As costs started soaring at Kemper coal-gasification plant in Mississippi, Southern Company execs turned to deception about the facility's mounting problems

The Kemper Plant near De Kalb, Mississippi

 

Part One

Most of the reporting on the scandal engulfing Southern Company has focused on mismanagement, cost overruns and other issues at the Vogtle Nuclear Plant in Georgia. But that's not the only place where Southern Company has stepped in doo-doo. In fact, you might say Southern has problems across a swath of the South -- east of Alabama (in Georgia), in Alabama (via chicanery at Alabama Power and Matrix LLC) and west of Alabama (near De Kalb, Mississippi) at the Kemper Plant (also known as Plant Ratcliffe) about 30 miles north of Meridian.

Kemper was supposed to be a shining example of coal gasification technology, a process designed to turn coal into gas. But it hasn't turned out so well. An E&E News article (dated Oct. 26, 2021) carried the glaring news that "The Kemper project (had) just collapsed." From the article, by reporter Kristi E. Swartz:

One of the nation’s largest symbols of carbon capture technology — the Kemper project — has collapsed into a pile of debris, highlighting the strategy of one of the nation’s largest utilities as it aims to decarbonize its fleet.

The project, which was half of a multimillion-dollar power plant in Mississippi intended to gasify lignite coal and store its captured carbon emissions, was imploded by Southern Co.’s Mississippi Power unit earlier this month because the equipment was no longer needed. The facility, Plant Ratcliffe, captured worldwide attention and was supposed to host the first commercial-scale carbon capture project on a large coal plant in the United States.

But what was known as “Kemper” for most of its construction life stopped after delays and increased costs prompted Mississippi utility regulators to say in 2017 the facility could run on natural gas only.

What did the project's failure mean to the people of Mississippi? The Mississippi Free Press addresses that question in a Nov. 11, 2022 article titled "Power for Southern People, Not the Southern Power Company." Artis Burney calls it a "disaster" and goes on to write:

In 2016, construction began on the Kemper Power Plant, touted as the pinnacle of  the movement to bring "clean coal" to America (https://www.theguardian.com/environment/2018/mar/02/clean-coal-america-kemper-power-plant). The plant  . . . was intended to be the largest of its kind and a proof-of-concept for future plants to follow -- then spent the next 11 years trying and failing to become operational, while Southern Company, the monopoly that owned it, lobbed the costs of its ill-conceived venture off on Kemper County residents.

Ill-conceived? That leads us to a report at The UK Guardian, under the headline "How America's clean coal dream unravelled; Exclusive: Kemper power plant promised to be a world leader in ‘clean coal’ technology but Guardian reporting found evidence top executives knew of construction problems and design flaws years before the scheme collapsed." Writes reporter Sharon Kelly:

High above the red dirt and evergreen trees of Kemper County, Mississippi, gleams a 15-story monolith of pipes surrounded by a town-sized array of steel towers and white buildings. The hi-tech industrial site juts out of the surrounding forest, its sharp silhouette out of place amid the gray crumbling roads, catfish stands and trailer homes of nearby De Kalb, population: 1,164.

The $7.5-billion Kemper power plant once drew officials from as far as Saudi Arabia, Japan and Norway to marvel at a 21st-century power project so technologically complex its builder compared it to the moonshot of the 1960s. Its promise? Energy from “clean coal”.

“I’m impressed,” said Jukka Uosukainen, the United Nations director for the Climate Technology Centre and Network, after a 2014 tour, citing Kemper as an example of how “maybe using coal in the future is possible”.

Kemper, its managers claimed, would harness dirt-cheap lignite coal – the world’s least efficient and most abundant form of coal – to power homes and businesses in America’s lowest-income state while causing the least climate-changing pollution of any fossil fuel. It was a promise they wouldn’t keep.

Last summer the plant’s owner, Southern Company, America’s second-largest utility company, announced it was abandoning construction after years of blown-out budgets and missed construction deadlines.

“It hit us hard,” said Craig Hitt, executive director of the Kemper County Economic Development Authority. Some 75 miners, roughly half living inside Kemper County, have already been affected in a region where unemployment is 7.1% compared to a national average of just 4.1%.

“It was going to be the biggest project in the history of the county, possibly in the state of Mississippi,” Hitt said. Instead, this year, Kemper County was home to one of the first large coal-mining layoffs of the Trump era.

Southern Company officials have tried their best to blame someone (or something) else. That does not fly, based on The Guardian's research, writes Kelly:  

Company officials have blamed the failure on factors ranging from competition from tumbling natural-gas prices to bad weather, bad timing and plain old bad luck.

But a review by The Guardian of more than 5,000 pages of confidential company documents, internal emails, white papers, and other materials provided anonymously by several former Southern Co insiders, plus on- and off-record interviews with other former Kemper engineers and managers, found evidence that top executives covered up construction problems and fundamental design flaws at the plant and knew, years before they admitted it publicly, that their plans had gone awry.

Their public statements helped to prolong the notion that their “clean coal” power could be affordable, costing Southern’s customers and shareholders billions, giving false hope to miners and firing dreams that American innovation had provided a path forward for “clean coal” technology at a reasonable price.

In other words Southern Company officials were dishonest, and their deception wound up costing other people a lot of money: Their hopes for Kemper were a "pipe dream," Kelly writes:

“It was exciting times, but it turned out to be like a mirage,” said Brett Wingo, a former Southern Co engineer who first went public with his concerns about Kemper’s construction delays in a front-page New York Times investigative report in 2016 and is now suing the company over alleged retaliation. “It was a cool trick – on all of us.”

Kemper’s failure will have a profound impact on international plans to slow climate change which rely heavily on the rapid development of technology to capture carbon and store it, technology that has so far shown little progress.

The United States has spent hundreds of millions in federal taxpayer funds chasing the chimera of clean coal. Donald Trump has been particularly vocal about his support for clean coal. “We have ended the war on American energy and we have ended the war on beautiful, clean coal,” he said in this year’s State of the Union address.

Kemper promised a way forward. But the documents show that while Southern Company management presented a rosy picture of Kemper’s prospects to the public, numerous structural problems with the project had emerged during construction and internal documents questioned the very foundation of the plant’s viability.

In a 24 April 2013 earnings call, for example, Southern’s CEO Tom Fanning regretted Kemper’s newly announced first budget blowout, a $540-million hike, but described “tremendous progress” on construction and said “the scheduled in-service date” was achievable.

Fanning, it turned out, was painting a picture that was far too pretty:

Several former Southern engineers explained in interviews that construction workers often lacked the right gaskets, bolts and pipe hangers necessary to connect up Kemper’s more than 900,000 linear feet of pipes – but managers ordered them to install the piping anyway.

The orders were “just to show work was being done”, one engineer who worked on Kemper said, requesting anonymity because he still works in the tight-knit utility sector, and describing the inoperable maze of pipes as a “pony show” for the state’s Public Service Commission.

Bosses pressured engineers to turn in impossible cost and schedule estimates, former construction manager Kelli Williams and Wingo both recounted. They faced strong pressure to alter construction planning documents to fit budget goals, they said, even if they had strong reasons to doubt workers could actually achieve what the resulting plans required.

These construction snafus and planning pressures help explain how Kemper ballooned from a $2.4-billion construction project to one that cost $7.5-billion.

But Kemper’s flaws weren’t limited to construction problems. They went right to the heart of the power plant’s “clean coal” design.

What does that mean? Kelly explains:

Perhaps the single most important number for a power plant is its availability rate – the percentage of the time it can be up and running versus down for maintenance and repairs. Southern told the federal authorities that achieving 80% availability was a “key performance target” for Kemper, vital to proving that “clean coal” could be affordable.

After construction was under way, Southern Co hired a consultant called World Oil Services to run the numbers again. World Oil concluded Kemper’s design meant it could only be up and running on coal just 30-45% of the time during its first three to five years.

A 2 May 2014 in-house analysis also presents availability rates far lower than the company’s public numbers, concluding clean coal availability would gradually rise from 25% and not reach its “key” target for nearly a decade.

The figures suggest Southern’s plans for running an affordable “clean coal” plant were a pipe dream or, at best, unachievable for a decade. By the time Southern called it quits, Kemper had produced electricity from just coal for only about 100 hours.

Southern Company's failure at Kemper is not a surprise to everyone:, writes Kelly:

Instead of delivering the promise of clean coal Kemper has shattered them, in the meantime leaving locals out of work and shareholders out of pocket.

“We told them years ago that this was a facade,” said Louie Miller, director of the Mississippi chapter of the Sierra Club. “I think there’s going to be a big scrap metal sale at some point.”

Next, in Part Two: Mississippi Power, a subsidiary of Southern Company, has a lengthy history of dubious actions, and many of those weigh heaviest on communities of color.