In the recent article on electric utility audits (“Mississippi PSC selects companies to perform electric utility audits” 10/31/2010), the reporter wrote, “In instances where an outside source, such as Independent Power Producer (IPP), can generate cheaper power, utilities are required to buy that electricity.”
Typically, electric utilities are held to standards to provide customers electricity in a reliable and safe manner and at the lowest reasonable cost. In Mississippi, some IPPs provide valuable services to utilities and to Mississippi electric customers. For example, Tennessee Valley Authority (TVA) has a long-term contract to buy power from the GDF Suez’s Red Hills Power Plant in Choctaw County.
There seems to be a basic conflict between utilities and IPPs. Utilities produce power at the lowest reasonable cost, but the goal of IPPs is to obtain the highest possible price for their product — in Mississippi or out-of-state. To that end many IPPs oppose the construction of new generation facilities by utilities. Magnolia Energy and Entegra Power filed complaints with the PSC against Mississippi Power’s Kemper County clean coal project.
There is another cost component associated with IPP plants, and that is transmission, or delivery of their product. IPPs build power plants and expect to sell their electricity using transmission systems built by utilities and paid for by Mississippi utility customers. At times IPPs complain about being limited in their ability to deliver power because the lines carrying the power are being used to deliver power to ratepayers. In many instances, they have chosen not to invest in transmission. It makes you wonder why Mississippi utility customers should subsidize out-of-state owned IPPs so they can sell power at the highest possible price.