State utility regulators have officially asked Mississippi Power Co. to only use natural gas to power the Kemper County energy facility, to not put the costs of its problematic gasifier technology on the shoulders of ratepayers, nor increase their rates.
The Mississippi Public Service Commission, which oversees public utilities, made the proposal Thursday.
The agency previously 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, including potentially lowering the rates of residential 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.
Thursday’s unanimous vote of the three-member commission kicks off a 45-day period for Mississippi Power Co. to respond with their own settlement proposal.
“Today, we begin the 45-day clock ticking for Mississippi Power and other parties to this case to work to get this issue resolved,” Commission chair Brandon Presley said. “… We’ve set three very strong precedents.”
After the meeting, Mississippi Power Co. spokeswoman Cindy Duvall said the company is reviewing the order.
“We’d hate to get ahead of the order and not read it,” Duvall said. “That would not be prudent.”
Later, Mississippi Power released an official statement, saying: “Today’s proceeding is in line with the framework the Commission laid out two weeks ago. We look forward to reviewing the order.”
The commission first announced a draft of this order on June 21, after the company’s filed its latest rate case proposal on June 5.
In the filing, Mississippi Power Co. requested a continuation of current rates for 11 months beginning Aug. 1. This was after years of missed project deadlines and cost increases from building a one-of-a-kind lignite coal power plant meant to produce electricity and reduce carbon emissions. The project’s price tag has since ballooned up to $7.5 billion.
Public Service Commissioner Cecil Brown a day later said he was concerned Mississippi Power Co. project would drag on with cost overruns.
Fellow commissioner Sam Britton, of the Southern District, said Thursday that it was time to move forward, which led to the commission’s final decision to speak out against Kemper’s clean coal technology last month.
“It is over budget and three years’ past the estimated deadline, and it’s just time to resolve Kemper, and that’s what this process does.” Britton said.
Southern Co. and Mississippi Power Co. could potentially absorb more than $6.5 billion in losses.
This order comes about a week after Mississippi Power Co., a subsidiary of Atlanta-based Southern Co., told the commission it suspended its lignite coal gasification operations at its Kemper plant.
Original plans for Kemper called for burning lignite coal, which is abundant in the region, to produce a synthetic gas. Mississippi Power Co. ran into problems with these machines, called gasifiers. This led to years’ worth of delays and a price tag that ballooned to $7.5 billion from an originally-projected $2.9 billion.
Mississippi Power Co.’s decision to halt its lignite coal operations came a week after the commission advised the company to operate the beleaguered power plant on natural gas.
The plant continues operating on natural gas.
Now, the question is who will absorb around $3.4 to 3.5 billion in project costs.
Southern Co. had already planned to absorb about $3.1 billion. The company in a June U.S. Securities and Exchange Commission filing said about $4.3 billion of the project’s total cost is eligible for recovery.
About $900 million of that $4.3 billion is already being absorbed by ratepayers per a 15 percent rate increase approved in 2015 to help pay for the natural gas portion of the plant that is producing electricity.
Mississippi Power Co. has a $2.88 billion cost cap in place for customers regarding the power plant portion of the project, but there is no cap for recovering infrastructure-related costs, such as the plant’s adjacent lignite coal mine, its proposed carbon-dioxide pipeline and transmission.