The promised value of Kemper lignite gasification to customers was false in 2010, but the PSC chose to ignore the Emperor (Southern) wore no clothes. It is time for the PSC to acknowledge the naked facts and Rule the lignite portions of Kemper Not Useful. Based on MPC’s own cost data from 2010, Kemper burning lignite is shown below to be economically worse over 40 years than Kemper turbines on natural gas, even if natural gas prices escalated to over $70/MMBTU during the last 30 years of plant operations.
In an earlier article, “Kemper Gasifier: Slow Agony, Sure Death”, the gasifier plant is described as a cancer deadly to Mississippi economic growth for decades. In 2010, the Public Service Commission (PSC) and the Mississippi Public Utilities Staff (MPUS) diagnosed Kemper as benign, even helpful. There was no close examination of the technology, of how much engineering was completed, of the risks and of the outrageously high natural gas price projections Southern used to justify lignite gasification. Were they oncologists, the PSC and the MPUS would now be in court for wrongful death.
In 2010, Mississippi Power Company (MPC) filed Chart 1 as they sought PSC approval to construct the Kemper clean lignite plant. The chart shows future natural gas prices that would result in the Kemper project being breakeven for customers versus building a new natural gas fired combined cycle plant (NGCC). Southern assumed and the PSC accepted the NGCC natural gas fuel would cost $10-20/MMBTU. The red line added to Chart 1 shows Southern’s natural gas price projections used to justify the lignite project. Their natural gas price projections appear fudged to make the cost of power from a stand-alone NGCC appear more expensive than from Kemper burning lignite. It was both illusion and delusion.
Chart 1 is based on the construction, operating and maintenance (O&M) and other cost estimates at the end of 2009. Financing costs, a major item, was excluded. In short, projected costs for Kemper burning lignite were a fraction of current reality. But the sleight-of-hand gets even worse. Costs for the NGCC used for the comparison in Chart 1 were increased by monies already spent for Kemper at that time. It was an extremely biased comparison even in 2010 and given current reality, laughable. The PSC saw nothing unusual and did not even take the cancer patient’s temperature.
I ask the PSC to make public an updated version of Chart 1 based on current MPC estimated costs operating Kemper on syngas compared to the Kemper NGCC as a stand-alone plant burning natural gas. I ask they use the latest U.S. Energy Information Agency (EIA) projected natural gas prices through 2035. From 2036 through end of the plant life, calculate the cost curve for natural gas required to make Kemper on syngas breakeven on a net present value basis with the stand-alone Kemper NGCC.
This post was written by Charles Grayson of Bigger Pie Forum.