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Kemper coal plant hearings wrap up

Public speaks out on both sides of the issue of whether ‘clean coal’ plant should be authorized

On Feb. 5 the state Public Service Commission wrapped up its week-long resource hearings for a proposed $2.5-billion clean coal plant in Kemper County with a public forum at which more than 40 speakers were divided evenly on support or opposition to the plant.

More than 100 attended the three-hour session, which began as standing room only, in Jackson’s Woolfolk state office building.

Many citizens, politicians and economic developers focused on the positive economic impact  the plant proposed by Mississippi Power Company (MPC) would have for Kemper County, which badly needs jobs.

Those opposed expressed concern over environmental issues and cost of the plant to ratepayers.

Several speakers thanked the Commission for conducting the hearings and said they had watched the hearing online at the Public Service Commission web site.

Some speakers said they had visited the Ackerman lignite mine operated by North American Coal, the company that will be mining the proposed Kemper site, and touted the mine’s dedication to reclamation of land after mining.

Hart Nester, a Kemper County retired school teacher, was one of two speakers who said he had  visited the Alabama research facility where the Kemper plant’s new clean coal technology was developed. Nester said he supported the proposed facility “100 percent.”

Blake Wilson, president of the Mississippi Economic Council, said baseload energy generation is an important economic development tool. A long-range, stable source of power is needed to recruit industry, he said. Southern Company (MPC’s parent) has a history of working for the communities it serves, and the plant would “put Mississippi on the map as an energy leader,” Wilson said.

Kemper resident Anita Thompson said she would probably be able to see the plant from her house and was “excited about change.” Thompson said she and her husband were in the process of signing a land lease for the potential mine. Thompson had met with MPC and North American Coal representatives in “group meetings” and looked forward to the companies’ plans to become involved with Kemper County’s senior citizens and the local junior college.

Marie Walden of Ocean Springs said that if the plant was such a good deal, MPC and its stockholders should pay for it themselves. Gulf Coast residents “should not have to pay for Kemper’s power plant any more than (MPC) should have to pay our high insurance rates on the Coast,” she said.

MPC serves nearly 190,000 customers in its 23-county service area, from which it will seek to recover plant costs.

State Sen. Giles Ward, representing Neshoba, Leake and Winston counties, said, “I have not received a single phone call, written or otherwise, that would oppose this plant.”

The counties Ward represents, along with Kemper County itself, are not in MPC’s service area and would not be responsible for paying plant costs.

William Bova of Gulfport, said he was a businessman with a finance background and a “free market capitalist.” He said the plant’s financing plan “smells like corporate socialism.” Most companies have to go to the private sector, not the public sector, for loans, Bova said.

Among other provisions, Mississippi’s Baseload Act allows Construction Work in Progress (CWIP) costs to be put into rate base. MPC says it needs the Commission’s permission to put CWIP in rate base to obtain low interest rates from Wall Street and save customers money in the long run. CWIP in rate base allows a utility to charge ratepayers incrementally for the cost of financing a plant before it is in operation. The Baseload Act also allows a utility to recoup prudently incurred costs from ratepayers “whether or not the construction of any generating facility is ever commenced or completed.”

Mississippi NAACP president Derrick Johnson also called the plant corporate socialism. Sherri Davis-Garner, AARP Mississippi senior state director, also spoke out against the plant due to cost concerns.

Lt. Gov. Phil Bryant praised the plant as an economic development project that he said would create 1,200 jobs and help recruit industry to the area.

The plant is to create more than 1,000 construction jobs and more than 200 permanent jobs after completion.

Bryant also represented Gov. Haley Barbour, who strongly supports Kemper and called it a “home run for Mississippi” in a recent State of the State address.

The Commission’s hearings began Feb. 1 and also included questions about plant financing, reliance on natural gas, legitimacy of independent power producer (IPP) contracts and the mitigation of potential plant cost overruns.

The Commission will vote by May on whether to allow the MPC Kemper plant or choose another option to fill the upcoming energy generation need for southeastern Mississippi. Commission members are chairman and Northern District Commissioner Brandon Presley, Southern District Commissioner Leonard Bentz and Central District Commissioner Lynn Posey. The Commission’s duty is to regulate utilities and make decisions in the best interest of ratepayers.

The Commission is accepting written public comments through March 12.

The Kemper plant is the largest proposed addition to any utility in the state’s history and would also be the first power plant in the world to be “clean” — or capture carbon dioxide emissions.

North Dakota’s Great Plains Synfuels Plant is the only commercial-scale lignite coal gasification plant in the United States that manufactures natural gas. The plant then ships its natural gas to power plants for electricity production. The plant also captures carbon dioxide, which it then sells to Canadian companies for enhanced oil recovery.

North Dakota’s Basin Electric announced plans in Dec. 2009 to evaluate the feasibility of adding carbon capture equipment to a conventional coal-fired power plant.

MPC’s parent, Southern Company, manages the U.S. Department of Energy’s development facility in Alabama, where it has developed and tested the carbon capture technology – called TRIG — on a much smaller scale. If approved, Kemper would produce 582 megawatts of new generation for customer consumption. On average, one megawatt can power about 1,000 typical American homes.

MPC & IPP Closing Arguments

Regardless of their position, most attorneys and interveners giving closing arguments regarding the Kemper plant Feb. 4 agreed on one thing: The Commission’s hearings were a good idea.

The Kemper hearings, comprised of a week in October and the week this month, mirrored request for proposal (RFP) hearings conducted by other states and mark a first in Mississippi Commission history. The RFP process opens the door for free market competition against regulated utilities.

Former U.S. Attorney Brad Pigott, on behalf of IPP KGen Power, said Kemper was equivalent to a “40-year fuel hedge,” or insurance policy, against the risk of high natural gas prices. The Commission has to make a decision about whether $2.5 billion is a good premium to pay, Pigott said.

The Commission’s independent counsel Dr. Craig Roach, president of Boston Pacific Co., called the information presented during the week a “very strong record.” Roach said he found an honest case for Kemper as well as some alternatives, but both cases needed to add “credibility.”

Kemper wins as the best option for ratepayers if the Commission wants to plan for 40 years into the future or if natural gas prices are high, Roach said. If natural gas prices are low, Kemper will make ratepayer electricity bills “dramatically” more expensive than they would have been, he said. Roach recommended the Commission get cost and performance guarantees for Kemper and also get price guarantees from the IPPs who submitted indicative offers.

MPC attorney Ben Stone gave the final word, and used MPC’s concern for its customers’ rates as his primary argument for the plant.

Stone also said Kemper was now or never. If the Commission does not approve the project now, it’s off the table permanently, he said. Not approving the plant would be “condemning” MPC customers to 70 percent dependence on volatile natural gas, Stone said, and eliminating what is probably MPC’s only legitimate baseload generation option.


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About Amy McCullough