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NY Times Kemper article ratchets up scrutiny of Southern

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NY Times Kemper article ratchets up scrutiny of Southern

The New York Times focused widespread attentionon the cost overruns, delays and possible project mismanagement at 'sintegrated gasification combined-cycle generation project in Kemper County,Miss., in a front-page article published July 5.

Thearticle placed the Kemper project in the broader context of Mississippi'sstruggling economy, the Obama administration's greenhouse gas emissionsreduction plans and recent political history surrounding the controversialgeneration project, for which former Mississippi governor and lobbyist Haley Barbourhelped pave the way. The article also explored the role of regulators and theliability of ratepayers for risky generation projects undertaken by a regulatedutility.

Kemper,formally known as PlantRatcliffe, has seen its start date delayed by two years, is roughly$4 billion over budget and is the target of lawsuits, issues all known within theindustry. But the prominent play the Timesgave its coverage prompted several more days of coverage, of Kemper itself, itstechnology and the political and regulatory environment from which the projectemerged.

Indeed,S&P Global Market Intelligence contacted the key source in the Times article, engineer Brett Wingo, inFebruary after being passed his phone number. At that time, Wingo said heplanned to tell his story, and provide the documents and recordings he hadgathered, to a news outlet where he felt it would receive wider exposure. The Wall Street Journal mentioned Wingoin a May 14 article on Kemper's problems, saying only that he thinks Southern"put a positive spin" on construction delays to avoid acknowledgingto investors it could lose federal subsidies.

The Times apparently took Wingo's assertionsmore seriously, and in a statement responding to the article, Southern rebukedthe paper for doing so, describing the article as "a negative recap of previously disclosed developments thathave already been addressed." Southern also noted the $2.5 billionin charges it has taken to account for cost overruns at Kemper. As for Wingo,Southern said investigations into his allegations by an outside counsel and thecompany itself concluded that "his concerns were unsubstantiated and nototherwise supported by the facts."

Whether the issues at Kemperamount to a company setting overly aggressive and hopeful deadlines for acomplex and project or whether the cost estimates and timeline issues crossed aline into something more serious is a question to be decided by the SEC, whichis currently investigating thematter.

But in the meantime, the Times article has also kicked offanother round of debate about carbon capture and storage, or CCS, technology,and how it fits into the U.S. strategy to cut CO2 emissions, as well as thepotential lifeline it has long held out for the coal industry. Vox.comgrappled with what Kemper's struggles might mean for the future of CCStechnology. While CCS may prove too expensive to be feasible for future coalplant projects, the successful development of industrial CCS systems for theproduction of steel, iron, cement and chemicals could go a long way towardreducing greenhouse gas emissions, according to Vox.

Fortune magazine reviewedthe numerous "green tech flops" in Mississippi, from a shutteredbiofuel plant formerly owned by failed company KiOR to solar panel makers thatcouldn't sustain. "Why has the statebeen home to reoccurring green tech flops? It seems to be a combination of agovernor who was eager to bring them in with a state development authority thatlacked skills in vetting the companies, investors and companies willing to takemajor risks on unproven technology with state and federal funds, and a federalgovernment that for a time was willing to give major aid to risky green techprojects," the magazine said July 5.

The New York Times,since publishing the Kemper article, has been hosting a debate on its Opinionpage with a range of voices, from environmentalists to engineers. Ina July 7 post, Massachusetts Institute of Technology Research EngineerHoward Herzog argued in favor of developing a portfolio of low-carbon energyproducing options, including carbon capture, to confront "the magnitude ofthe climate challenge."

Costs and critical coverage aside,the Kemper project may still have a role to play in that challenge. Southernprojects the plant to begin full operation this year.