Magnolia Marketplace

The Mississippi Public Service Commission voted 2-1 Tuesday morning to reissue the certificate of public convenience and necessity for Mississippi Power’s coal-fired plant in Kemper County.

Northern District Commissioner Brandon Presley was the dissenting vote.

The Mississippi Supreme Court ruled in March that the PSC failed to cite sufficient evidence from the record in granting the first certificate. The court’s 9-0 ruling kicked proceedings back to the PSC. Preserved in the latest certificate is the $2.88 billion cap on construction costs MPC can pass to its ratepayers. Any cost overrun above $2.4 billion still must be approved by the PSC. Also, any construction costs above $2.4 billion cannot be recovered until the plant is in commercial operation.

MPC spokesman Jeff Shepard said after Tuesday’s hearing the plant would begin full-scale commercial activity in May 2014.

Louie Miller, executive of the Mississippi chapter of the Sierra Club, said after the meeting his organization would file for a stay on Tuesday’s ruling by the end of the day. It was unclear whether that filing would be made in Harrison County Chancery Court or with the Mississippi Supreme Court.

Mississippi Power Co. is asking the Public Service Commission to allow it to exceed the $2.88 billion cost cap on its Kemper County coal plant, under certain conditions.

Those are claims the Sierra Club, an opponent of the plant, made in a conference call Monday.

The company filed April 12 a revision to its proposed final order (which it filed April 2) that essentially seeks permission to go beyond the cost cap as long as it:

* Produces what the company calls “efficiencies” that are netural or favorable to the ratepayer. In other words, as long as it doesn’t cost the ratepayers any more money, or it saves ratapayers money over the life of the plant.

* The proposed cost increase is accompanied by an equal or greater revenue requirement decrease  associated with one or more of the other estimates (like operational performance or sales of byproducts) in the company’s original proposal.

* The cost increase is caused by a natural disaster, terrorist strike, change in utility law, some sort of sabotage or a related event.

* To the extent the PSC does not allow 100 percent construction work in progress (CWIP), which MPC assumed when it made the $2.4 billion cost estimate, it will allow an increase in that figure to reflect the allowable funds used during construction (AFUDC) that CWIP would have obviated.

Mississippi Sierra Club’s Louie Miller said what MPC is asking for amounts to the company “reneging on everything they’ve agreed to.”

“We’re going from a mandatory-type environment to a permissive environment. This is what we’ve been concerned about all along.”

Commissioners have called a special meeting for Tuesday morning, where they will take up the Kemper project.

UPDATE: MPC spokesperson Jeff Shepard said after Tuesday’s hearing that the company was not trying to exceed the outer hard cap of $2.88 billion, but trying to “supplement the record” with more information.

The Mississippi Public Service Commission will hold a special meeting Tuesday, and only two items are on the agenda.

One of those is Mississippi Power Company’s Kemper County coal plant. The other has to do with Willmut Gas and Oil Company and EnergySouth seeking approval of a transfer of control. Obviously, one will get a lot more attention than the other.

Commissioners have had a couple weeks to review the three proposed final orders they received related to Kemper. The Sierra Club and Entegra Power Group, a Florida-based company that operates and markets electric power from natural gas-fueled power plants to wholesale customers, each proposed that the PSC reopen the Kemper docket with the aim of exploring options to include natural gas instead of lignite coal as the plant’s main fuel source.

Mississippi Power proposed an order that the PSC re-issue the certificate of public convenience and necessity for the plant. Commissioners can adopt one of the three orders, or issue their own.

Central District Commissioner Lynn Posey told the Mississippi Business Journal in early April that it’s almost certain Commissioners will issue their own order. He added that it would probably contain parts of each of the three proposed orders, but wouldn’t go into detail beyond that.

Tuesday’s agenda says there will be discussion “and possible action” on the two agenda items. So it’s no guarantee the PSC will do anything definitive. Like every other Kemper hearing, though, Tuesday’s should be a show.

The Mississippi Public Service Commission held its regularly scheduled meeting Tuesday morning, and it was more noteworthy for what happened afterward than what happened during it.

The good news: Southern District Commissioner Leonard Bentz finally spoke with a reporter about Mississippi Power’s lignite coal-fired generation plant in Kemper County. The bad news: It was a brief conversation.

“Y’all haven’t printed one thing that’s accurate,” Bentz said, referring to the Mississippi Business Journal’s coverage of Kemper from the PSC’s 2010 approval of the $2.8 billion plant to the Mississippi Supreme Court’s recent ruling that the Commission’s decision to grant a certificate of public necessity and convenience was not based on “substantial evidence presented.”

Bentz wouldn’t say what he felt was inaccurate. “Just quote that,” he said, walking away and pointing his finger at a reporter. “Quote that.”

Bentz joined Central District Commissioner Lynn Posey in 2010 in granting the certificate for the Kemper plant. Northern District Transportation Commissioner Brandon Presley dissented.

The Mississippi Chapter of the Sierra Club challenged the project in Harrison County Chancery Court, which ruled in favor of MPC. After the Sierra Club appealed, the state’s high court ruled 9-0 that the PSC would have to revisit the facts that led to it approving the project. Last Friday, the PSC voted — with the same split – in a 45-second hearing to temporarily authorize MPC to continue construction on the project.

Posey has not spoken with the media since the court’s decision, either.

Presley has said repeatedly that while he’s not against the use of coal to generate energy, he would rather MPC pay for the project itself, rather than passing the cost through to its ratepayers via increased power bills.

An MPC spokesperson said after last week’s hearing that the company has spent $1.1 billion on the project, most of that paying for the installation of underground utilities.

The Mississippi Public Service Commission voted 2-1 Friday morning to allow — at least temporarily — Mississippi Power Co. to continue construction on the Kemper County coal plant.

Northern District Commissioner Brandon Presley was the dissenting vote.

Commissioners will hold another hearing Tuesday morning to decide if they will issue a permanent certificate of public necessity and convenience. Friday’s hearing was in response to a 9-0 ruling in mid-March by the Mississippi Supreme Court that said the PSC — in the same 2-1 split — decision in 2010 that moved Kemper forward was not based on “substantial evidence presented.”

In his written dissent, Presley cited John Conlee’s classic country music hit “Rose Colored Glasses,” writing that “the rose colored glasses allow the majority to bypass state laws about certificate proceedings, redefine ‘temporary,’ and brush away apparent cost overruns while forcing customers to bear risk for untried technology.”

Presley, the only commissioner to speak to reporters, said after the hearing — which lasted less than one minute — that “(MPC) is already in a too-big-to-fail scenario. I guarantee you we’ll be bailing them out eventually, and I’m against that kind of corporate socialism.”

MPC spokesman Jeff Shepard denied that the coal-fired generation plant is experiencing cost overruns. He added that the company has spent $1.1 billion on the project since construction started in 2010. Construction is expected to finish in 2014. Halting construction would lead to massive cost overruns, he said, noting that contractors who have already been hired would continue to bill the company.

“The cash register is ringing the entire time,” he said.

Mississippi Sierra Club director Louie Miller called Friday morning’s hearing “patently illegal,” saying that such hearings should contain public testimony. “The reason they haven’t opened this docket up is because they know it couldn’t stand the light of day,” he said, adding that the Sierra Club will appeal Friday’s decision, whose legal journey will most likely lead right back to the Mississippi Supreme Court.

UPDATE: A small correction: I just finished reviewing the docket for Tuesday’s meeting, and Kemper isn’t on there. It could be added, up to 24 hours before the meeting. Or, if commissioners want to add it during the meeting, they could, if all three agree to do so. That’s highly unlikely. It’s also unlikely that it will be on the docket if it’s not on there by now.

That said, the issue will be taken up either at the PSC’s next regularly scheduled meeting in May, or during a special called meeting in April. Sorry for that confusion. Y’all have a good weekend.

In advance of Friday morning’s hearing, Mississippi Power Co. filed Thursday a motion asking the Public Service Commission to issue a declaratory opinion affirming that the certificate of public convenience and necessity the Commission issued for the Kemper County coal plant last year is still valid.

The Mississippi Supreme Court ruled 9-0 March 15 that the PSC’s split decision to grant the certificate in 2010 was not based on “substantial evidence presented.” Northern District Commissioner Brandon Presley voted against the project. The Southern District’s Leonard Bentz and Lynn Posey of the Central District voted for it.  MPC said shortly after the high court’s ruling that it would continue construction on the project.

What MPC is asking commissioners to affirm is that, essentially, the Supreme Court’s ruling does not disallow construction on the $2.88 billion project from continuing.

The motion says that stopping construction would do “significant and potentially irreparable harm to MPC and its customers and to ensure the timely and cost-effective completion of the Kemper Project in order to assure maintenance of adequate service to customers.”

Commissioners will take up the matter Friday at 9 a.m. in the PSC meeting room of the Woolfolk building in Jackson.

The Mississippi Supreme Court ruled 9-0 Thursday afternoon that the Mississippi Public Service Commission’s decision to allow Mississippi Power Co. to build a lignite coal-fired power plant in Kemper County was not supported by “substantial evidence presented,” as mandated by statute.

The Sierra Club had sought to halt the project in Harrison County Chancery Court, which ruled in favor of the company. The Sierra Club appealed that decision to the high court last year.

The PSC voted 2-1 to allow the project to proceed. Northern District Commissioner Brandon Presley was the dissenting vote.

“I think this puts us back to square one,” he said, referring to the Supreme Court’s decision to remand the case back to the PSC for further proceedings. Presley said the Commission was checking with its legal counsel to see if MPC had to halt construction, which started last year. He added that MPC had alerted PSC monitors last week that it anticipated cost overruns on the project.

Opponents of the project argued from the outset that the technology MPC planned to employ at Kemper was unproven, making the $2.88 billion plant an enormous risk for the company’s ratepayers, who would pay for construction with increased power bills. The company revealed in filings with the PSC that, on average, power bills would rise 45 percent.

I have a phone message in to MPC spokesperson Cindy Duvall. If and when she responds, I’ll post it.

UPDATE: Duvall just responded via email. “We have received the Mississippi Supreme Court’s order and are presently reviewing it,” she wrote.

Northern District Public Service Commissioner Brandon Presley spent the better part of 40 minutes addressing the crowd at the Stennis Capitol Press Corps luncheon.

While Presley didn’t break any new ground in his remarks about Mississippi Power Company’s plans to build a lignite coal-fired electric plant in Kemper County, he did reinforce his position that the plant represents a huge financial risk for MPC’s 190,000 customers in South Mississippi.

Specifically, Presley said the mechanism that allows MPC to charge its ratepayers for the cost of the facility as it’s being built — known as Construction Work in Progress financing — is particularly unnerving for him.

“All risks and all costs will be borne by the ratepayer,” he said.

Also, the technology the plant will use to generate electricity is new and unproven, Presley said, adding that “we can’t get anybody to put a stamp of approval on it, to promise us that it’s going to work.”

Presley went out of his way several times to say that he hoped the plant was successful, but his was the lone dissent when the PSC held a final vote on the issue.

“I hope the majority of the Commission’s crystal ball is a good one,” he said. “We’re spending other people’s money. I hope and pray it works. If (electric) rates go up, we’ve just made it harder for somebody to go into small business.”

The prudent thing to do, Presley said, would have been to delay the project until some of the murkier issues surrounding the technology are resolved. The unpredictability surrounding things like cap and trade and natural gas prices also presents a risk for jumping head-long into the plant immediately.

“This may be a wonderful project, but there’s no harm in waiting,” Presley said.

UPDATE: See video of Presley’s speech here.

So it seems as if the cap BP installed over the leaking oil well in the Gulf of Mexico might be working, at least slightly, depending on who you ask.

If the leak was stopped completely right now, the clean-up and aftermath of billions of gallons of oil floating in the Gulf would be astronomical and take many years to complete.

We’re working on a package of stories for next week’s MBJ taking a look at some of the economics of the disaster.

In other energy news, Northern District Public Service Commissioner Brandon Presley will address the crowd at today’s Stennis Capitol Press Corps luncheon. Presley cast the sole “no” vote on Mississippi Power Company’s bid to build a lignite coal-fired electric plant in Kemper County. Presley is never shy about giving his opinion, and today should be no different. Magnolia Marketplace will have the particulars of his speech as soon as we can.

Is there anything better than the first sign of autumn? Yesterday evening just before sunset, as I made the final approach to the barn on the Official Horse of Magnolia Marketplace, the temperature had settled into the 60s and brought a welcome contrast to the broiler of the past few months. Swell. Just swell.

Anyway, there are a few items to pass along.

I’ve been meaning to post this since Friday, but it has somehow escaped the to-do list. Lake Caroline Golf Club, which is reopening after lying dormant for two  years, rolls out the welcome mat tomorrow. Randy Watkins bought the place and has been refurbishing the course and clubhouse the past few months. Kyle Sisk, Caroline’s director of golf and an Official Friend of Magnolia Marketplace, has worn just about every hat imaginable as he oversees the day-to-day operations, refereeing subcontractors and groundskeepers, coordinating a marketing campaign and squeezing in a few hours’ sleep.

The course looks ready. After a sneak preview  Saturday, Magnolia Marketplace is proud to report the clubhouse is ready and the LCD televisions on the wall project college football games beautifully. Well done, Messrs. Watkins and Sisk.

The Mississippi Public Service Commission and Mississippi Power Co. will tee it up next week. The Commission will hold Phase I hearings on the company’s petition to seek a Certificate of Public Convenience and Necessity for its Integrated Gasification Combined Cycle plant in Kemper County.

The IGCC plant, says the company, would capture 65 percent of carbon dioxide emissions and employ lignite to power the process. Mississippi Power estimates the $2.2 billion project would generate 260 jobs once it came online. Ideally, the company would like to begin construction next year and begin operations at the plant in 2014. That might be a tad optimistic, because several environmental groups, including the Mississippi chapter of the Sierra Club, oppose the plant and would probably challenge it in court.

The hearings run Monday through Thursday next week in the PSC’s courtroom on the first floor of the Woolfolk Building.