Kemper Update: PSC Resource Hearings on Kemper County Coal Plant

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Published: February 2,2010

The Public Service Commission’s resource hearings for a proposed $2.4 billion clean coal plant in Kemper County began Monday with questions to utility representatives about plant financing.

Mississippi Power Company’s President and CEO Anthony Topazi testified that the Kemper plant is the “least cost overall option for our customers.”

The plant would gasify lignite coal and produce more than 500 megawatts of new generation for nearly 190,000 customers in MPC’s service region of 32 southeastern Mississippi Counties.

Topazi said MPC’s generation mix is currently too dependent on natural gas and coal for electricity production, and power from lignite coal would offer diversity as a “third fuel.” The new plant would be the mainstay of MPC’s power production, as two of its other plants are approaching retirement age.

The Commission determined in previous hearings that were was a need for new power generation in the MPC service area. Alternatives to building a new plant in Kemper are power purchase contracts with Independent Power Producers (IPPs). IPPs that have submitted proposals and intervened in the hearings are KGen Power, Calpine Corporation and Entegra, which all have natural gas plants that are approximately 10 years old.

Other interveners in the hearings are the state Attorney General and the Sierra Club, an environmentalist group. The South Mississippi Electric Power Association (SMEPA) is also participating and have submitted a letter of intent to MPC to purchase 20 percent of Kemper.

MPC Vice President of Generation Development, Thomas Anderson, was scolded several times by Commission Chairman Brandon Presley for failing to answer direct “yes or no” questions regarding whether MPC would seek to cover certain plant costs through ratepayers.

If the plant is approved by the Commission and the Legislature’s Baseload Act is applied, MPC can recover all costs and cost overruns through its customers.

Dr. Roach, and independent consultant with Boston Pacific hired by the Commission, questioned whether the contingency of $162 million for cost overruns was sufficient. “It’s my gut feeling that we would need a much larger contingency,” he said.

Presley asked if Anderson if the utility was willing to guarantee that the plant’s new clean coal technology would work.

“No,” Anderson said.

Presley also asked a panel of MPC representatives if they could tell him whether the utility would consider sharing the revenues of the new technology with Mississippi ratepayers if it is successful and later deployed nationwide.

The panel said it could not answer the question. Presley asked for the question to be filed as a data request.

The Kemper plant would be the first plant in the nation to capture carbon dioxide for sale for Enhanced Oil Recovery.

 

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