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Whistleblower seeks return of $382M for failed Kemper Project power plant

The lawsuit seeks the return of the U.S. Department of Energy clean coal and other grants given to the Atlanta-based Southern Company, whose Mississippi Power subsidiary built the plant.

Published: November 1, 2023 6:43pm

(The Center Square) -

According to a filing in federal court unsealed this week, a former Southern Company employee is filing a whistleblower claim seeking the recovery of $382 million in federal funding for the aborted Kemper Project power plant.

Kelli Williams, a former construction manager at the plant, filed a lawsuit in 2018 that was unsealed by the U.S. District Court for the Northern District of Georgia on Monday. The lawsuit seeks the return of the U.S. Department of Energy clean coal and other grants given to the Atlanta-based Southern Company, whose Mississippi Power subsidiary built the plant.

Under federal law, Williams would be entitled to receive between 15% and 30% of the triple damages, which could add up to $1.1 billion.

Williams and her attorneys have asked the court for a jury trial. In the filing, Williams says the company deceived the Mississippi Public Service Commission of the "cost, status, and commercial viability of Kemper – including the plant’s availability estimate" to retain the plant's certificate of need and convenience, a permit that allowed the company to build and operate the plant and charge ratepayers for capital costs once it was completed and operational.

She also said in her filing that the company deceived the U.S. Department of Energy in 2016, when the plant continued to endure multiple delays, to receive $137 million on top of a $245 million clean coal grant provided when construction was approved by regulators in 2010. The plant was supposed to be operational in 2014, but was beset by delays and significant cost overruns.

The Dekalb, Mississippi plant – designed to convert soft lignite coal into synthetic gas for electricity generation and capture the associated carbon emissions – was supposed to cost $2.4 billion, but ballooned 212.5% to $7.5 billion.

The filing also says the company knowingly lied to the Department of Energy in 2010 and 2011 while the original $245 million grant was being disbursed, saying the plant was "'on schedule' and 'on budget,' thereby concealing cost overruns and delays that were already plaguing Kemper."

One of those ways Williams says the company obscured the truth was by pushing forward with construction without the proper materials, requiring expensive rework.

One of those methods was temporarily hanging pipes, which would require permanent lashings to be constructed to secure them and require the pipe work to be done twice and at much greater cost since they were fabricated after a structure is built.

She also said in the filing that the company retaliated against her after she spoke out against the practices and deceptions she observed to Southern Company management by lowering her evaluations and demoting her, saying that she wasn't a "team player."

An October 2016 accident nearly resulted in a catastrophic explosion when hot syngas filled an area of the plant that wasn't designed to endure 1,750-degree heat.

The company was never able to get the plant fully operational on syngas and announced on June 28, 2018, that it would cease efforts to get the gasifiers operational.

In February 2018, the Mississippi Public Service Commission unanimously approved a settlement that reduced the amount of capital costs the company could collect from ratepayers and mandated that Mississippi Power run the Kemper Project on natural gas only, something the company had done since August 2014.

The company demolished the gasifiers and the associated equipment in 2021, leaving the plant's electricity-generating turbines running on natural gas.

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