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Cleaner air might force rise from below-the-national-average rate

Are higher rates coming for Mississippi Power customers?

GULFPORT – Will the quest for cleaner air end up raising utility rates for Mississippi Power Company (MPC) customers?

Overall rates at MPC are 20% below the national average in part because of the economy of producing electricity with MPC’s coal-fired power plants, Plant Watson in Gulfport and Plant Daniel in Escatawpa. Recently the U.S. Justice Department, on behalf of the Environmental Protection Agency (EPA), filed lawsuits alleging that 24 coal-fired power plants in the U.S. have operated without the best available emissions-control technology.

MPC was not part of that lawsuit, but was named as one of an additional eight power plants that received notices of violations for actions EPA alleged are similar to those at the other 24 power plants. EPA said the power plants, including MCP’s Plant Watson in Gulfport, have violated the Clean Air Act by making major modifications to their plants without installing the equipment required to control smog, acid rain and soot.

The action against all 32 of the power plants seeks significant civil penalties. The Clean Air Act authorizes civil penalties of up to $25,000 per day for each violation at each plant prior to Jan. 30, 1997, and $27,500 for each day thereafter. The Justice Department lawsuit alleges the power plants illegally released massive amounts of air pollutants for years, and contributed to some of the most severe environmental problems facing the U.S. today.

“When children have trouble breathing because of pollution from a utility plant hundreds of miles away, something must be done,” said Attorney General Janet Reno. “As a result of one of the largest enforcement investigations in EPA history, we are today taking action to cut illegal and excessive air emissions from 32 coal-fired power plants throughout the Eastern half of the U.S.”

MPC officials responded that the company was extremely disappointed and surprised at EPA’s action, because the company has been working closely with EPA over the last 18 months to address their concerns on the issue. MPC spokesman Kurt Brautigam denied that Plant Watson is in violation, and said the plant has been operating within permit limits. Brautigam said it was premature to discuss how much it might cost to install additional pollution control equipment at the plant because MPC will appeal the notice of violations.

“Obviously it would be a lot of money if we assume the worst, and we have to add scrubbers to all of our coal-fired production,” Brautigam said. “But we don’t think that will happen. We don’t think we have done anything wrong in maintaining our units. There will be a process to resolve this issue, and we will certainly work with the EPA to do that.”

While MPC had no estimates for upgrading pollution control technology, industry analysts have estimated that the cost of upgrading coal-fired plants to meet the standards that EPA wants would be in the range of $200 to $300 per kilowatt. A cost of $250 per kilowatt hours would result in costs of about $437 million to upgrade both Plant Watson and Plant Daniel. However, the current EPA notice of violation only involves one coal-fired unit at Plant Watson.

“They are saying that we have violated the regulations with Unit 5, one of the coal-burning units at Watson, by modifying the unit,” Brautigam said. “But we disagree with that contention. All we have done with that unit and the other units is to conduct routine maintenance in order to keep them as efficient and economical as possible, which is what any business would do as far as maintaining and protecting its investment. In doing routine maintenance, we do not believe we have created new sources of pollution.”

EPA Administrator Carol Brown said the companies named in the enforcement action were allowed to perform routine maintenance, but they were not allowed to make significant changes to the plant-such as increased generating capacity, increased burning of coal, or modifications that prolonged the life of the plant-without seeking permits and adding the best available pollution control devices.

“We charge these companies named in these actions spent hundreds of millions of dollars modifying these plant, increasing their life and increasing their pollution,” Browner said. “When Congress passed the Clean Air Act in the 1970s, it reasonably thought these old coal-fired plants would be replaced by newer, cleaner technologies. So it exempted these plants from meeting the tougher standards applied to new facilities as long as these ‘grandfathered’ power plants maintained the status quo.”

While MPC plans to appeal the violation, if the company loses it could affect costs for electricity.

“Obviously anything that impacts our costs could conceivably affect our pricing,” Brautigam said. “If we have costs added to our business, somehow we will have to recover our cost. But we don’t know that is going to happen. We firmly believe that we have not done anything that qualifies us for such measures.”

MPC is adding two new 530-megawatt natural-gas powered generating turbines at Plant Daniel is Escatawpa. Plant Daniel also has coal-fired production, but was built later than Plant Watson in Gulfport. Plant Daniel has more emissions controls, and burns lower sulfur coal than Plant Watson. Natural gas production produces less pollution, but Brautigam said the new gas-generating facilities will be used to meet the growing demand for electricity in the area, and will not supplant the company’s coal fired plants.

“Coal-fired plants are very reliable and economical,” Brautigam said. “Now we have the opportunity to add new generation using newest technologies available. In that sense we are going to be able to reduce emissions through gas-fired technology.”

The two new gas units are expected to be on line by spring 2001.

Chevron’s oil refinery in Pascagoula is the largest customer of MPC, and one of the largest customers for MPC’s parent company, the Southern Company. Steve Renfroe, public affairs manager for Chevron Mississippi, said he doesn’t expect Chevron to be affected by the EPA action.

“All of the electricity we use is generated at the refinery with natural gas turbines,” Renfroe said. “It is actually co-generation. The generators generate electricity, and the heat off of those turbines go through boilers to create steam that is used for refining processes. It is a very efficient process.”

Contact MBJ staff writer Becky Gillette at mullein@datasync.com.

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