A final vote is near
by Amy McCullough
Published: May 21,2010
Mississippi Power won’t unveil how much of an increase plant would mean to ratepayers
The Mississippi Public Service Commission is set to vote Wednesday on Mississippi Power Company’s request for a reconsideration on its $2.4-billion proposed Kemper County clean coal plant.
MPC has said that restrictions imposed by the Commission in a recent order — including a $2.4-billion price cap — would make the plant impossible or costly to finance, which would translate into higher rates for its customers.
While expressing concern for customer rates, MPC has still not released rate impact information estimating cost increases in real dollars. That information was filed confidentially with the Public Service Commission. MPC’s 190,000 customers in 23 southeastern Mississippi counties have little idea how the plant would affect their monthly electric bills.
Under state law, a utility is allowed to designate as confidential any information it wants to keep out of the public view. To gain access to confidential documents, a public records request must be filed by a third party, and Hinds County Chancery Court must rule to release the information.
Mulling the Cost of Kemper
Mississippi’s only other utility project with high capital costs comparable to Kemper is Entergy Mississippi’s Grand Gulf nuclear station in Port Gibson.
Although the plant has operated since 1985, Entergy’s customers in 45 southwestern Mississippi counties are still paying for their $1-billion share of the multi-state project.
Kemper, which would gasify lignite coal, is the largest proposed addition to a utility in state history.
Grand Gulf’s original cost estimate was $1.2 billion for two reactors. Cost overruns totaled 400 percent, and the final bill for one reactor totaled more than $3.5 billion.
Customers are still being billed approximately $150 million per year for the reactor, said Virden Jones, Mississippi Public Utilities Staff director of electric, gas and communications. “But it is the cheapest energy we have now” due to low fuel costs, he said.
The original rate shock of the plant was almost 60 percent, most of which was phased in over 15 years. The highest adder to base rates was 53 percent, which occurred between March and Sept. 1994.
The U.S. Supreme Court in 1988 ordered Mississippi to pay for 33 percent of the project’s cost, as ordered by the Federal Energy Regulatory Commission.
Although the number of Entergy (then MP&L) customers at the time of the plant’s construction could not be obtained by the Mississippi Business Journal, the company currently serves more than 400,000.
Mississippi Power Company CEO Anthony Topazi has said rates will “go up about a third” regardless of whether MPC builds Kemper or not. The plant is scheduled to operate commercially by 2014.
The alternative to the project would be to use natural gas-fired generation. Gas prices, which have been volatile historically, are now some of the lowest and most stable they have been in years. Natural gas advocates argue that the gas market has been radically changed due to recent technological advances enabling producers to reach unprecedented gas reserves from fracturing shale rock.
MPC believes lignite, a low-cost fuel available in Mississippi, will save customers money over time. Fuel costs for lignite, a low-rank coal, which is not traded on the market, would be stable and could be locked in for decades.
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