State utility regulators are telling Mississippi Power Co. to ditch coal and operate as a natural gas facility at the company’s $7.5 billion Kemper County energy facility.
The move comes after years of missed project deadlines and cost increases from building a one-of-a-kind lignite coal power plant to produce electricity and reduce carbon emissions.
The Mississippi Public Service Commission on Wednesday unanimously voted to instruct its lawyers to put together a proposal of solutions for problems at the Kemper County energy facility before the commission’s July 6 meeting.
Commissioners said any settlement presented to the commission should remove responsibility from ratepayers for the plant’s lignite coal technology and related assets; involve no rate increase to Mississippi Power Company customers; and revise the plant’s operating license to only allow for operation of a natural gas facility at the Kemper County project’s location.
Generally, utilities cannot recover project costs unless the commission determines them to be prudent.
Mississippi Power Co. has a $2.88 billion cost cap in place for customers regarding the power plant portion of the project. The company said in a June U.S. Securities and Exchange Commission filing that $4.3 billion in project costs is eligible for recovery. There was no cap in place for recovering infrastructure-related costs, such as the plant’s adjacent lignite coal mine, its proposed carbon-dioxide pipeline and transmission.
Under the public service commission’s ideal settlement, Mississippi Power Co. would be the ones to cover that $4.3 billion.
The Kemper County energy facility has drawn national attention for promising to be the first coal plant of its kind and size to operate commercially in the U.S. Once complete, original plans stated, the plant would not only produce electricity, but also reduce carbon emissions compared to traditional coal technology by putting carbon dioxide into a nearby pipeline system. From there, oil companies would be able to purchase the CO2 to inject into fallow oil fields to bring valuable crude to the surface.
The project is now known as one of the most expensive power plants ever built. A portion of the plant has been running on natural gas since August 2014, but the portion designed to produce electricity from lignite coal is not complete.
Mississippi Power Company is required to notify all customers individually of the settlement per commission rules.
Commissioners declined to comment further on the decision apart from a statement released Wednesday afternoon.
The commission “requests solution that eliminates ratepayer risk for unproven technology and assures no rate increase to Mississippi Power customers,” the statement says.
Mississippi Power Co. in a statement said the company looks forward to reviewing the public-service commission’s order.