October 2, 2013 9:57:10 AM
Much like a fast runner giving his opponent a seemingly insurmountable head start, Haley Barbour flexed his rhetorical muscles Tuesday before a joint lunch meeting of the Lowndes County Republican Women and the Columbus Rotary Club.
The former two-term Mississippi Governor turned lobbyist conceded two of the major points used to attack the Kemper County lignite coal plant -- plentiful and cheap natural gas.
With a price tag estimated between $4.3 billion and $5 billion, easily the most expensive project in state history, the lignate coal plant has been characterized as obsolete by critics who say new extraction techniques has made natural gas far more plentiful and economical.
Barbour not only acknowledged that the price of natural gas is very low, he also admitted that it is an under-utilized energy, something he says won't always be the case.
"Natural gas (prices) have always been very volatile," Barbour said. "It can be used for so many things beyond what it is being used for now. It's plentiful and it's cheap. But that's a short-term view of it. What we do know is that natural gas (prices) are volatile based on its history. Three times in 10 years it's gone up to more than $10 (per thousand cubic feet). If you are thinking about long term, I would urge you to be cautious."
Barbour says as the current supply of cheap natural gas leads to more diverse applications of the product, it will invariably increase demand. He said currently many natural gas produces are providing natural gas below the cost required to extract it, mainly to maintain leases that require companies to drill or lose their leases.
For those reasons, Barbour said, the Kemper lignite plant makes sense for the state's long-term energy security.
New technology, he said, has not only made lignite coal cleaner to burn, but it's omissions can be used to extract vast quantities of oil that had previously been unrecoverable. The plant's carbon dioxide emissions can be pumped into the ground on oil drilling sites to capture oil.
"Mississippi power has sold all of its carbon dioxide to oil companies for $2 billion," Barbour said. "That's $2 billion that will be split between the rate-payers and stockholders."
While critics have pointed to Kemper's 22 percent rate hike to pay for construction, Barbour said it's a far better deal for consumer than previous rate hikes attached to plant construction.
"When Plant Daniels opened in Jackson County, the rate increase was 34 percent," Barbour said. "Grand Gulf (nuclear power plant) was even higher -- 54 percent. And if there are cost overruns, that cost is not passed onto the consumers. The legal limit for the rate increase is 24 percent."
Barbour ignored some other key charges levied by critics of the Kemper plant, among them that Mississippi Power, a subsidiary of The Southern Company, already charges far more for power than the two other suppliers -- Entergy and TVA -- who provide electricity to the state. Furthermore, critics say Kemper's patented technology is unproven and that lignite produces far less fuel when gassified than coal. There is also the matter of the state legislature's agreement to fund the project which is currently being challenged in court.
Critics have also suggested that there are hidden rate increases, but Barbour did not respond to those charges Tuesday.
Slim Smith is managing editor of The Dispatch. His email address is email@example.com.
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