Mississippi Power’s Kemper County energy facility

Mississippi Power Co. customers are off the hook.

Atlanta-based Southern Co. said Wednesday it will absorb $2.8 billion in costs related to the Kemper County energy facility’s lignite coal gasification project.

Southern, the parent company of Mississippi Power, said in a U.S. Securities and Exchange Commission filing Wednesday that cost recovery from Mississippi Power customers for the $7.5 billion plant’s gasification technology “is no longer probable.” So the utility will absorb the cost of the gasification portions of the plant and its adjacent lignite coal mine.

Southern said this decision is a response to the Mississippi Public Service Commission’s July 6 order calling on Mississippi Power to ditch its clean coal plans and operate the plant only as a natural gas facility, which the plant has done in part since 2014. A settlement is pending between the commission and Mississippi Power.

Southern also noted in the filing the commission’s “stated intent regarding no further rate increase for the Kemper County energy facility.” The utility company may also incur additional charges in the future regarding the settlement order, the filing states.

Mississippi Power initially had a $2.88 billion cost cap eligible for recovery from customers regarding the power plant portion of the project, but no cap for recovering infrastructure-related costs, such as the plant’s adjacent lignite coal mine, its proposed carbon-dioxide pipeline and transmission. Generally, utilities cannot recover project costs unless the commission determines them to be prudent.

Mississippi Power on June 5 filed a rate case request with the commission, starting the formal process of updating what it can charge customers for its services.

The filing requested the continuance of current rates for 11 months starting Aug. 1. Public Service Commissioner Cecil Brown a day later said he was concerned project construction would drag on for another 11 months with cost overruns.

The commission has since held off on reviewing the rate case filing pending a potential settlement.

 


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