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Ten reasons the Kemper Project is bad for consumers

1. Kemper has already resulted in an 18-percent rate increase and more could follow

The utility has already increased rates on its nearly 187,000 customers in south Mississippi 18 percent. The higher rates will pay for Kemper’s construction costs.

The Mississippi Supreme Court ruled in February that Mississippi Power must issue refunds on a 18 percent rate increase to fund Kemper’s construction because the Mississippi Public Service Commission hasn’t ruled yet on whether costs incurred for construction are justified. The company has asked the Court for a rehearing, along with the PSC.

2. Kemper is billions over budget and customers could pay for it

According to the cost cap, Mississippi Power can only have its customers pay for $2.88 billion of its cost. The rest of it depends on PSC approval, but those hearings haven’t occurred yet.

If the PSC rules that the utility’s spending was warranted, the customers would eat the extra costs in the form of rate increases. If the three-member commission rules that Mississippi Power’s extra costs were not justified, the company will have to pay.

3. Natural gas would’ve been cheaper

When Mississippi Power pitched the idea for Kemper to the Mississippi Public Service Commission, it used projections for future natural gas prices that showed that gasifying lignite would be the cheapest solution and offer “fuel diversity.”

Those projections, thanks to the shale gas revolution, turned out to be way off base. According to the PSC order that allowed Kemper to be built, the company said “even assuming a 20 percent Kemper cost overrun, Kemper wins in 13 of 20 scenarios.”

At $6.219 billion, Kemper has well exceeded the 20 percent cost overrun mark after it was supposed to cost $2.4 billion.

In comparison, Entergy bought an 450 megawatt natural gas plant for $206 million. Power cooperative South Mississippi Electric Power Association upgraded its existing plants and finalized the purchase of an 837-megawatt natural gas plant near Batesville for $675 million in 2012.

4. Kemper is two years behind schedule

Mississippi Power has pushed back the opening date now three times. First it was scheduled to open in 2013, then it got rescheduled to 2014 and now, the opening date is the first quarter of 2016.


MS Watchdog
6/3/15

Posted June 3, 2015 - 11:11 am

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