Justices: Kemper County coal plant case is not about coal
by Amy McCullough
Published: December 15,2011
Tags: Associated Press, Bloomberg, Boyce Adams, Brandon Presley, Businessweek, Clarion Ledger, coal, construction, courts, election, electricity, electricity generation, energy, environment, Kemper, Kemper County Coal plant, Kemper County IGCC Project, lawsuit, Lynn Posey, Mississippi Business Journal, Mississippi Power Company, Mississippi Public Service Commission, power, power generation, Power plant, Public Service Commission, Reuters, utilities
>> KEMPER COUNTY CLEAN COAL PLANT HEARD BEFORE STATE SUPREME COURT
JACKSON — Three Mississippi Supreme Court justices say that so far, they can’t find the evidence that state regulators used to justify their decision to allow Mississippi Power Company to build a $2.4 billion clean coal plant under construction in Kemper County. If the high court rules that the Commission is in violation of state statute requiring it to present its findings in sufficient detail, the plant could be in jeopardy.
Justices Michael K. Randolph, Jess H. Dickinson and Randy G. Pierce heard oral arguments yesterday in Sierra Club’s appeal of its case against Mississippi Power and the state Public Service Commission
Environmentalist group the Sierra Club first sued the power company and state regulators in Harrison County Chancery Court after the Mississippi Public Service Commission gave the company permission to construct the $2.4 billion plant in May 2010. The Chancery Court upheld the Commission’s decision after a February hearing.
Sierra Club calls the plant “dirty, expensive and unnecessary” and is concerned about environmental and rate impacts to customers. As with all public utility infrastructure projects, over time customers must pay for the improvements plus interest to the company.
Of the three state Public Service Commissioners, Leonard Bentz and Lynn Posey voted to approve the plant, and Brandon Presley dissented.
In April 2010, the Commission issued an order stating that the project was too risky for ratepayers but could be allowed if the company met certain financial restrictions, one of which was capping the plant’s cost at $2.4 billion.
Mississippi Power filed for a rehearing, and in May the Commission issued a second order approving the plant with eased financial restrictions — including allowing a 20 percent cost overrun for the project, thus capping its cost at $2.88 billion.
The Sierra Club says the Commission’s May decision was arbitrary and capricious. They claim Bentz and Posey “flip-flopped,” overturning the Commission’s decision through the second order without sufficient effort in the record to support it. Also, Sierra says the Commission did not comply with state statute when it failed to detail the specific evidence from the record that would support its decision to ease Kemper’s financial restrictions.
At the hearing Justice Pierce asked: “What happened between April 29 and May 26 … What additional facts were submitted during that time frame that made the Commission feel comfortable …?”
Mississippi Power’s attorney Ben Stone said Sierra Club had brought the suit against Kemper because the group is opposed to all coal generation. The Kemper project, he said, is about “the future of coal generation in the world. It’s very clean. It’s very friendly to the environment.”
Justice Dickinson said the reason the Court was there was not to determine the merits of the plant but to determine whether the Public Service Commission had met its legal obligations.
Dickinson addressed the Commission’s May decision to ease financial restrictions on the plant, saying: “So far, I don’t find anything in the Commission’s order itself and haven’t yet found in the record what would help me understand that the Commission is justified in its conclusion that this risk is balanced.”
Stone never directly answered questions regarding what evidence was used to support the May decision. Additionally, Stone said Mississippi Power does not believe that the statute requiring the Commission to expressly detail reasons for its decisions applies in this case.
The Sierra Club’s attorney, Robert Wiygul, closed by saying that since the Commission did not spell out the reasons for its May order, the justices and others were left to speculate about what specific evidence was used to support its final decision.
Justice Pierce said he was concerned about the lack of detail in the Commission’s May order. In its April order, he said, the Commission expressed concern about the high risk of the project since it would be using new technology, but the May order did not state why the Commission’s concern was abated.
Justice Randolph said his obligation was to “make sure a governmental agency charged with this responsibility doesn’t throw a Solyndra on the ratepayers of Mississippi and that we don’t see another beef plant.”
The common term “beef plant” in Mississippi refers Mississippi Beef Processors, an economic development project for which the state co-signed more than $50 million of taxpayer funds before the company went bankrupt shortly after it opened in 2004.
Justice Dickinson said Kemper was “a very important case … a complex case that affects the lives of a lot of people” and said the Court would take its time to review the 30,000-page record and possibly require additional information from parties involved.
The Court could do a number of things, including requesting additional briefs, requiring supplemental information for the record and inviting the parties back for another hearing before all nine justices – an unusual requirement. After a case is argued, the Court usually rules within a nine-month period. Various rulings are possible, including a reversal or a remand to the Public Service Commission, which could require them to provide reasons justifying the May order.
Plans for the Kemper Count coal plant include using new technology to convert low-grade, on-site Mississippi lignite coal into a gas, which can be used to produce electricity. The plant — which will produce 582 megawatts of new generation and should be operational by 2014 — should be the first commercial-scale plant in the nation to capture a majority of its carbon dioxide emissions, thus making it clean.
The Kemper plant will serve nearly 190,000 Mississippi Power customers in 23 southeastern Mississippi counties. The Commission determined in early 2010 that additional electric generation would soon be needed in the Mississippi Power service area. A power plant fueled by natural gas was discussed as an alternative to the Kemper plant. Mississippi Power argued that generation fired by natural gas — the prices for which have been historically volatile – would be more expensive than using stable, lignite coal as a fuel source. Independent Power Producers, who sell supplemental, natural-gas fired electricity to utilities, intervened in the Commission hearings and noted that natural gas forecasts predict the fuel will have low, stable costs for the next 20 years, due to a new technology called “fracking” which has resulted in new and abundant supplies of natural gas.
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