Tamar Hallerman
GHG Monitor
2/15/13
The Mississippi legislature approved a pair of measures this week aimed at smoothing out the economics of Mississippi Power’s Kemper County integrated gasification combined cycle facility currently under construction in the eastern portion of the state. The Republican-controlled House easily cleared a bill Feb. 8 that allows the Southern Company-owned utility to sell up to $1 billion in bonds to pay construction and financing costs for the plant above the $2.4 billion agreed to in a settlement agreement with the state Public Service Commission (PSC) last month. The lower chamber also passed related legislation that enables the PSC to approve multi-year rate plans for the facility once operational. The state Senate nearly unanimously approved parallel measures Feb. 14. Republican Gov. Phil Bryant will now determine the fate of the legislation.
The primary measure stipulates that the utility’s nearly 200,000 customers repay the debt on the entire project cost, which Mississippi power estimates will be $2.88 billion but others estimate will be higher. The utility cannot collect a profit above the $2.4 billion in rate recovery (and $377 million in CO2 pipeline and lignite mine costs) cleared by the settlement. The Associated Press quoted Mississippi Power President Ed Day, who said last week that the utility plans to sell between $700 million and $800 million in bonds if given a green light by the legislature. Mississippi Power said it is “very pleased” with the bills’ passage. “The leadership shown today by the Senate, and last week by the House of Representatives in approving the rate mitigation and securitization bills, will save customers $1 billion or more over the life of the Kemper County energy facility,” the utility said in a statement.
Supporters Quickly Introduced Measures
Supporters of the 582 MW IGCC project—which has a $270 million Department of Energy grant to capture 65 percent of carbon emissions for storage via enhanced oil recovery—introduced both bills within days of the settlement agreement’s finalization late last month. In addition to capping capital costs passed on to consumers to $2.4 billion, the agreement credits Mississippi Power’s ratepayers with 10 percent of the future royalties earned from the sale of Southern Company’s Transport Integrated Gasification (TRIG) technology globally. Following the announcement of the settlement agreement, Mississippi Power filed for a $172 million rate increase with the PSC, a request that if passed would hike customer rates by 21 percent, or about $20 per month on average.
The local chapter of the Sierra Club, which has been a vocal opponent of the project and has a separate ongoing legal challenge against the facility, compared the legislation to a “$1 billion handout.” “Mississippi Power hired nearly every lobbyist in Mississippi to push this legislation,” Sierra Club state Director Louie Miller told GHG Monitor following the Senate vote. “When you’re fighting against an echo chamber of 30 plus lobbyists who spew a litany of lies to get these bills approved, it’s very difficult to overcome that.” Miller said he expects Gov. Bryant to sign the bills.
In a Feb. 14 statement, Mississippi Power blamed the NGO for spreading “misinformation” about the project. “There has been much misinformation about the Kemper project and this legislation conveyed by the Sierra Club. These out-of-state activists are against cost-effective energy solutions for the future of our customers and neighbors,” the utility said.
