JACKSON — The Mississippi Public Service Commission today delayed hearings on whether Mississippi Power Co. has spent prudently in building the $5.5 billion Kemper County power plant.
Prudency hearings are a key step in the company collecting from its 186,000 ratepayers to pay for the plant, even though rates have already risen 18 percent. The unit of Atlanta-based Southern Co. is already absorbing $1.5 billion in overruns from the plant, but could be forced to absorb more if the commission finds spending was imprudent.
In a 2013 agreement between the commission and Mississippi Power, commissioners agree to review spending on Kemper by the middle of that year. But that initial round of prudency hearings to consider the $2.75 billion spent on the plant through March 31, 2013 was pushed back, with hearings supposed to start Sept. 8. Another round of hearings was supposed to follow after the plant goes into commercial operation in the first half of 2015, gasifying coal, and burning the gas to generate power while removing chemicals.
But today’s vote means there will only be one round of hearings, and it won’t come until after the plant proves that it can operate reliably. Though construction is mostly complete at what the company calls Plant Ratcliffe, a similar gasification plant built by Duke Energy in Indiana had a rocky startup. Shawn Shurden, a lawyer for the commission, cited “the ongoing concern and uncertainty relating to cost, availability and viability of the plant” as a reason for the delay.
Northern District Commissioner Brandon Presley, a Democrat, has long wanted to wait until completion to review spending. The other two commissioners joined him yesterday. Southern District Commissioner Steve Renfroe, a Phil Bryant appointee who doesn’t publicly identify with a party, said he wanted to see how the plant would operate before deciding if spending was wise.
“If we’re going to do prudence, let’s make sure we have all the information,” Renfroe said. “Now we’re going to do it all at one time.”
Commissioners said the delay wasn’t related to the settlement announced yesterday between Mississippi Power and the Sierra Club.
Mississippi Power spokesman Jeff Shepard said the delay would have no financial effect on the company.
“We believe all costs incurred during the construction of Kemper are prudent, and look forward to taking part in the full proceeding after the plant goes into service,” Shepard wrote in an email.
Filings by the Public Utilities Staff in the prudence case continue to question Mississippi Power’s decision to start work at a point where only about 10 percent of engineering work had been done.
Also today, the commission ordered Mississippi Power to file documents on its plan to use part of the plant to burn natural gas from a pipeline before the coal gasifier begins operation. Shepard said Mississippi Power hopes to have those turbines in operation by the end of this summer.
In a related item, Hattiesburg businessman is not giving up on his challenge to the Kemper County plant.
In a motion filed yesterday with the Mississippi Supreme Court, Thomas Blanton asked the justices to delay dismissing lawsuits against the power plant until they address his constitutional challenge to the 2008 Baseload Act. The law allows utilities to raise rates to pay for new power plants before they begin generating electricity.
Blanton, who has aimed his lawsuit at Kemper, says collecting from customers before a power plant is turned on is unconstitutional.
His motion was filed the same day the Sierra Club and Mississippi Power settled their differences and would seek dismissal of all lawsuits against the Kemper plant.
The Supreme Court consolidated Blanton’s lawsuit with two others challenging Mississippi Power Company’s construction of the plant in eastern Mississippi.
Blanton argues in his motion that dismissal of the lawsuits is not in the best interest of the public.
The court has not ruled on Blanton’s motion. The court has also not ruled on the motion filed by the Sierra Club and Mississippi Power.
Mississippi Power spokesman Jeff Shepard said company officials were reviewing Blanton’s motion.
In their motion to dismiss the lawsuits, the Sierra Club and Mississippi Power said other parties “have been consulted and state that they do not object to this motion.”
Blanton said he was unaware of the settlement talks between the Sierra Club and Mississippi Power.
He said the settlement proposal “will result in circumstances which are onerous to the public and potentially dangerous to the economic well-being of the Mississippi public, both at large and with specific reference to the customers of Mississippi Power Company.”
Mississippi Power and other utilities backed the Baseload Act, which was also supported by then-Gov. Haley Barbour.
In the settlement announcement Monday, Mississippi Power said it will convert several units from coal to natural gas at plants in south Mississippi and Greene County, Alabama, or else retire them.
The Sierra Club will drop regulatory challenges before the Public Service Commission and legal appeals pending in local and state courts.
Mississippi Power will establish a $15 million fund to provide low-income residents with insulation, energy-efficient appliances and other ways to save on their bills. The fund also will be used to provide grants for schools and charities for solar and other renewable energy.