Frogs in a pot
Kemper is actually two plants: a natural gas generating plant that cost $900 million and a lignite plant experiment that has cost $5 billion so far. If the commissioners decide customers will pay only for the generating plant running on natural gas, rates can go down. If they decide customers will pay for both the generating plant and the lignite plant experiment, rates will continue to go up.
The generating plant has already run on natural gas. It uses proved technology. It meets the used and useful test that the commission usually follows to make such decisions. The way to make rates go down is to declare it prudent, put it in service, and charge customers only for its $900 million cost.
The lignite plant has not run. In fact, it is still being built and will not be completed before mid 2015. It's an experiment. It has not meet the used and useful test. It may never meet this test. It will take until 2018 under the company's most optimistic projections to see if it does. The company's optimistic construction projections proved unreliable and unattainable. It's start up and operating projections may too. Why should customers bear this risk? Why are they paying 18% more for the plant while it's being built? Why don't the commissioners wait to see how the experiment turns out before they make customers pay for any of it?
Even if the experiment works, its electricity will cost over twice as much as electricity from natural gas. Why should customers pay more than the natural gas alternative then? What can customers do now.
Bigger Pie Forum
Posted August 11, 2014 - 1:13 pm