Kemper Coal Plant — Are Commission conditions too much for Miss. Power?

Mississippi Public Service Commission approves clean-coal power plant with multiple conditions

Mississippi Power Company is taking a careful look at whether to build a $2.4 billion clean coal plant in Kemper County.

The Mississippi Public Service Commission voted April 29 to approve the plant – but with several conditions MPC says “seem to make it impossible” to finance or construct.

Commissioners Leonard Bentz and Lynn Posey approved the plant. Commissioner Brandon Presley voted no.

In its order the Commission imposed a cost cap of $2.4 billion, instead of the company’s recently proposed $3.2 billion. The Commission also denied the company’s request to increase customers’ rates to cover plant financing costs before a plant produces electricity, a practice called Construction Work in Progress (CWIP) in rate base.

MPC has said it must have permission to use CWIP or the company will not be able to get financing from investors.

The Commission said the CWIP provision may be revisited at a later date.

MPC has 20 days to agree to the Commission’s conditions or risk not obtaining approval.

The Commission is encouraging MPC to use Mississippi labor and resources in plant construction. Additionally, independent monitors will be hired to oversee the project’s costs.

MPC spokesperson Cindy Duvall said in a statement, ” The Mississippi Public Service Commission denied Mississippi Power permission to construct the Kemper County IGCC Project.”

Duvall cited the Commission’s order, which states that MPC’s proposal “does not satisfy the statutory requirement of ‘public convenience and necessity.’”

However, the Commission maintains it had approved the project and MPC has the opportunity to comply with its conditions and move forward.

The project would be the largest addition to a public utility in state history and would also have the distinction of being the first U.S. clean coal plant to capture carbon dioxide emissions.

Mississippi Economic Council President and CEO Blake Wilson released a statement saying Mississippi has an opportunity to become a leader in the nation in clean energy technology. “Unfortunately, the future of this plant is in doubt … We hope our state leaders will take another look so that we don’t miss this chance to make it possible for Mississippi Power to construct this plant and put Mississippi in the place of the greatest opportunity for our state’s economic development future,” Wilson said.

The plant would produce 582 megawatts of new generation and come online in 2014.

The Kemper County IGCC (Integrated Gasification Combined Cycle) Plant will be the first commercial-scale plant to use TRIG (Transport Reactor Integrated Gasification) technology for carbon capture. TRIG was developed by MPC’s parent, Southern Company, with its partner company, KBR, and the U.S. Department of Energy, which endorses the project.

The Commission conducted its first phase of hearings for the plant in October, after which is agreed with MPC’s projections that its service area of 23 southeastern Mississippi counties would need 400 to 1,300 megawatts of new generation by 2014.

At a second phase of hearings in February, the Commission evaluated alternatives to Kemper that would fill the energy generation need. One alternative considered was to delay plant construction and purchase power from independent power producers (IPPs) which are not regulated by the state.

The controversial plant has been touted extensively by Gov. Haley Barbour, numerous politicians, economic developers and Kemper County residents, who favor the job creation and tax revenues the plant would provide.

Kemper County is not part of MPC’s service area, and its residents will not bear rate increases that will pay for the plant.

Some MPC rate payers, particularly Gulf Coast residents, expressed disdain for the plant and the way in which it will be financed at two public meetings held by the Commission. Opponents have objected to the CWIP provision in state’s Baseload Act, as well as language in the act that allows a utility to recoup costs and a return for a plant regardless of whether a plant is ever completed or operates commercially.

The Sierra Club has also been vocal in its opposition to the project, which has received $270 million in DOE funds.

PDF of Order

PDF of Brandon Presley dissent

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4 Responses to “Kemper Coal Plant — Are Commission conditions too much for Miss. Power?”

1. Mississippi Business Journal » Blog Archive » Miss. Public Service Commission votes to conditionally approve $2.4 billion clean coal plant for Kemper County Says:
   April 29th, 2010 at 9:51 pm

   [...] See full story Close this Window Bookmark and Share This Page Save to Browser Favorites / BookmarksPrintRSS FeedAskbackflipblinklistBlogBookmarkBloglinesBlogMarksBlogsvineBuddyMarksBUMPzee!CiteULikeco.mmentsConnoteadel.icio.usDiggdiigoDotNetKicksDropJackdzoneFacebookFarkFavesFeed Me LinksFriendsitefolkd.comFurlGoogleHuggJeqqKaboodlekirtsylinkaGoGoLinksMarkerMa.gnoliaMister WongMixxMySpaceMyWebNetvouzNewsvineoneviewOnlyWirePlugIMPropellerRedditRojoSegnaloShoutwireSimpySlashdotSphereSphinnSpurlSquidooStumbleUponTechnoratiThisNextTwitterWebrideWindows LiveYahoo!Email This to a FriendCopy HTML:  If you like this then please subscribe to the RSS Feed. More » To sign up for Mississippi Business Daily Updates, click here. Four states discuss Entergy’s power purchasing practices [...]

2. Breaking News: PSC approves $2.4B Kemper Coal Plant | mirant blog Says:
   May 2nd, 2010 at 12:08 pm

   [...] Read more on Mississippi Business Journal [...]

3. Mississippi Business Journal » Blog Archive » BGR website has changed since MBJ Barbour/Kemper story was published Says:
   May 4th, 2010 at 10:28 am

   [...] Story: Kemper Coal Plant – Are Commission conditions too much for Miss. Power? [...]

4. Kemper plant: Yes or no? | Reily’s ramblings Says:
   May 4th, 2010 at 11:18 am

   [...] saying the company has decided not to build the plant, while the Mississippi Business Journal correctly reported that MPC was mulling its options. And today a company official said MPC will file for a rehearing [...]