Mississippi Power suspends coal gasification Kemper County power plant

Mississippi Power will operate on natural gas

On Thursday, Mississippi Power and its parent company Southern Company announced coal gasification operations at their Kemper County power facility would be suspended.

The plant was supposed to be a model for the future of coal and was designed to capture carbon dioxide.  But on Wednesday, the company acknowledged that with lower natural gas prices, regulatory opposition and Mississippi Public Service Commission conditions, the plant might not be economical to run.

The Sun Herald reports that high construction costs and a ballooning timeline forced Mississippi Power to suspend the start-up of the coal-fuelled portion of the plant.

Last week, the PSC voted to have the company reach a settlement to re-license the plant as a natural gas facility.

In a press release, the company said “This action is being taken to preserve the safety and health of the workforce and safety of the facility, while still retaining the necessary workforce to operate the combined cycle power plant.”

Southern Company Chairman, President and CEO Thomas A. Fanning said “We believe this decision is in the best interests of our employees, customers, investors and all other stakeholders.”

Following the announcement, Southern Co. stock dropped slightly from $49.52 at opening to $49.15 at close.

According to a Sun Herald report, the Kemper facility is more than three years behind the original start up date of May 2014.  The estimated costs have increased from initial estimates of about $2 billion to $7.5 billion with costs increasing by millions every month.

In December 2015, the PSC allowed Mississippi Power to increase their rates by 15 per cent to recover costs for the portion of Kemper that produced electricity from natural gas.

Mississippi oilman Thomas Blanton successfully sued Mississippi Power over the Kemper plant rate increase and won a $281 million refund.  He advises ratepayers to remain vigilant.

“I’m happy to see Mississippi Power has finally woke up,” he told the Sun Herald. “But I have not heard the fat lady sing.”

The PSC has moved for a settlement that protects South Mississippi ratepayers from increased Kemper costs and any risks surrounding the coal portion of the plant.

The PSC gave the company a deadline of 45 days for the settlement.  It says it will address the future of the plant at its meeting on July 6.

In response, Southern Co. and Mississippi Power said they will “fully participate” in the proposed settlement and vowed to make future announcements on the status of the project based on the committee’s actions.

So far, Southern Co. and Mississippi Power have absorbed $3.1 billion of the $7.5 billion facility, leaving $4.4 billion outstanding.

The combined cycle plant will continue to provide its nearly 187,000 customers in 23 southeast Mississippi counties with electricity using natural gas.