Jackson Free Press

The Mississippi Public Service Commission will deliver a decision on a proposed $2.4 billion coal plant in Kemper County in May.

Mississippi Power Company filed a certificate of public convenience with the PSC last year asking for permission to begin setting aside 48,000 square acres of Kemper County for lignite coal-mining and the construction of a 582-megawatt lignite coal-burning plant using as-of-yet unimplemented technology.

The commission responded with a series of hearings. Phase 1, conducted between Oct. 5 and Oct. 9 last year, resulted in the commission finding a growing need for more electrical capacity in the state, and an order establishing a bidding process for resource options.

Phase 2, conducted earlier this month, addressed the Kemper IGCC project and why the company chose a $2.4 billion coal plant over cheaper alternatives such as home weatherization, government financing incentives, cost recovery, risk calculation and rate increases to customers.

The company says that it needs to balance the volatile natural gas market with a plant that burns a more economically stable fuel, like coal. Anthony Topazi, president and CEO of Mississippi Power, told the commission during a Feb. 1 statement that Mississippi Power needed to move away from the volatile natural gas market by concentrating on coal plants, which use a fuel source less subject to market swings.

"Natural gas is the most volatile commodity we can use," Topazi said, adding that new Environmental Protection Agency findings on greenhouse gases would likely drive the company to either close down its coal plant on the coast or invest about $1 billion to upgrade it to a cleaner-burning facility.

A U.S. Department of Energy report, "Annual Energy Outlook 2009," which offers projected natural gas prices extending into 2030, predicts natural gas prices to be comparatively stable. The report estimates that 2030 crude oil prices, in both the highest and lowest cost projections, to be between $50 and $200 per barrel. The same report predicts natural gas produced by the lower 48 states to average in price between $8.70 and $9.62 per million British Petroleum Units in its most expensive and least expensive projections. The Department of Energy assigns a relatively stable price to natural gas, in part because it projects the U.S. contains "nearly 70 years of domestic consumption at 2007 levels."

Mississippi Sierra Club Director Louie Miller, a staunch opponent of the Kemper County plant, claims "coal will never be clean" and argues that ratepayers can't expect rate increases to fund the construction of the plant.

Mississippi Power wants to finance the building of the $2.4 billion plant through a combination of grants and rate increases, rather than investing money up front. But Miller warns that the construction of Entergy Mississippi's $3 billion Grand Gulf Nuclear Power plant raised customers' rates an average of 50 percent over the course of two decades—and that Entergy had a larger customer base through which to distribute those rate increases.

Independent power providers like KGen, which owns the modern natural gas plant on Beasley Road in Jackson, argued that gas prices are reasonably stable despite fluctuations at the onset of the 2008 economic recession. They say dominant companies like Mississippi Power have refused to fully utilize their widely available natural gas plants, and instead seek to build costly experiments like the Kemper County facility, which would turn more profit for the company.

Mississippi Power said that the company would be unable to build the plant without the PSC's permission to charge customers to finance the plant.

Attorneys for Mississippi Power confirmed that one credit agency has expressed concern about Mississippi Power's current rating. They also confirmed that "it would be a concern for all three credit rating agencies" if the company built the plant without the PSC's permission to pre-charge customers.

The PSC has the ability to say 'no,' to the plant in more than one way. Commissioners, for example, could endorse the need for the plant and embrace the concept, but refuse to allow Mississippi Power to fully fund its construction on the backs of ratepayers—effectively killing the project.

Contact the PSC at 601-961-5450.