SMEPA to buy power plant; county watching with concern
Published: August 15,2012
BATESVILLE — South Mississippi Electric Power Association plans to buy a Batesville power plant for almost $286 million, a spokeswoman said yesterday.
SMEPA spokeswoman Sara Peterson said the utility won a bankruptcy auction Monday to buy the assets of LSP Energy.
Hattiesburg-based SMEPA generates and transmits power to 11 cooperatives in southern and western Mississippi. Those cooperatives serve more than 400,000 customers combined.
Peterson said SMEPA has been buying a third of the 837-megawatt plant’s power under a long-term contract since 1998. SMEPA had originally bid $249 million for the plant, but Peterson said that bid was rejected, leading to an auction in federal bankruptcy court in Delaware, where the case was filed earlier this year.
Panola County officials have been watching the sale closely because SMEPA is mostly tax-exempt. The county and South Panola schools would lose $4.4 million a year in property tax revenue if the plant leaves the tax rolls. The city of Batesville would still collect $800,000 a year in property taxes. LSP owes back taxes to the county and schools; those would get paid if the case settles.
LSP said it had to file for bankruptcy because one of its three power units broke down, leaving it without enough revenue to operate and make its long-term debt payments. The company owed more than $200 million to bondholders.
Peterson said the purchase furthers SMEPA’s long-term goal of owning more generation, rather than buying power from others. SMEPA currently buys 28 percent of its electricity from Mississippi Power Co.
“It’s kind of like going from renting your house to owning your house,” Peterson said.
Right now, SMEPA has seven power plants, including a coal-fired plant near Purvis and 10 percent of the Grand Gulf nuclear plant near Port Gibson.
Peterson said the purchase doesn’t affect SMEPA’s plans to buy 17.5 percent of the $2.8 billion coal-fired power plant that Mississippi Power Co. is building in Kemper County. Opponents of the Kemper plant had claimed the Batesville purchase meant SMEPA, which has yet to go through with the deal, could back out in the face of $400 million in cost overruns. Peterson said those claims were “complete speculation.”
She said the Kemper purchase is aimed more at satisfying SMEPA’s need for baseload generation, the kind that runs all the time to meet basic electricity needs. The Batesville plant probably won’t be used as baseload, Peterson said.
She also said that SMEPA wants to make sure that it doesn’t become overly dependent on one kind of fuel, to guard against price fluctuations.
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