DIRECT TESTIMONY BRUCE C. HARRINGTON. On Behalf of MISSISSIPPI POWER COMPANY BEFORE THE MISSISSIPPI PUBLIC SERVICE COMMISSION DOCKET NO.

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1 DIRECT TESTIMONY OF BRUCE C. HARRINGTON On Behalf of MISSISSIPPI POWER COMPANY BEFORE THE MISSISSIPPI PUBLIC SERVICE COMMISSION DOCKET NO. 0-AD-01 Q. Would you please state your name, position and business address? A. My name is Bruce C. Harrington. I am the Plant Manager, Kemper County Integrated Gasification Combined Cycle (IGCC) Plant (Kemper or the Plant) for Mississippi Power Company (MPC or the Company), of which the Kemper Combined Cycle (Kemper CC 1 ) is a part. My business address is Highway P.O. Box, DeKalb, Mississippi. Q. Please describe your education and professional experience. A. I received my Bachelor of Science degree in Mechanical Engineering and my Masters of Business Administration degree from the University of Tennessee, 1 Knoxville in 1 and 11, respectively. I obtained my Master of Science 1 0 degree in Mechanical Engineering from Carnegie Mellon University in. I have been an employee of Southern Company Services, Inc. (SCS) and MPC for a 1 The Kemper CC and its related assets and associated Transmission include the Kemper CC fueled on natural gas; all transmission facilities, including two () 0 kv lines and substations supporting the Kemper CC; and the treated effluent and natural gas pipelines. The Kemper CC and related assets were placed in service August, 0, and the associated Transmission facilities were placed in service upon completion during 0 and 0. Page 1 of

2 cumulative fifteen years and have served in a variety of positions of increasing responsibilities in the areas of plant engineering, plant operations and maintenance, and plant management within SCS and MPC. From to 00, I was a Senior Engineer - Design for Special Projects, Maintenance Coordinator and Relief Shift Operations Coordinator at SCS. In 00, I left SCS to become Maintenance Manager for Alco Chemicals specialty chemical facility in Chattanooga, TN. In 00, I moved to TVA s Fossil and Hydro Mechanical Engineering group to lead half of the team supporting TVA s Fossil and Hydro generating fleet. In 00 I returned to SCS and from 00 to 00, I was a Project Engineer and Process Engineering Supervisor. In this role, I directed a team of Process Engineers that supported engineering for the Gasification Island at the Plant. From 0 to 0, I was a Project Manager and Process 1 1 Engineering Manager at SCS, and was responsible for leading the detailed engineering and procurement of the non-combined cycle portion of the Kemper Plant. From 0 to 0, I continued to support the Kemper Plant and transitioned to the position of Operations & Maintenance (O&M) Manager for MPC. In this role, I was responsible for all O&M at the Plant and assisted in the development of the overall operational strategy and approach for MPC Plant Operations. From 0 to 0, I was the Assistant Plant Manager and assumed 0 1 my current Plant Manager position in October 0. responsible for all aspects of Kemper Plant Operations. In this role, I am Page of

3 1 1 0 Q. Have you previously testified before the Mississippi Public Service Commission (MPSC or the Commission)? A. Yes, I filed Direct Testimony and Supplemental Testimony in Docket No. 0- AD-01 (0 Kemper Prudence Discovery Docket). Q. What is the purpose of your testimony? A. The purpose of my testimony is to update the information presented by Samuel G. Sumner in MPSC Docket No. 0-UN-000 (0 In-Service Assets Filing). My testimony will support the Non-Fuel O&M and Maintenance Capital estimates, describe the operational performance, and present staffing information for operation of the Kemper CC on natural gas. Q. Are there any costs associated with the operation of the Kemper CC excluded from the Non-Fuel O&M and Maintenance Capital estimates presented herein? A. Yes, these estimates do not include costs related to operation of the natural gas pipeline or transmission assets. The costs related to the operation of the natural gas pipeline are included separately in the Company s fuel clause. For transmission assets, no capital maintenance is anticipated and, while projected to be minimal, any O&M for transmission assets would be included in the Company s Performance Evaluation Plan (PEP) Rate Schedule. Both exclusions are consistent with the cost recovery applied to MPC s other generating units. 1 Page of

4 Q. Do you sponsor any exhibits with your testimony? A. Yes. I am sponsoring one exhibit: Exhibit (BCH-1) Kemper CC Non-Fuel O&M and Maintenance Capital Actuals and Estimates Q. Was this exhibit prepared under your supervision and control? A. Yes PLANT UPDATE Q. Please describe the Kemper CC s operational statistics since commercial operation. A. Beginning with the In-Service Date of August, 0 through July 0, the Kemper CC has generated a total of,0, MWh and, during that same period, used 1, MWh for station service, resulting in net generation of,1, MWh. In addition, The tested full load net heat rate without supplemental firing is, BTU/KWh and the average net heat rate over the period described above was, BTU/KWh. This average value includes all operating modes that occurred during the period, including minimum load and supplemental firing. Since being placed in service through July 0, the capacity factor for the Kemper CC was %. This heat rate value is from performance test results, corrected to ambient conditions of F, ft. elevation, and % relative humidity. Page of

5 In total, since being placed in service through July 0, MPC has achieved an Equivalent Forced Outage Rate of 1.% for the Kemper CC. Based on the above data, the Kemper CC has performed extremely well since commercial operation, providing our customers with economic, lower cost energy than they otherwise would have received if the decision had not been made to place the Kemper CC in service prior to completion of the gasifier. Q. Is the Kemper CC currently in use and providing benefit to MPC customers? A. Yes, the Kemper CC has been serving customers since August, 0. Normal start up and commissioning procedures were completed for the Kemper CC, and MPC Plant Operations determined that it was ready to be used to benefit customers. Additionally, the Commission s Temporary Rate Order (August 0) in Docket No. 0-UN-000 stated the following on page : MPC s In-Service Asset Proposal and the interim rate request are premised on assets that are and have been used and useful in providing service and benefits to ratepayers. Q. Please explain staffing as it relates to the organization that has been operating the Kemper CC. A. Currently, the staffing plan consists of full time positions deemed necessary for the safe and effective operations and maintenance of the Kemper CC. MPC Plant Operations is fully staffed utilizing full-time employees and contractors. The current composition of personnel is based on additional knowledge gained since the completion of the facility s design and construction, and MPC Plant Operations experience gained throughout the startup and operations phase. Page of

6 MPC Plant Operations consists of the Operations and Maintenance and the Engineering and Compliance departments. Both groups are overseen by the Plant Manager. The overall staffing level assumes contract employees will perform the bulk of the labor during scheduled maintenance outages. This approach is standard in the industry and consistent with MPC s maintenance strategy for its existing generating plants. Q. Please provide an update on upcoming planned outages for the Kemper CC. A. The Kemper CC has planned outages in the fall of 0 and the fall of 01. The fall 0 outage includes borescope inspections on the combustion turbines (CTs) and the steam turbine. The borescope inspections are necessary to ensure continued operational integrity of the CC equipment. The fall 01 outage is scheduled to include hot gas path (HGP) inspections on the CTs, as well as a conversion of the CTs to Ultra Low NOx (ULN) and F HGP components (ULN / F HGP conversion), discussed later in this testimony NON-FUEL OPERATION AND MAINTENANCE (O&M) EXPENSE AND MAINTENANCE CAPITAL ESTIMATES Q. Please describe the estimates provided in the 0 In-Service Assets Filing. A. The annual budget estimate in the 0 In-Service Assets Filing for operating the Kemper CC on natural gas during the test year (June 1, 0 May 1, 0) was approximately $ million. This estimate excluded certain costs such as the CT Long Term Parts and Services Agreement (LTP) with Siemens, contract operators, and Southern Company employees loaned from other plants, which at Page of

7 1 1 the time were not included as O&M for the Kemper CC. With these costs included, the O&M budget would have been approximately $. million. Q. Were the O&M actual expenses provided in the 0 In-Service Assets Filing reviewed by the Independent Monitors (IMs)? A. Yes. Mr. Don Grace of CTC, the Staff s IM, performed an analysis on the Kemper CC s O&M procedures and costs. He states that the Kemper Project total O&M costs are approximately % higher than the calculated O&M costs based upon industry published data. Therefore, the actual O&M costs are considered reasonable. Q. Please provide the actual O&M costs for the Kemper CC on natural gas during the In-Service Assets Filing test period (June 1, 0 May 1, 0). A. The actual O&M costs over this period were $. million, which includes certain items such as the CT LTP, contract operators, and Southern Company employees loaned from other plants, as mentioned above. Q. Please provide detail on actual Maintenance Capital and Non-fuel O&M expenses required for operation of the Kemper CC on natural gas since being placed in service. A. The actual operating costs for the Kemper CC since being placed in service through June 0 are presented in the following table: Timeframe Duration Actual Non-fuel O&M Actual Maintenance Capital /0 /0 months $,0, $0 1/0 /0 months $1,1,0 $,, MPSC Docket No. 0-UN-000, Direct Testimony of Don Grace, p., October, 0. Page of

8 /0 /0 months $,,0 $,, 1/0 /0 months $,0,1 $1,0, Details of these costs are presented in Exhibit (BCH-1) Q. Please provide the current budget estimate for operation of the Kemper CC on natural gas. A. The annual budget estimate for operating the Kemper CC on natural gas during the test year (01) is $. million. The maintenance capital budget estimate for the test year is $.0 million, which incorporates the proposed ULN / F HGP conversion. The estimate includes MPC labor, contractor labor, major equipment maintenance, chemicals and utilities costs. These estimate categories are the same categories referenced in my previous direct testimony in the 0 Kemper Prudence Discovery Docket; however the reported costs presented in this filing have been narrowed to only include costs for the Kemper CC and its associated assets. Details of this estimate are presented in Exhibit (BCH-1). Q. Please describe any proposed changes to the Kemper CC based on full-time operation on natural gas. A. MPC is currently contemplating two changes to the Kemper CC, which involve the ULN / F HGP conversion for the CTs. The conversion would be accomplished during the next HGP outage for the CTs and is expected to reduce CT maintenance costs and water treatment O&M costs. Q. How would the ULN / F HGP conversion of the CTs reduce Kemper CC maintenance costs and water treatment O&M costs? Page of

9 A. The Kemper Plant was designed for primary operation on synthesis gas (syngas), with features included in the Kemper CC to support full-time operation on natural gas. One major difference required for syngas operation of the CTs is a diffusion flame combustion system for NOx emissions control, rather than the typical dry low NOx or ULN systems found on most natural gas-fired CTs. For these reasons, MPC is contemplating the ULN / F HGP conversion. Although additional analysis is required to refine the following projections, MPC currently estimates reduced CT LTP costs of approximately $ million annually, and additional savings due to reduced water requirements. Q. Does the Stipulation encompass full recovery of O&M costs related to the operation of the Kemper CC on natural gas? A. Yes. Q. How do the Kemper CC s O&M costs compare to a typical combined cycle Plant? A. Due to the initial certification for the construction of an IGCC Plant at the Kemper site, the Kemper CC has several unique aspects resulting in potentially higher than average O&M costs. For example, because of the site location, the Kemper CC pumps and treats water coming into the Plant from the City of Meridian Wastewater Treatment Plant. This has led to the need for additional onsite water treatment which increases annual O&M costs. Additionally, the Kemper CC is a zero liquid discharge facility, leading to additional costs related to the maintenance of equipment necessary to meet this standard. Q. In your opinion, are the O&M estimates reasonable? Page of

10 A. Yes. We have taken our experience and the actual cost for operating the Kemper CC since being placed in service into consideration in developing the estimates. These estimates reflect, to the greatest extent possible, the current design and operational philosophy necessary to operate the Kemper CC on natural gas. SUMMARY Q. Please summarize your testimony. A. The Kemper CC has been in use and benefitting MPC s customers since August, 0, and continues to operate successfully. MPC s ULN / F HGP conversion proposal is anticipated to reduce CT maintenance costs and water treatment O&M post conversion. The O&M estimate for the Kemper CC for test year 01 is $. million and the maintenance capital estimate is $.0 million. Based on our experience operating the Kemper CC and a review of the actual costs since being placed in service, we believe these estimates to be reasonable. Q. Does this conclude your testimony? A. Yes, it does. Page of

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12 MISSISSIPPI POWER COMPANY MPSC DOCKET NO. 0 AD 01 Kemper CC Non Fuel O&M and Maintenance Capital Actuals & Estimates EXHIBIT (BCH 1) PAGE 1 OF 1 Non-Fuel O&M Actuals Estimates Category Aug Dec Jan June 0 01 Staffing 1,,,0,0,,,0,,, SCS Gas Tech and Demand Services Support 1, 0,0,,0, Contract Labor/Outage Support,,1,,0,,000,,0,000 Training/Licensing 0,,,0, Third Party Agreements 1,1,,,1,,,0,,, Major Equipment Maintenance 1,,,,,0,1 1,,,0, Environmental, Health & Safety 0, 1,,0,0 Rolling Stock 0,,,0 1,0 Consumables 0, 0, 1,1, Utilities/Chemicals,0 1,, 1,,,1,1 Miscellaneous Contract Services 1,0,,,,1, 1,0, 1,1, Security, Insurance and Other 0 0 (,) (1,1,) 1,, TOTAL,0, 1,1,0,,0,0,1,, Maintenance Capital* Actuals Estimates Category Jan June 0 01 Staffing/SCS Design Labor 0,, 1,0,0 Third Party Agreements 0,1,,,,0,0,0 Major Maintenance Equipment 0,,,1,0,000 Environmental, Health & Safety ,0 SCS Corporate Services , TOTAL 0,,,, 1,0,,01, *Capital includes staged inventory and cost of removal