Home > Mississippi Power Company, Mississippi Public Service Commission > Indiana coal plant’s rate impact will be smaller than Kemper’s

Indiana coal plant’s rate impact will be smaller than Kemper’s

Mississippi Power Co.’s Kemper County plant isn’t the only coal-fired generation facility the Sierra Club has fought recently.

In Indiana, Duke Energy is building an integrated gasification combined cycle plant that will use bituminous coal, which sits a little deeper in the ground than lignite, which is abundant in East Mississippi and will serve as the main fuel source for the Kemper plant.

The company is catching it from a number of consumer groups, to go with the Sierra Club.

Duke Energy recently settled a round of litigation sparked by who would pay for the plant, the company or its ratepayers. Much of the hand-wringing had to do with who would foot the bill for $920 million in cost overruns on the roughly $3 billion project.

The settlement terms spelled out the rate impact for Duke customers: Electricity bills would go up 14.5 percent as the plant’s costs (at least some of them) were passed through. Various media reports in Indiana said that without the settlement, ratepayers’ bills would go up 22 percent.

Why that’s interesting is lignite coal is cheaper to recover, because its beds are generally closer to the surface than those of traditional coals like bituminous, making it easier to mine. The Kemper plant will use lignite, and like the Indiana plant, its costs — up to $2.88 billion — will be passed through to Mississippi Power ratepayers. It’s worth noting, though, that the ratepayer cost cap for the Indiana plant is $2.59 billion, about $300 million less than the Kemper facility. A really good overview of the plant’s finances can be found here.

The April 24 order the Mississippi Public Service Commission issued granting a new certificate of public convenience and necessity for the Kemper plant said rate increases would peak at 30 percent in 2014, when the facility is scheduled to start commercial operation, before declining as Mississippi Power pays off the plant’s debt. That figure was arrived at after months of proceedings before the plant was approved, litigated and approved again last week.

The 30 percent number differs from documents MPC filed with the PSC in 2009, in response to a set of data requests from Florida-based Entegra, which wanted to know how the plant would affect power bills in South Mississippi. Mississippi Power filed the information confidentially, but the Mississippi Business Journal obtained it via an open records request in 2010.

The rate impact data MPC filed then said hikes would be a touch more than 45 percent. That number has been disputed recently, most vehemently by Southern District Commissioner Leonard Bentz, whose territory includes the vast majority of Mississippi Power’s 186,000 customers.

  1. No comments yet.
  1. No trackbacks yet.