Tamar Hallerman
GHG Monitor
08/31/12
AT KEMPER: CO-OP TO TAKE 15 PERCENT STAKE IN PROJECT
An electricity cooperative confirmed late last week that it will purchase a stake in Mississippi Power’s troubled Kemper County carbon capture and storage project. The South Mississippi Electric Power Association (SMEPA) said that it will purchase a 15 percent share in the 582 MW ‘clean coal’ project, which the utility refers to internally as Plant Ratcliffe, for roughly $500 million, a share equivalent to more than 88 MW of capacity. SMEPA, which generates and transmits wholesale electricity to 11 smaller member cooperatives in southern and eastern Mississippi, said the purchase is contingent on loan approval from the federal Rural Utilities Service and the state’s Public Service Commission. The cooperative said it expects the ownership bid to close by the end of the year.
SMEPA said that partial ownership would help meet the long-term needs for its more than 400,000 customers at low cost because the co-op is a large wholesale customer of Mississippi Power. “Plant Ratcliffe has a high capital cost but will have a very low energy cost,” SMEPA General Manager and CEO Jim Compton said in a statement. “Because SMEPA currently purchases 28 percent of its energy needs from Mississippi Power Company, our wholesale rates will be impacted regardless of our participation in the project. However, our analysis shows that ownership by SMEPA of a portion of the facility is the best overall option for our customers.”
SMEPA has been eyeing an ownership stake in the project for several years. In fall 2009, the company signed a letter of intent to explore the potential for acquiring an ownership stake in the project. Mississippi Power praised the move. “We applaud the management at SMEPA for recognizing the vital role this plant will play in the energy future of southeast Mississippi and for taking the steps necessary to diversify their fuel portfolio, which will lead to lower fuel costs for their customers,” company spokesman Jeff Shepard said.
Investment Could Help Project
The investment could help buoy the Integrated Gasification Combined Cycle project, which has seen a series of major cost increases over the last several months as construction continues. The project, which is now nearly one-third complete with construction but already $484 million over initial budget estimates, is currently hitting up against its $2.88 billion rate recovery cap approved by the PSC, and has recently faced increased political and regulatory scrutiny because of that.
The Kemper County facility has been under construction in eastern Mississippi for the last two years and is expected to come online in spring 2014. The project, the furthest-along large-scale CCS power generation project in the Department of Energy’s demonstration project portfolio, plans on capturing 65 percent of emissions and selling its captured CO2 for local enhanced oil recovery operations. Earlier this month, Mississippi Power publically announced that it was reshuffling some of its main contractors on the plant construction side in a move to save money.
