PSC’s Presley: Don’t expect ratepayer help with Mississippi Power’s federal Kemper debt

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The U.S. Department of Energy provided $407 million in financing for the Kemper plant.

Brandon Presley, chairman of the Public Service Commission, said Mississippi Power Co. should not look to utility regulators for a rate hike to help settle debts related to the company’s failed power plant in Kemper County.

“They will be laughed out of the meeting,” Presley said.

Presley was responding to reports that the Atlanta-based Southern Co., the parent company of Mississippi Power, reported in its quarterly financial report that the Department of Justice’s civil division is investigating the company in connection with grants – totaling more than $380 million – the company received from the Department of Energy to help build the plant. The statement said the investigation could be significant to its finances.

“This is an issue for the Department of Energy and the Southern Company on what they have to pay back,” said Presley, who said he had no details about the investigation.

When the utility company announced plans for the facility in 2009, planners said Kemper would convert lignite coal into gas— a process known as gasification — as well as to include a smaller natural-gas portion to generate electric power.

The plant and nearby lignite coal mine were originally expected to cost nearly $3 billion, and scheduled for full operation by May 2014. The 582-megawatt facility would power 190,000 homes of Mississippi Power customers, the company said.

But construction was continually delayed due to bad weather, labor shortages, incorrect timetable and material estimates, technology snafus and other problems, resulting in project costs ultimately spiking to more than $7.5 billion, which would have made it the most expensive power plant ever constructed.

The plant is now operating as a traditional natural gas power plant.

In February 2018, the state’s public utility regulators approved a settlement for about $99.3 million annually over eight years from Mississippi Power’s customers – much less than the rate hike the lignite plant would have required.

The amount will cover the natural gas portion of the Kemper County energy facility that has helped provide power for 23 counties since 2014. Mississippi Power provides electricity to about 190,000 homes primarily in south and east Mississippi. Its service area does not include the Kemper plant.

The plant was controversial from its inception with Presley and Attorney General Jim Hood, both Democrats, questioning its feasibility. Then-Gov. Haley Barbour, a Republican, lobbied federal officials for help with the plant that was touted as a technological breakthrough for its ability to use coal to generate electricity with fewer carbon dioxide emissions. No state funds were provided for the endeavor, which was touted as a jobs producer for the state.

But in 2013, the Legislature did grant Mississippi Power the authority to issue $1 billion in bonds for the project. But those bonds would had to be approved by the PSC.

“If they had tried to issue those bonds I would have started a nuclear war,” Presley joked.