Jackson Free Press

JACKSON, Miss. (AP) — Mississippi Power Co.'s $2.8 billion Kemper County coal-fired plant is one step closer to legal clearance after a judge denied a Sierra Club challenge to the plant's license.

The ruling by Harrison County Chancery Judge Jim Persons was filed late Monday. The environmental group's state director Louie Miller said Tuesday the decision will be appealed.

The Mississippi Supreme Court overturned the plant's previous certificate. The high court agreed with the Sierra Club that the state Public Service Commission hadn't given enough explanation for raising the plant's cost cap from $2.4 billion to $2.88 billion.

The PSC then granted a new certificate, and the Sierra Club challenged it, arguing it too was improper. The Sierra Club wanted a halt to construction and new hearings on whether it would be cheaper to convert Kemper to a gas-fired power plant rather than have it burn a soft form of coal called lignite.

Persons rejected the Sierra Club's challenge, saying that the PSC had more than adequately laid out its reasoning in the 133-page order that it issued in April and was not required to hear new evidence.

"Mississippi Power customers are the ones who will benefit from this important decision," Ed Day, president and CEO of Mississippi Power, said about the latest ruling.

Miller said the PSC has made the wrong decision twice.

"The Kemper plant was a bad deal when it was first proposed, but in the last few months we've seen huge cost overruns and delays, which will make this project even more unaffordable for coastal Mississippi Power customers," Miller said.

Persons ruled that under state law, he was required to uphold the PSC's order unless it "is not supported by the substantial evidence, is contrary to the manifest weight of the evidence, in excess of the statutory authority or jurisdiction of the commission, or violates constitutional rights."

The judge said it's not his role to choose between coal or natural gas as a fuel source, stating that either course could pose financial risks to Mississippi Power's customers.

"It is for the commission, not the courts, to determine policy preferences on such matters as a 40-year solution for fuel diversity and price stability of fuels used in generation," Persons wrote.

Mississippi Power, a unit of Atlanta-based Southern Co., already has spent $1.88 billion on its Plant Ratcliffe.

Under state law, the company was supposed to have the opportunity to pay down some of that cost before the plant goes into operation in 2014. However, in a ruling that surprised Mississippi Power, the PSC voted 3-0 to deny any rate increases until the Sierra Club's legal challenges had run its course. At the time, commission members said they didn't expect to act until the state Supreme Court had heard the case again.