Abby L. Harvey
GHG Monitor
1/9/2015
As the Environmental Protection Agency pushes back the finalization of new carbon emissions standards for new, modified and existing coal-fired power plants, the EPA is facing increased criticism over its use of the Kemper County Energy Facility to help demonstrate the viability of using carbon capture and storage as an option for emissions reductions in the proposed regulations. Commenting this week on the EPA’s plans to delay finalization of the new regulations, Rep. Ed Whitfield (R-Ky.), Chairman of the House Subcommittee on Energy and Power, noted the continued difficulties the Kemper project has faced, which have included cost increases and schedule overruns. “The EPA points to the Kemper County Energy Facility as key evidence to mandate carbon capture and sequestration technology (CCS) for new power plants in its proposed rulemaking. However, Kemper is not yet in commercial operation. The delay underscores the error of EPA’s judgment that CCS is commercially viable and has been adequately demonstrated for new power plants. This action further highlights the complexities and legal flaws in these proposed rulemakings,” Whitfield said in a release.
Kemper, a new build coal-fired power plant which once completed will utilize CCS technology, has delayed full operation several times in the past and has more than doubled its initially estimated budget with a price tag currently sitting at $6.13 billion. At question is EPA’s use of Kemper as an example to defend the commercial viability of CCS, which in the agency’s proposed New Source Performance Standards for coal-fired power plants would be mandated on all new-build coal plants. The data used to come to this conclusion became the source of a lawsuit against the Department of Energy this week by the Energy and Environment Legal Institute which sought, via the Freedom of Information Act, DOE’s financial assistance contract with Kemper owner Southern Co., expected to provide information relevant to when data from the Kemper project would become available.
Chris Horner, Senior Legal Fellow for E&E Legal, told GHG Monitor this week that “like many others we expect that this information poses a stark challenge to EPA’s claim that Kemper proves CCS to be adequately demonstrated as commercially viable. Indeed, we understand EPA has been scrambling since November to redirect their primary reliance onto Boundary Dam,” Horner said, referencing a CCS project in Canada which reached full operations in October of last year. “On the basis of the same information we believe this flagship project proves CCS not viable. Agencies are granted discretion in making certain determinations, but it seems logical that hard numbers should reduce that wiggle room. We are seeking those numbers to assess EPA’s claim.”
Horner noted that “not long after” filing the lawsuit, DOE provided the requested document, albeit in a “somewhat redacted form,” he said. “The document is remarkably non-specific and otherwise ambiguous in key places about how certain information must be presented, and on first review it is possible the DOE Kemper document does not obligate Southern to produce a particular cost summary for another two years; government sources indicate to us that senior administration officials have no interest in obtaining the data, however, but rather an interest in putting off its release for as long as it can,” Horner said. The group has now filed a new FOIA request for reports referenced in the provided document. While DOE does not comment on pending litigation, a DOE spokesman told GHG Monitor this week that “the Department is committed to responding to all Freedom of Information Act requests as quickly and thoroughly as possible.”
Mississippi Power Reports $25 Million Overrun in Latest SEC Filing
In publicly available documents filed with the Securities and Exchange Commission late last week, Mississippi Power reported additional cost overruns of $25 million for the Kemper project. Mississippi Power spokesman Jeff Shepard told GHG Monitor in a written response this week that the $25 million overrun is due to “construction support costs during start-up and commissioning.” The filing, which covers costs through November 2014, also says that the company is reviewing additional overruns of $20-30 million. Those costs are “associated with the construction, start-up and operational readiness of the facility and the operation of the combined cycle,” Shepard wrote, going on to state that the “review is expected to be completed in conjunction with the filing of the next monthly report.”
Mississippi Power ‘Committed’ to Kemper
Once completed, the facility will utilize Mississippi lignite, a low-rank brown coal, to produce electricity. The plant will employ a custom integrated gasification combined cycle (IGCC) system and carbon capture and storage technology to produce electricity from the coal with carbon emissions roughly equal to that of natural gas. Portions of the plant are currently on-line, but the gasification and carbon capture portions of the plant have yet to be placed in service. Full operation of the plant has been delayed several times in the past year and is currently scheduled to begin in 2016.
Mississippi Power remains confident in the project, however, Shepard wrote. “Mississippi Power is committed to the success of this project for the long-term benefit of its customers. World leaders in energy technology are showing more and more interest in the Kemper facility and its innovative integrated gasification combined cycle technology. In fact, the top climate technology official for the United Nations recently toured the plant and said the technology and environmental safeguards expected to be deployed on the Kemper project ‘gives hope’ to developing countries and people wanting to improve their lives,” he wrote. Shepard did not comment on if the most recent overruns could result in further delays.
The latest reported overrun is just one of many reported in the last year including $330 million reported in late October attributed to “the extension of the project schedule … as well as start-up and operational readiness activities.” Approximately $59 million in additional costs were reported in September related to “construction, start-up and operational readiness activities, including additional related contingency as well as additional property taxes and insurance.” Overruns comprised of $61 million were reported in May and were attributed to construction issues which were identified as decreases in construction labor productivity on the project due in large part to adverse weather, unexpected excessive craft labor turn-over and unanticipated installation inefficiencies; and $135 million related to the delay of the projected in-service date were also announced at that time.
