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If MPC wants to build coal plant, it should do so with private financing

Wed, Dec 30, 2009

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In the grand scheme of things, it’s hard to be critical of a company that is trying to grow, create more jobs and make America more energy independent.
Unfortunately, Mississippi Power Company (MPC) doesn’t have all of its ducks in a row in regard to building a $2.4-billion lignite coal plant in Kemper County at the ratepayers expense.
Mississippi Power would like for its ratepayers to trust them when it says there is a need for a new plant, and that the reason it is needed is because natural gas is too volatile of a commodity to be trusted as a primary source of energy spanning the next 25 years.
A couple of weeks ago, Mississippi Power was given the opportunity to respond to comments from experts saying that because of recent discoveries of natural gas, an increase in production has lowered the commodity’s price, therefore contradicting MPC’s “need” to build a new lignite coal power plant.
MPC’s CEO Anthony Topazi did not respond to interview requests at the time.
However, we did provide testimony Topazi made before the Mississippi Public Service Commission, where he said “gas is simply unpredictable.”
“Any long-term energy strategy,” he said, “that is relying on some optimistic forecast for natural gas is dangerous and exposes our customers to enormous cost risks going forward.”
After the story ran, MPC asked for an editorial board meeting with us to explain in detail the issues it has with natural gas pricing.
In that meeting, Mississippi Power reiterated its position it had made to the Public Service Commission that natural gas is too volatile. Using their experts’ range of natural gas forecasts, they had determined that energy from lignite coal would be cheaper for customers than energy from natural gas over the life of the plant.
“Great,” we said. “Put us in touch with those experts, so we can put their comments on the record.”
They wouldn’t do that, citing competitive reasons.
They told us to contact an expert twho had testified before the Public Service Commission. We did.
He declined to be interviewed.
So, we asked to see the MPC forecasts it was providing to the Public Service Commission.
They wouldn’t do that.
What we were left with for another story is a lot of experts who have continually said that while natural gas has been volatile in the past, it will not be in the foreseeable future.
In fact, just a week after Mississippi Power submitted its findings to the PSC, but made them unavailable to the public, the federal Energy Information Agency released its latest findings.
The results from the EIA shows gas prices rising at a consistent rate over the next 25 years. However, at the end of 2035, prices will only be two cents more than they were two years ago.
That is hardly volatile.
Mississippi sits on a gigantic pile of lignite coal.
Mississippi Power believes it has new cutting-edge “clean coal” technology that can put Mississippi on the map. MPC believes it can make money doing that.
Great.
But don’t make the case for the plant with claims that cannot be backed up in a public forum, particularly when the public is going to be on the hook for billions of dollars.
As stated before, we would love to see Mississippi Power Company grow, create more jobs and make America more energy independent.
It just seems that the ratepayers of Southeast Mississippi ought not be on the hook for the bill, if it doesn’t work out.
Mississippi Power Company should get private financing for its project. The model of putting everyday Mississippians on the hook for the financing this project is not a good one, particularly since the plant is not expected to provide savings for customers until 2024.

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89 Comments For This Post

  1. Pim Says:

    I see the Sierra Club at work here in this report, I paid more for gas this year and I know it will be higher next, with new discovery of gas also comes the cost of extraction it..Gas fired will also have an increase in rates when Cap and Trade is passed..Look at the Lignite plant Red Hills…..I see nothing wrong with the plant and if Sierra Club and it’s supporters are up to a Challenge I CHALLENGE them to come up here and dodge the wild life for a couple of weeks……..Look to the tree tops for any damage to the environment,(that is where pollution will be present first) you wont find any damage….I live here and heard all the scare tactic before Red Hills was developed ..
    Look at the jobs and the flow of money into the area while construction is ongoing…Ask the people of Ackerman,Ms ,if they enjoyed an increase in sales , ask questions of people in the area of a lignite plant,before you pass judgment …
    I support this plant being built and I suggest the Mississippi schools start teaching welding pipe fitting,and basic electrical in High Schools, it’s time to get the most out of federal funding for our school children,and they need skills,a trade they can leave school with and support themselves with…sports is not a skill……..computer training?? excuse me but computers are pretty much self explanatory…
    and explain to me what kind of skill a false history is??
    Maybe a start to a political skill……..
    The point is the plant will not hurt anything and it will provide thousands of unemployed Mississippi CITIZENS with jobs while being constructed, are you aware that Brown & Root pays helpers 10 to 18 bucks an hour, and those people without a skill can get one while working this one project….allowing them the ability to continue to excel and earn 20 to 32 an hour…….come on guy get your head out and straighten yourself up,bring yourself to our neck of the woods and talk to those who work at an operating plant…Look around at what it has done and look at the livestock right outside it’s fencing..look at the recovery system the plant has done,even in the winter it looks nice..
    I think you are under the impression that drilling for gas is cheaper,but son ,a company can drill 3 or 4 wells only to find they have to cap them off..look through the woods of Arkansas and you will find thousands of wells that have been capped.
    Could it be you have a connection to the gas industry,and would profit from this new UNION laid pipeline?? I do believe so…….

  2. Julia O'Neal Says:

    Well and succinctly expressed. It seems every week there is a story in The Wall Street Journal about new methods of extracting natural gas and/or new estimates for larger reserves. Natural gas emits a little over 1/2 the CO2 of coal: http://www.naturalgas.org/environment/naturalgas.asp. Add to that the idle natural gas generating plants in our state (because MS Power doesn’t own them and won’t buy from them) and there is simply no good reason for the Kemper plant.

    Let us hope the PSC reads this editorial, and that MS Power’s “forecasts” see the light of day for rational analysis.

  3. Charles Quitman Says:

    Mississippi Power Company certainly could get private finance for its project, but then those finance costs and the interest on billions of dollars would be passed on to ratepayers. The method MPC advocates cuts out increased financing/interests costs to ratepayers, keeping rates lower. The method you advocate would require rate increases to pay for the financing/interest of the plant. Either way works for MPC, but only one way is better for ratepayers.

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