In an apparent first salvo in a public relations campaign to shift blame for the Kemper power plant boondoggle away from himself and corporate management, Southern Company chief executive officer Tom Fanning admitted this week that Kemper plant is not economically viable as a coal-burning power plant.
The startling reversal came during an earnings call Thursday at a time when Southern faces intense scrutiny from federal and state regulators and the Securities and Exchange Commission - - and as its Mississippi Power Company subsidiary, the plant's owner, faces a Moody's downgrade over Kemper's skyrocketing costs and failure to operate despite being three years past its promised operating date.
During the call, Fanning acknowledged that Kemper can only be feasible if it runs on natural gas as financial analysts questioned him about a just-released "economic viability" study by Southern that found that low gas prices for the long-term mean the plant can't profitably gasify lignite in the gasifiers Southern spent most of $7.1 billion to build.
Fanning called a "reduction in the longterm gas price forecast" an "overwhelming change, the big change. Obviously, there are others. It is a point in time. When we had this plant certificated, we all thought that gas prices were going to be double digits and there was some spread that were way higher than where we are now."
Fanning's comments came as the company announced it will soon file a rate case with the Mississippi Public Service Commission seeking to recover its costs for the plant.
Although Fanning has often reassured Mississippians that they are protected by a $2.88 billion cost cap agreement limiting their liability for the plant's runaway budget, he has failed to mention that once the plant is declared operational, the cap won't protect them from additional costs of some $4 billion. That includes $200 million a year in operation and maintenance costs, a disturbingly high figure that keeps going up for the novel "clean coal" plant.
To investors, Southern often touts its friendly relationships with state regulators in the four states in which its regulated utilities operate, but the fall 2015 Mississippi PSC election quickly became a referendum on Kemper, replacing two commissioners who reliably rubberstamped MPC's agenda with two new faces, Sam Britton and Cecil Brown, both of whom have pledged not to leave ratepayers holding the bag.
A source close to the Public Service Commission told CIC recently that the PSC staff has run the numbers and that even under the cap, electrical rates could increase by 40 percent or more - a catastrophic burden for MPC's 186,000 disproportionately lower-income customers in 23 counties in southern Mississippi.
A conciliatory Rick Perry cruised through a half-day Senate confirmation hearing today for secretary of the Department of Energy before a Senate committee in a performance that was long on warm words and vague promises and short on tough questions from a low-energy Democratic contingent.
Even before the hearing before the Energy and Natural Resources Committee ended in the early afternoon, Democrats rushed out a press release claiming the former Texas governor had promised to protect jobs tied to science and innovation - including climate science - at the department.
While Perry said he has "extraordinary respect" for DOE scientific staff, he repeatedly hedged on the specifics of what exactly would be protected under questioning about a leaked Trump plan to eliminate several units at the agency considered technology incubators, such as the Office of Fossil Energy, which funds so-called "clean coal" projects, as well as the depatment's Energy Efficiency and Renewable Energy unit.
The list of things Perry couldn't promise to do or continue when he takes over at DOE was a long one. He wriggled out of repeated attempts to coax him into promising not to open the Yucca Mountain Nuclear Waste site in Nevada, a deep storage facility for high level radioactive waste.
"Can you say that testing of nuclear weapons is a dangerous idea?" asked Senator Bernie Sanders, referring to president-elect Trump's seemingly offhand comment that he might resume nuclear testing and the arms race ("Let it be an arms race," Trump said.)
No, he couldn't say it was a dangerous idea, was the thrust of a long wandering reply by Perry, who did however promise to protect the electrical grid and infrastructure from cyberterrorism.
Pushing back against the fossil energy industry's claim that reducing fossil fuel use is a "job killer," Washington Democratic Senator Maria Cantwell, the ranking minority member of the committee, rattled off a list of job-killing harm caused by greenhouse gases in her state, including the depletion of fisheries and extreme weather. She said a forthcoming Government Accountability Office report would put the damages from climate change-related damage in the trillions of dollars.
A maverick climate lawsuit few legal authorities thought would survive more than a few months came within two days of questioning the world's most powerful oil executive under oath.
But that prize remains tantalizingly out of reach after a federal magistrate judge in Oregon yesterday put an 11th-hour hold on the deposition of Rex Tillerson, who was CEO of ExxonMobil until December 31 when he stepped down from leading the petroleum giant to become incoming President Trump's Secretary of State.
Tillerson was to be questioned today in Dallas, Texas by lawyers representing a group of 21 youth plaintiffs in what is already a landmark climate lawsuit. The deposition would have meant that a small group of plaintiff's lawyers based in Eugene, Oregon would become the first to question the most senior ExxonMobil official in a lawsuit over climate change.
However, Magistrate Judge Thomas M. Coffin instead ordered what a spokesperson for the plaintiff's called "an informal discovery dispute resolution" after oil industry lawyers said they would refuse to produce Tillerson for questioning.
A telephone conference among the parties and Judge Coffin is to be held January 27th, according to Meg Ward, communications and youth engagement director for Our Children's Trust.
Filed on behalf of a group of of 21 young people, the suit demands that the United States take immediate and aggressive measures to fight global warming.
The lawsuit charges that since the at least the 1960s, the federal government "has known that carbon dioxide ("CO2") from burning fossil fuels was causing global warming and dangerous climate change, and that continuing to burn fossil fuels would destabilize the climate system on which present and future generations of our nation depend for their wellbeing and survival."
But despite this knowledge, according to the complaint, the government "continued their policies and practices of allowing the exploitation of fossil fuels."
Under a somewhat novel legal theory, pioneering climate scientist James Hansen, the former director of the NASA Goddard Institute for Space Studies, is suing the United States as guardian for "Plaintiff Future Generations" who, it is charged, "retain the legal right to inherit well-stewarded public trust resources and to protection of their future lives, liberties, and property – all of which are imminently threatened by the actions of Defendants challenged herein."
The suit seeks both pro-active action to combat global warming and the end of policies that worsen it.
This is the first real set-back in what had been an unbroken advance by the plaintiff's toward trial, which Coffin had tentatively set for the summer or early fall of this year.