Jackson Free Press

The financial performance of companies building a lignite coal-fired power plant that is nearing completion in eastern Mississippi has raised new questions about the sustainability of the project, and has intensified a quiet proxy war that is raging between two nonprofit organizations.

In a recent report, Southern Co., the Atlanta-based corporate parent of Mississippi Power Co., released second-quarter earnings that showed a more than 50-percent earnings drop from last year. In the second quarter of 2013, Southern reported earnings of $297 million, or 34 cents per share, compared with earnings of $623 million, or 71 cents per share, during the second quarter of 2012.

Southern cited "increased cost estimates for the construction of Mississippi Power's Kemper County project," which include close to $1 billion in cost overruns. To date, the utility's shareholders have absorbed $611 million in costs for the power plant, which is designed to gasify lignite, a low-energy-density coal, which is abundant in Mississippi. The plant will do so using TRIG technology, a system Southern trademarked and has been developing for 15 years, but has not tested on a commercial scale.

Southern's executives remain upbeat about the plant's chances of providing "clean, safe, reliable and affordable electricity" to Mississippi Power's customers.

"Despite recent cost challenges, we are making great progress in the construction of the Kemper County energy facility," said Thomas Fanning, the company's chief executive officer on an earnings call with investors and news media.

An unlikely coalition has gelled around criticism of Kemper IGCC, and recently, the groups have stepped up their public-relations campaigns. Kemper's critics, who include conservationist and other taxpayer watchdogs, say that progress comes at great expense to Mississippi Power's ratepayers and, when the 582-megawatt plant starts generating electricity sometime in 2014, the environment.

Louie Miller, state director of the Mississippi Sierra Club, which has slowed the plant's progress through the courts, said the latest cost overruns have demonstrated what his organization has said in court filings and public statements.

"The Kemper project is an unmitigated disaster, and is now the nation's most expensive coal plant. To add insult to injury, Mississippi Power has already rammed through a punitive rate increase on their customers and secured an agreement to charge customers for up to $1 billion in bonds to pay for this boondoggle. Even Mississippi Power's CEO cannot say with confidence that things won't continue to spiral out of control," Miller said.

Joining the Sierra Club is a not-for-profit called the Bigger Pie Forum, which espouses fiscally conservative viewpoints such as reining in government spending and battling political cronyism. The Bigger Pie Forum and its directors have penned dozens of editorials that take aim at Kemper's rising costs. The board includes Chairman Kelley Williams, a former executive at First Mississippi/Chemfirst and Bruce Deer, president and CEO of Ridgeland-based Neopolis Technology. Forest Thigpen, president of conservative think tank Mississippi Center for Public Policy and technology consultant Charles Grayson also sit on BPF's board.

"We are against public policy that will stifle economic growth," said Bigger Pie Forum board president Ashby Foote. "Kemper is going to be bad for the economy of southeastern Mississippi and the state as a whole."

In recent weeks, a group of business and labor leaders called the JobKeeper Alliance has started running ads on Facebook and stepping up its overall digital footprint in support of Kemper. Patrick Cagle is JobKeeper's executive director. JobKeeper's founders, Stewart Burkhalter and George Clark, are presidents of the Alabama AFL-CIO and Manufacture Alabama, a trade organization.

"We're concerned that they're using public money to fight Mississippi jobs," Cagle said about the Bigger Pie Forum.

Cagle and the JobKeeper Alliance say the Bigger Pie Forum receives underwriting from the Institute for Technology Development, a nonprofit the Mississippi Legislature established in the 1980s to help universities develop scientific research for commercial applications. Congress has also appropriated funds to ITD.

Foote acknowledges that Bigger Pie Forum has used some profits from ITD businesses; Cagle believes that any profits generated by ITD should be returned to Mississippi taxpayers.

Cagle said state Auditor Stacey Pickering told the JobKeeper Alliance that the relation between ITD and Bigger Pie Forum is on his radar, and that he plans to ask the U.S. Treasury Inspector General to look into the matter.

Foote calls the JobKeeper Alliance's media blitz "a smear campaign" designed to stem the tide of public opinion against the plant. Foote added that he does favor electricity produced with natural gas, because the process known as hydraulic fracturing has made the fuel abundant and cheap.

JobKeeper representatives who recently attended the Neshoba County Fair also met with Mississippi Attorney General Jim Hood's office about investigating the diversion of IDT taxpayer money to the Bigger Pie Forum.

Jan Schaefer, Hood's communication director, said the agency's policy is not to confirm or deny the existence of an ongoing investigation.

CORRECTION 8-7-2013: A previous version of this story identified Jobkeeper Executive Director Patrick Cagle as a former employee of Alabama Power. Mr. Cagle's father worked for Alabama Power. The Jackson Free Press apologizes for the error.