Mississippi Power’s owner, has been promising that the gasifier will be operational “next month” for over two years. He and President Obama are a lot alike. They make promises they can’t keep. You can’t trust them. The President is beginning to worry about his legacy. It’s dawning on him that reality is catching up with hype.
Reality intrudes. Reality is beginning to catch up with the CEO’s hype too. And It’s beginning to dawn on the PSC that the gasifier is probably not going to operate – for years – if ever. And even if it does, it’s not going to be useful because it’s not going to be economical because its synthesis gas will cost much more than natural gas.
The PSC has a dilemma. It knows it should holler calf rope and put the gasifier out of its misery. And put customers out of theirs. And quit pretending that something is going to happen to justify customer’s paying for part of the gasifier and overpaying for the turbines. But the PSC doesn’t know how to get out of the regulatory thicket it’s in due to its own feckless decisions. So it dithers.
Its “open mic” hearings are a way to dither and make it look like it’s doing something. And maybe find a way to cut the regulatory knot. It has two more hearings planned. It is asking the public to weigh in with comments and questions about Kemper.
Pay more for less? It got some good ones last week in Meridian. Bigger Pie’s Charles Grayson noted that Southern’s CEO told analysts that Kemper’s turbines produced a third of Mississippi Power’s electricity in 2015 running on natural gas. That’s about 20% more power than the gasifier can produce if it operates. Then he asked: How will the PSC explain to customers a big cost increase for less power if it approves the gasifier?
Commissioner Presley said … Errr, you have to consider reliability. (The old dual fuel argument.) Does that mean he thinks the experimental Rube Goldberg gasifier will be a more reliable source of gas to run the turbines than thousands of natural gas wells? Let’s hope not.
Watchdog’s Steve Wilson asked: Can Kemper vent CO2 to the atmosphere if it can’t sell it? It was supposed to sell CO2 to Denbury Resources to inject in old oil fields to stimulate production (enhanced recovery). But oil prices are down and Denbury is in dire financial straits. It’s an iffy buyer. Other buyers are not waiting in line.
The whole point of Kemper’s experimental clean coal technology was to reduce CO2 emissions by storing it under ground. That’s the reason it got millions in federal grants and tax credits. Kaput! The revenues from CO2 were also supposed to offset some of Kemper’s cost. Kaput!
Commissioner Brown said that Kemper cannot vent the CO2 to the atmosphere. If Denbury doesn’t take the CO2, Mississippi Power must find someone else. The PSC certified Kemper for construction assuming there would be CO2 revenues. If there aren’t any or if they are less than promised, could the PSC decide the gasifier is not prudent? A way to cut the knot?
Despite the CEO’s hype, odds are not good that the gasifier will be deemed prudent. It may take years for this to play out. Why should customers pay more in the meantime?
Flunks. Kemper flunks Economics 101. The PSC flunks Human Nature 101. Customers don’t want to pay more to make environmentalists happy – or to pay for the PSC’s and Mississippi Power’s mistakes. They shouldn’t have to.
Kelly Williams is the Chairman of the Bigger Pie Forum.
Tuesday, October 25, 2016
Kelly Williams: Wait for the Thud
Bigger Pie Forum purchased distribution rights on Jackson Jambalaya
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29 comments:
Kemper County Plant was enabled by Haley Barbour and Phil Bryant. The prior PSC Commissioner from South Mississippi( Mississippi Power's customer base) resigned because he knew he would never be reelected after supporting it. Phil Bryant took care of him by getting him appointed as CEO ( pays well in excess of $100,000) a Planning and Development District in South Mississippi. He had no education or experience for such a job. He has a HS degree. The District survives on taxpayer money. The former Hinds County Supervisor, who did not run for reelection, was handpicked to be Phil's man to represent Mississippi Power on the PSC. Thankfully he lost the election. Phil got him appointed as Administrator of Madison County, the same county where his daughter, who had no experience, was appointed as The Board Attorney paying $200,000 per year. I cannot remember this guys name and am too lazy to look it up. See a pattern here?
People keep acting like they expect the elected officials to do the right thing when they continually elect people who do not know the right thing to do and are too crooked to do it anyway.
If the people want something done they should elect people who have some slight idea about what they are supposed to do. It would also help if they elected people who didn't fill every position with friends, family, and donors.
We keep complaining about our politicians when the real culprits are the people who elect them.
We are the least educated state and we elect the least educated politicians.
If 11:13 is speaking of Tony Greer, I believe you will discover that he graduated from Mississippi College.
11:38 Are you saying that the voter has no right to expect "honor" to enter any election? How would you, a voter, establish honor and integrity. Are the oaths of office taken by elected officials meaningless. If all this is true, the we are doomed.
Barbour/Bryant, the gift that keeps on giving! Seriously though, if we're expecting a politician to come along who knows what's right and will DO right by taxpayers we may as well write in "unicorn" on every ballot from here on out.
11:13 - Damn right I see a pattern here. One that shows you (1) don't like Phil, and (2) you think he has a hell of a lot more influence than he - or any other governor for that matter - actually has.
The Governor got someone hired to be the head of a PDD? One that has 20 something counties included as members and has had the same asshole as its director for almost 50 years? So Phil got him to retire and got the supervisors from those 20 counties to hire someone just because "Phil said so". Damn!! I'm impressed.
And the supervisors in Madison County hired his daughter because she was his daughter. Hmmmmm. Knew they were going to get rid of Espy. No surprise there. Dozens of folks vying for the job. Three disparate supervisors have to agree on someone, when each had their own personal choice. Hmmmm. But Phil - being Phil - convinced them that they should hire his daughter.
And it doesn't even take getting to the Madison Board hiring a CPA and a former supervisor to be their administrator. Guess you think that nobody can get a job because they are qualified for it and the supervisors - who are in search of a new administrator - couldn't figure that this guy might be qualified. No ---- he only got it because Phil told them to do it.
Yes, I see the pattern. It shows that you are an idiot.
And this has nothing to do with Kelly Williams continual harping over Kemper - you really had to stretch to get there.
You can always tell those who were never diagnosed, or had a loved one diagnosed, with a disease that would be categorized as a pre existing condition.
Everyone hates Obamacare, until it saves their ass.
12:59 you are correct. I have no respect for Bryant. Heard the PDD thing from a Board member there. Also KF has said daughter Bryant does not have the experience for that job. that said, yes Espy needed to go.
From the article - " The President is beginning to worry about his legacy. It’s dawning on him that reality is catching up with hype. "
Obomacare is failing as it was designed to do. From the very beginning it was easy to see it had to fail. If Hilary wins it will continue to fail and then the Democrats go to phase #2 - single payer (full government takeover). And of course that is what the entire thing was about from the beginning. It has nothing to do with helping folks. It has everything to do with keeping people poor and dependent on government so they will vote for Democrats. So I disagree with the writer of this article. The President is not worried at all.
I have a hard time following anything that Kelly Williams / Bigger Pie Forum opines about. The gall and hypocrisy of him after his own dealings... And he is one rude and hateful man to boot.
1:56, the increase in premiums will only affect a few people on the exchange since the government (us) subsidizes the premiums for most of the participants. The taxpayers get stuck again. Sorry for going off the original subject.
11:38 Leonard Bentz is the name in play here. Don't know about Phil's influence but Leonard's father was president of the board of the planning district He ask the board to change the qualifications for the president, (no college degree). Elder Bentz then resigned from the board after junior got the top job.
Yall keep bitching about blame....meanwhile that plant over there spends 4 millions dollars to light a tiny rock and it calls that a "success."
If the ACA fails, and it seems it will without insurance company support, then we will be back to the generosity of the big insurance companies. So get ready for the same treatment. No insurance if you are sick...get too sick...or if you cost too much. Get ready to go bankrupt.
Crafty people will begin putting all their assets in trusts so that when they get sick (and you will get sick) and amass bills (and you will get large bills) which are not payable (and they are not payable)....they can file bankruptcy and save some of their assets.
Others will work all their lives...and get sick...and then pay hospitals...and die....broke. But they will be happy Obamacare was repealed.....
12:22, If you want honor to enter any election there has to be honorable people running for office. Sure the oaths are meaningless. Today a voter cannot undo years of electing crooked politicians. That is all we have to pick from today. Honest people with integrity learned many years ago it is a waste of time running for office.
Just look at all we have seen in the WikiLeaks emails. What honest person would vote for a person who is as crooked as we can see in the emails? There will be many who do. There is no way an honest person can compete with lying, trickery, and dishonesty. The voters would laugh at them.
1;36 - So proud of your decision making process.
One board member (out of thirty) told you so - that Bryant hired this guy. Did your board member tell you how he voted and why?
And KF's opinion - and yes, even KF has an opinion, but its not always right - that Bryant's daughter was not qualified. That doesn't make it that they hired her because Bryant said so.
And, you skipped the question of Greer.
Three strikes, your out.
2:39 - you might have explained it for the soothsayer at 11:13. Elder Bentz got appointed to the SMPDD decades ago because Deputy Sheriff Phil Bryant arranged it; then elder Bentz got himself elected president of SMPDD because Auditor Bryant arranged that as well - all so that Leonard could get the job to take over when they finally got rid of the drunk. And of course Gov Bryant worked with Elder to make sure that he could get that done, all in accordance with the decades long plan.
Only way that 11:13 can make his all powerful, ever intruding influence of Feel work out.
The underreported Kemper story is this: it will be too expensive to operate and maintain the plant at $1 to $2 Billion every 5 years just for O&M (that is $8 to $16 Billion over the 40 years life in addition to capital costs of $6 Bil for the lignite plant), forcing MS Power and SO to continue to run the plant on natural gas instead of lignite manufactured syn gas. The lignite plant will be neither "used" nor "useful" as required by statute to place the lignite portion of the plant into the rate base. The syn gas electricity will be too uneconomical to dispatch by any PRUDENT operator. That means that the PSC Commissioners should award NO rate increase--goose egg--NADA--for construction of what will be an "unused" and "useless" lignite plant too expensive to operate and whose electricity by any objective standard will prove too expensive to dispatch. The Commission will be bound by statute not to add the lignite plant to the rate base of MS Power. Might as well call it what it is: a wholly uneconomic, useless paper weight holding down the woods north of Meridian.
A couple of ya'll seem to think that when we kill Obomacare we will revert back to where people who are seriously ill cannot get coverage. I don't think that at all. But there are much better ways to do it than the lunacy of Obomacare. One thing that comes to my mind is an assigned risk pool. The reason is that some people are sick because of their own lifestyle. They eat too much, smoke, drink too much, take drugs, drive too fast etc. etc. Others are sick because of bad luck. The assigned risk pool would cap the premiums at maybe two or three times what healthy people pay. So the really sick people could get coverage, but they would pay some of the additional costs. The healthy people would pay a small % to help them. So say 3% of your premium costs would be paid into the assigned risk pool to help those people. Another reason to do this is that under Obomacare if a healthy person takes a risk and buys no insurance they pay a small fine, but if they get cancer they go buy insurance the next day for the same price as everyone else. Making them pay more for serious illnesses gives them incentives to purchase insurance all along. The complete answer is much too long to put here, but the point is conservatives are saying Obomacare cannot be fixed. They would kill it and replace it without something that works. No one is saying they would kill it and then do nothing.
Phil has no control over an Planning and Development District. Bentz and father, got him that job using local pull. Cities and Counties do not have to pay dues or be a member of the PDD so must be happy the hire.By the way, Phil has boards that he appoints that do not following his orders.
Obamacare will survive. The Clinton administration, Demcoratic Senate, and the Paul Ryan led Republican House will make changes to fix it. Kemper should not survive but probably will and will be an economic drain on South Mississippi for decades.
It is impossible to fix Obomacare. Everything about it is wrong.
The analogy to Obamacare was unnecessary to make the points on Kemper and a bad analogy.
The only analogy possible is the GOP catering to special interest lobbying namely, the very wealthy health insurance companies in the case of Obamacare. With Kemper, it's the utility company and any pie in the sky business proposition that causes our GOP to turn a blind eye.
With Obamacare, it was the GOP that would not support the bill if competition nationally or single payer was included. It was GOP governors that made it unavailable to a large enough pool.
If the pool is large enough, it works. It's math. And, of course, the GOP can't allow a Democrat to be successful any more than the Democrats can allow a Republican to be successful. That's what broken.
Obamacare can be fixed. You can't scrap it and leave nothing . And, you can't risk losing the " no caps" or having " pre-existing conditions " return.
Kemper can't be fixed.
And, I hope this election has been enough of a wake up call that all politicians will " get" that America has to come first and in states, the State comes first.
Both parties have adopted stupid , unworkable policy positions to cater to their extreme bases and to cater to their deep pocket contributors. And, both parties are now afraid to stand up to our " too big to fails" and to our oligarchs.
Risk pools = fantasy land
If it was so simple it would already be done
I hate Kemper articles. Post reads like a doctoral thesis.
@7:10 AM = Same stuff every day. Wash rinse repeat.
There is already about 10% of your medical insurance premium paid into the government for the risk a risk pool. Employers pay it on the employee premiums they pay and individuals pay it on the individual coverage. It is tacked on by the insurance companies to the premium like the sales tax is on purchases, only the consumer does not know it. It is a hidden tax. This was required by Obamacare.
7:11 am et. al. The more people you have in an insurance pool, the lower your rates are.
Please try to learn something about a subject before you comment.
6:33pm. That formula is true if the pool is relatively evenly divided - but if all the ones going into a pool are the high risk, then it is not automatic that the rates will be lower. There is a difference between an 'insurance pool' and a 'high risk pool'.
10:01 was kind enough to NOT tell 6:33 to 'learn something about a subject before he posts'.
Har....
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