By Tom Baxter
Last week, on the same day Metro Atlanta voters were turning down the TSPLOST referendum, the Mississippi Supreme Court denied a motion by Mississippi Power (which like Georgia Power is a Southern Co. subsidiary) to charge its customers interim rates to continue construction on its big coal-gasification plant in Kemper County. These seemingly unrelated stories, the TSPLOST vote and the Kemper coal fight, actually have considerable resonance with each other.
Like the plan for funding new projects which was rejected in nine of Georgia’s 12 transportation districts, the Kemper project has enjoyed the backing of a wide swath of Mississippi’s business and political establishment. Former Gov. Haley Barbour made the plan to mine lignite from a large nearby site, convert it into a gas and burn it a major part of an aggressive state policy to encourage energy-related projects of all kinds. The project, with its new technology, was the beneficiary of some $300 million in federal funds.
But just as the transportation initiative caused the coalescing of an unlikely coalition of opponents in Georgia, the Kemper project has drawn opposition from across what we generally think of as the political spectrum.
The Sierra Club and other environmental groups objected to the massive construction project, which was begun in 2010, claiming it would consume 20,000 acres of forest land and small farms while forcing consumers to accept steep increases in their monthly bills before any electricity had been generated by the still-experimental process.
As costs overruns began to pile up, the Kemper project also became a target for the Bigger Pie Forum, a state-based think tank started by a group of conservative Mississippi businessmen whose economic theories lean toward the Austrian School and whose goal is to create a bigger, more open business environment in the state.
Mississippi has been “giving taxpayer dollars to politically-connected businesses, often with pie in the sky chances of success, while also increasing regulations that discourage the small businesses and entrepreneurs who create jobs,” the group says on its website.
Kemper “might have made a little bit of sense at the front end,” Bigger Pie Forum president Ashby Foote said. But as the price of natural gas has fallen with the development of shale deposits in the U.S. and the project’s costs have risen, it has lost its economic justification. (A Florida company, Entegra Power Group, has filed a proposal to convert the mostly completed plant to natural gas.)
“My primary focus is the economic ramifications of jacking up the electricity rates by 40 percent or more for the people of southeastern Mississippi,” Foote said.
While the Sierra Club has pursued the issue in court, the Bigger Pie Forum has repeatedly questioned the economics of the project, and pointed out the political and business connections which tie supporters together in what Foote calls “crony capitalism.”
Unlike TSPLOST, which was settled at the ballot box, the struggle over the Kemper plant has been a complicated battle waged in court and before the state Public Service Commission. The Supreme Court ruling last week was one in a string of setbacks for the project, which was launched on such a broad-shouldered wave of support. It’s too soon to say what will happen to the plant, which is nearing completion. An outside monitor said last month that Mississippi Power has spent $2.822 billion of the $2.888 billion granted by the Mississippi PSC in an increase over the original cap of $2.4 billion.
But some of the same themes that played out in Atlanta are evident in the Kemper coal story. For good or ill, large projects funded by public money, either in the form of taxes or utility rates, are increasingly likely to draw a cafeteria line of opponents. It’s a novelty to see environmentalists and free market capitalists on the same side of an issue in Mississippi, or the Tea Party, the Sierra Club and the DeKalb NAACP working together in Georgia. But these new alliances are fueled by a more general distrust in both governmental and corporate leaderships, and by the alienation from the political mainstream of more and more groups. While they are likely to prove very unstable, they are also likely to spread.
Meanwhile the nation’s infrastructure isn’t getting less decrepit, so the potential for political friction over proposed projects and initiatives will only increase. A grim landscape, but one the planners of tomorrow should face up to.
Tom, thanks for covering this. There are a few small errors here: the "hard cap" for the Kemper plant, beyond which the PSC has said no ratepayer moneys will be collected, is $2.880 billion, not $2.888. This is pretty important because Mississippi Power is trying to get the extra eight million (and is hoping they won't be called out on it) because the plant will go further over budget. This is another example of a large Southern business - Southern Company's Mississippi Power, using lobbying, insider political connections, and so-called "clean coal technology" (NOT), to pull the wool over the eyes of ratepayers and decision-makers to get their multi-billion dollar, capital-intensive project paid for by someone else. Most people have had enough. With Sierra Club's legal challenges, we've also proven that the PSC improperly permitted the plant and have successfully prevented a new rate hike to pay for it. When the Supreme Court finally weighs in, we may see the whole thing overturned.