Meridian Star

October 2, 2013

Former Gov. Haley Barbour defends Kemper plant

By Michael Stewart / Executive Editor
The Meridian Star

MERIDIAN —     Former Mississippi Gov. Haley Barbour outlined his reasons for his support of the lignite coal plant currently under construction in Kemper County during Tuesday's Breakfast Before Hours meeting of the East Mississippi Business Development Corporation.

    Barbour said the Kemper plant will lessen the state's reliance on natural gas and use an abundant Mississippi resource — lignite — to provide "a stable, low cost fuel."

    Barbour also answered critics who point to Mississippi Power Co.'s cost overruns during plant construction that have pushed the latest estimated cost up to $4.45 billion, more than $1.1 billion than originally estimated.

    Mississippi Power customers will pay $2.88 billion of the construction costs and an additional $1 billion in bonds.

    Barbour said when Entergy opened its Grand Gulf nuclear power plant in Clairborne County in the mid 1980s, it cost "far more than expected" and "took twice as long to build as expected."

    At the time it was built, the power generation plant at Grand Gulf  "was the most expensive ever built in Mississippi," Barbour said,.

    Today, Grand Gulf provides the "cheapest energy that Mississippi customers can buy," he added. "I think the same thing will happen in Kemper. I think we will get stable, low rates with a huge array of benefits for Mississippi."

    In comparison to a 54 percent rate increase at Grand Gulf, rate increases at the Kemper plant are relatively low, Barbour said.

    Earlier this year, the three-member Mississippi Public Service Commission voted 2-1 to approve a 15 percent increase in place now to start paying off the plant's debt before it begins operations under a bill approved by the Mississippi Legislature and signed into law by Barbour called the "Baseload Act."

    An additional 3 percent increase will be implemented next year, with a request for an additional 4 percent rate increase expected later, for a total of 22 percent. An additional 2 percent rate increase is allowed by law, for a maximum of 24 percent, Barbour said.

    Hartley Peavey, founder and CEO of Peavey Electronics in Meridian, said his monthly utility bill ranges between $80,000 and $120,000 a month.

    Peavey asked Barbour why ratepayers are being charged an increase before the plant is operational.

    "The law changed while I was governor to allow the companies to start collecting earlier because it keeps the rates lower," Barbour said. "… It keeps the debt load down because you don't have as high of payments. At the end of the day, you will pay the same but you will pay less per month, which for most households is a bigger issue."

    PSC Commissioner Brandon Presley, who represents the Northern District, opposed the rate increases as a means to partially fund construction at the plant and has said Mississippi Power should have footed the entire bill.

    "The bottom line of it all is this: If this plan was a great idea, in 2010 Mississippi Power could have went to Wall Street and got investors to build it and if it produced power for the cost they said it would, then the customers could buy power from it," Presley told The Meridian Star editorial board recently.

    Critics have also said a natural gas plant would have been far cheaper to build and advocate burning natural gas in the Kemper turbines, rather than using "experimental technology" to gasify lignite coal.

    Barbour countered that although natural gas prices are relatively cheap in the U.S. at $3.60 per 1 million BTUs, he predicts they will eventually go up and pointed to the $11.87 per $1 million BTUs natural gas is selling for in Europe.

    "You cannot believe the price of natural gas is going to stay the same," Barbour said. "As supplies increase and oil prices stay at $100 a barrel or more, it is inevitable we will see natural gas used as a motor fuel, because it is so much cheaper for the equivalent and it's going to grab more and more of the market share for motor fuels, particular for heavy trucks."

    Mississippi Power Co., a subsidiary of Southern Co., has long been represented by BGR, the Washington lobbying firm Barbour co-founded more than a decade before he became governor, according to an Associated Press article published last month.

    Barbour acknowledged the financial link between Southern Co. and BGR during a luncheon speech, the AP article states.

    "He noted after the speech that he was not working for BGR while he was governor; his assets were in a blind trust," according to the article.

    During the Tuesday morning speech in Meridian, Barbour also said Mississippi should consider options for storing or reprocessing spent nuclear fuel, a topic that has cropped up over the past few weeks.

    "We already store nuclear spent fuel," Barbour said. "We have been storing it for 20 years. They are storing it at Grand Gulf."

    Barbour said France reprocesses almost 100 percent of its nuclear fuels.

    "This is something that is done safely in many places in the world. I don't know if we've got the geology for it. I don't know if we have the logistics for it. I don't know what it would take, but people who immediately say, no, no, no, no —  they are just Luddites.

    "If there is such a project, it will be a multi-billion project and for poor Southwest Mississippi, the poorest part of our state, if we could get that, it would be all the difference in the world."