When it comes to boondoggles, many of the largest have involved the energy industry. Executives who work in oil, gas, coal, and green energy, along with the lobbyists they hire to do their bidding, are the true master manipulators of governments everywhere, and they have been controlling the system for their own benefit every since the days of John D. Rockefeller. Presidents, governors, legislators, and even judges have been like putty in the hands of the energy industry, and the handouts, tax breaks, legal exemptions, and no-bid contracts this powerful special interest has received over the years has allowed the big name companies that dominate the field to become the wealthiest corporations on the face of the earth. Energy companies also know how to game the system quite successfully, thank you very much, and the unholy alliance between energy producers, distributors, and the politicians they have purchased has allowed those who trade in this commodity to get rich at the expense of average taxpaying citizens.
While there have been a lot of scams and rip-offs perpetrated against the public over the years by energy desperadoes, at the present time there is a real doozy going on down in Mississippi, a boondoggle so outrageous that it seems like something out of the past, when energy companies literally could get away with anything. Despite having ample facilities for producing natural gas already built and in operation, the state’s largest electricity provider, Mississippi Power, which is a subsidiary of the 16th largest utility company in the world, Southern Company, is in the process of constructing a $2.88 billion facility called the Kemper County Lignite Coal Plant in the east central part of the state. The story of how this project was approved despite all of its dubious aspects could function as a textbook example of how powerful interests can subvert the public interest when there are big profits to be made.
Unlike older-style power plants, the Kemper County Lignite Coal Plant will not actually burn coal to produce electricity. Instead, it will use a process called gasification to convert coal harvested from a nearby 45-square-mile strip mine into natural gas, which can be burned to produce electrical power and is a much cleaner source of energy than coal. In addition to converting coal to a cleaner form of fossil fuel, this plant will also be furnished with technology that allows it to sequester carbon dioxide that is removed from the coal during gasification. This sequestered CO₂ is slated to be sold for use in a process called Enhanced Oil Recovery (EOR), which increases the amount of crude oil that can be pumped from an oil field.
At first glance, this project has a superficial appeal, as its stated goal is to use modern technology to harvest coal cleanly and sustainably. But the old saying about how looks can be deceiving applies in spades to the Kemper County Coal Plant. The technology that is supposed to be used to convert the coal to natural gas is actually still somewhat in the experimental stage, and it is not known for sure how cost-effective or efficient it will prove to be once it is put into operation. But even if clean natural gas can be produced, coal mining is by its very nature a dirty business, and the large strip mine that will be opened up in the area to supply adequate amounts of coal to the plant will pollute the air, blight the land, and seriously endanger important nearby watersheds, including the Pascagoula River. As for the sequestered carbon dioxide, naturally produced CO₂ is cheaper and more readily available for EOR users, and it appears highly unlikely that the market for the plant-produced version of this gas will be able to absorb what is captured and stored by the Kemper County facility. And yet, the sale of sequestered carbon dioxide is supposed to play a big role in making this plant profitable and successful.
The “Free Market” at Work
But the real scandal of the project is related to its funding. Back in 2008, the Mississippi legislature, with the full support of Governor Haley Barbour, who before being elected was a well-connected energy lobbyist who worked for the Southern Company, passed a new law that allows utility companies to pawn off the costs of future power plant construction on their customers by charging higher rates for electricity use in the present. This law helped clear the way for the Kemper County ‘Clean Coal’ project, which is the first big utility project in the state to take advantage of this legislative effort to ensure that the rich and powerful will be able to stay that way by making sure they are protected from all risk.
The Mississippi Public Service Commission, which is charged with regulating utilities in the state, was at first reluctant to approve this $2.4 billion project because of its cost to ratepayers. In April of 2010, the Commission only granted conditional approval, with a cap placed on the amount of money the public would be expected to contribute. Mysteriously, however, just one month later the Commission changed its mind and liberalized the terms of approval– two commissioners changed their “no” votes to “yes,” and the project was given cost coverage all the way up to $2.88 billion, which Mississippi Power claimed was necessary to cover potential cost overruns.
Even though the new plant will not be completed for several years, rates will be going up steadily in the twenty-six counties Mississippi Power services. Customers in those counties will see an 11 percent increase in their electricity costs starting this month (January 2012), and those rates could increase by more than 40 percent by the end of the year. Or at least, they could go up by more than 40 percent for individual users and small businesses – when that law was passed back in 2008, exemptions to the rate increases were put in for shipyards, casinos, refineries, and other large business interests. And there is one more interesting thing here that must be noted – while the twenty-six counties serviced by Mississippi Power will be paying for the plant, at the present time this Southern Company subsidiary does not service Kemper County and its surrounding areas. So the ratepayers who are covering the costs of this project are actually doing so for the benefit of another area of the state, and they will be receiving no electricity themselves in return for this “investment.”
It is highly ironic that the people supporting this project most vociferously are the very same people who generally scream the loudest about the sanctity of the “free market.” These great defenders of the capitalist system are perfectly willing to protect stockholders and investors from the risks associated with a project like this by passing the costs onto working men and women, who will end up being on the hook for everything if the project fails – which it could, if the conversion process isn’t perfected and if no market can be found for the sequestered carbon dioxide. One thing that is not being talked about much is the fact that Mississippi already has several small, independent companies using natural gas to produce electricity, but because they are independent, Mississippi Power refuses to buy from them, and they are currently operating at only about 15 percent of their potential capacity. So even if it works, the Kemper County plant would be completely redundant if the state’s natural gas production potential was being fully exploited.
Turning Over the Rocks
The Sierra Club has filed suit against the Public Service Commission, to try and find out what happened behind the scenes to get them to approve this highly questionable project. It is already known that Southern Company and Mississippi Power spent a lot of money to try and push this project through, and in the end – with the full support both in public and behind the scenes of former Southern Company lobbyist and Haley Barbour – these efforts proved successful. Local interests have been coming on board to support the suit by the Sierra Club, which has gone before the Mississippi Supreme Court to try and get a hold put on the project until the conduct of the Public Service Commission can be investigated fully. Given the incestuous relationship that exists between government, industry, and the courts these days, however, it seems highly likely that this effort will prove unsuccessful, which means that the Kemper County “clean coal’ project will go forward, and we will never really know what went on behind the scenes to make it happen.
©2012 Off the Grid News