Kemper Project

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According to Energy Online, the proposed Kemper Project project will be fueled with lignite and use Integrated Gasification Combined Cycle (IGCC) technology; it will receive $133 million in tax credits under the National Energy Policy Act of 2005. The Mississippi Public Service Commission needs to approve the project before it can move forward.[1]

In late 2007, Mississippi Power Company filed a permit application with the state DEQ for the new plant.[2] In January 2008, the company announced it was exploring alternatives to building a new plant, including purchasing electricity from other sources, but that it was "most excited about IGCC because it is a Mississippi project through and through."[3]

As of March 2008, the Mississippi state Senate was considering a bill that would help Mississippi Power's efforts to build the new plant. Senate Bill 2793 would allow state power companies to raise its rates to cover construction costs before, rather than after, the plant is in service. The state House and Public Service Commission would also have to approve the bill, without which Mississippi Power may not be able to finance the $2 billion plant.[2]

Public comments on the Draft Air permit were due September 18, 2008.[4]

On October 14, 2008, the final air permit for the Mississippi IGCC coal-fired power plant was issued.

On January 7, 2009 the Mississippi DEQ announced that MS Power would have to start the air permitting process over because the company changed the type of turbines to be used for the plant.

On March 16, 2009, Entegra Power Group LLC and Magnolia Energy LP, requested that the Public Service Commission (PSC) suspend action on the certification of public convenience and necessity pending an analysis of Mississippi's future energy needs. On April 3, 2009, the Sierra Club argued additionally against the certification of public convenience, stating that a NEPA review and air permit must first be completed. Attorney General Jim Hood has also supported the motion. On May 5, 2009, the PSC held a public hearing on the motion. The motion was denied on June 5.[5]

In September, 2009, Southern Mississippi Electric Power Association signed a letter of intent to explore the acquisition of up to 20% of the capacity and output of the plant.[6]

The PSC held the first round of public hearings addressing the need for the plant in October 2009. Hearings on plant costs are scheduled to begin on February 1, 2010.[7]

On April 29, 2010, Mississippi Power indicated it may not pursue construction of the plant after the Mississippi Public Service Commission ruled that the Southern Co. unit failed to prove the plant would benefit customers, issuing an order that placed conditions on the project, including not being able to charge customers up front to build the new plant, and capping the cost of the new power source at $2.4 billion. Mississippi Power spokeswoman Cindy Duvall said the conditions that include a price cap "seem to make it impossible for Mississippi Power to finance or construct the Kemper County IGCC Project even if the right to construct had been - or might in the future - be allowed."[8]

On May 26, 2010, the MS Public Service Commission voted 2-1 to loosen some of their earlier restrictions on the plant. The PSC told Mississippi Power its construction could be no more than $2.88 billion, and could go no higher unless it could show that concrete, steel, and other building costs went up. This was up from the PSC cap in April at construction costs of $2.4 billion. Commissioners also agreed that Mississippi Power could pass on its construction costs to ratepayers, but not until Jan. 1, 2012, when the PSC expects the new power plant to be off the ground.[9]

Commissioners Lynn Posey of the Central District and Leonard Bentz of the Southern District voted for the modifications. Brandon Presley of the Northern District opposed it. Presley said in a statement attached to the order that ratepayers "will have to bear all the risk of this project on top of having to pay for this project upfront. MPC ratepayers will begin paying for this plant before they get any benefits from it." Bentz told WLOX-TV that the order "is an indication to the financial markets that [Mississippi Power] can move forward with it. We put some regulations on them. But we did what we're supposed to do, protect ratepayers at the end of the day."[9] On June 17, 2010, the Sierra Club filed an appeal in chancery court in Harrison County, Mississippi, challenging the need certificate issued by the Mississippi Public Service Commission (PSC) for the project, saying it would allow Mississippi Power to charge rate payers for the costs of the plant before it's built, and that PSC refused to order Mississippi Power to disclose how much customers will pay in rates for the new plant.[10]

On June 22, 2010, the board of the South Mississippi Electric Power Association (SME) said they will vote June 30 on a proposal to buy a stake in the $2.88 billion advanced coal plant. The electric association has negotiated an agreement to purchase a 17.5-percent interest in the 582-megawatt IGCC plant for about $450 million.[11]

On October 7, 2010, the state Supreme Court denied Mississippi Power's motion asking the high court to intervene in the case, and dismissed an appeal by the Sierra Club in response to the power company's motion, sending the suit back to Harrison County Chancery Court.[12]

On December 7, 2010, construction began on Kemper, and is slated for completion in 2014. The plant is expected to cost about $2.4 billion to build, or $4,123/kW. The utility has put a cap on the project at $3.2 billion, or almost $5,500/kW. The plant is designed to burn Mississippi lignite coal.[13]

On January 27, 2011, Mississippi Power Co. said the plant will be named for David M. Ratcliffe, recently retired chairman, president and CEO of Southern Company. Plant Ratcliffe is scheduled to begin commercial operation in 2014.[14]

On Feb. 28, 2011, Harrison County Chancery Judge Jim Persons upheld the decision by state regulators to allow the plant, dismissing arguments from the Sierra Club that the Mississippi Public Service Commission approved the plan without sufficient proof the plant is needed, passing over $2 billion in construction costs on to ratepayers. Judge Person's ruling said while the Public Service Commission's order "lacked specific findings on the balancing of risks," he wouldn't reverse its decision. Sierra Club lawyer Robert Wiygul said the group will appeal.[15]

On March 10, 2011, the Sierra Club filed a suit in U.S. District Court for the District of Columbia, alleging the DOE violated the National Environmental Policy Act and the Administrative Procedure Act in awarding $293 million in federal funds to Mississippi Power for the plant, using lignite coal from a new 12,000-acre strip mine, which the Sierra Club said will cause “extensive and irreversible damage to streams and wetlands” and could result in the release of as much as 5.7 million tons of CO2 every year. According to the complaint: “DOE is using ‘clean energy’ funds to back a project that will inflict all of the environmental harms associated with conventional coal-fired generation of electricity." The Sierra Club asked for an injunction forcing the government to do a more rigorous analysis under the National Environmental Policy Act, one that takes into account global warming and other environmental consequences. Further, they note that the “DOE made no effort to consider renewable energy projects or conservation and energy efficiency projects of any kind.”[16]

In August 2011, Mississippi Power CEO Ed Day said the plant is scheduled to start operations in May 2014. Average customer's rates are projected to go up by 33 percent over a 10-year period, as state law allows the utility to recover costs associated with the plant's construction as the plant is built.[17]

On March 15, 2012, the Mississippi Supreme Court, in a 9-0 vote, said the Mississippi Public Service Commission's (PSC) May 2010 approval for the plant failed to satisfy state law that the plant would benefit the utility's customers. Supreme Court Presiding Justice Jess Dickinson said the absence of specific findings from the PSC clouded its decision, and that without such details, the Supreme Court could not determine if the PSC decision was supported by the evidence. The court told the PSC to clarify how it decided to allow construction, sending the case back to the commission for reconsideration.[18]

On March 16, 2012, Mississippi Power said it would continue building the project. According to state filings, the company had spent more than $1.1 billion on the Kemper plant so far, including $245 million in grant money from the U.S. Department of Energy, and still expects to begin producing power in 2014. A Mississippi Power spokesperson said the utility hoped the PSC would address the ruling quickly to "correct" its order. South Mississippi Electric Power Association, which has agreed to purchase of a 17.5-percent stake in the Kemper plant, has not commented.[19]

On March 30, 2012, after only two days meeting notice and no discussion, Mississippi utility regulators voted 2-1 to issue a temporary certificate so that Mississippi Power could keep building the plant, stating that halting the project would lead to "unnecessary costs" that would cause substantial injury to the utility and its customers. The Sierra Club immediately filed an appeal at the Mississippi Supreme Court to block the certificate, saying "Mississippi Power is not exempt from the law, and the Public Service Commission does not have the authority to bypass state law."[20]

Coal source

Coal for the plant would be supplied by the Kemper County Mine, a proposed surface mine for Kemper County by Liberty Fuels Co. LLC, a wholly owned subsidiary of North American Coal Corporation. In September 2011, Liberty Fuels applied for a permit to mine lignite coal in east Mississippi that would be burned at the Kemper County coal plant. The application calls for Liberty Fuels to mine two million tons of lignite per year during the first five-year permit. Thereafter, it would mine 4.1 million tons per year through 2052. The mine would cover 31,000 acres over 40 years, eventually becoming the largest coal mine operation in the state.[21] The Mississippi Department of Environmental Quality will hold a public hearing in DeKalb on Oct. 18, 2011 on the application.[22]

Project Details

Sponsor: Mississippi Power (Southern Company subsidiary)
Location: Kemper County, MS
Capacity: 600 MW
Type: IGCC
Projected in service: 2014
Status: Active

Financing

Citizen Groups

Resources

References

  1. "Mississippi Power Plans Lignite-Burning IGCC Plant", Greenwire, December 15, 2006. (Access to this article requires a trial subscription.)
  2. 2.0 2.1 "Stopping the Coal Rush", Sierra Club, accessed January 2008. (This is a Sierra Club list of new coal plant proposals.)
  3. "Energy Needs Prominent in Speech", WTOK.com, January 22, 2008.
  4. "Stopping the Coal Rush", Sierra Club, accessed November 2008. (This is a Sierra Club list of new coal plant proposals.)
  5. "Stopping the Coal Rush", Sierra Club, accessed October 2009. (This is a Sierra Club list of new coal plant proposals.)
  6. "Companies join forces on Kemper County IGCC project," Meridian Star, September4 16, 2009
  7. Sid Salter, "Proposed Kemper County 'clean' coal plant: Why opponents object," Clarion Ledger, October 11, 2009.
  8. "MS Power can build Kemper County plant, with a catch" WLOX, April 29, 2010.
  9. 9.0 9.1 "State regulators loosen restrictions on Mississippi Power's coal-fired plant" CB Online, May 27, 2010.
  10. "Sierra Club, others sue to stop Miss. Power plant" Bloomberg Business Week, June 17, 2010.
  11. "SME May Buy Southern’s $450M Coal Stake" EMII.com, June 23, 2010.
  12. Sheila Byrd, "Miss. justices send coal suit back to lower court" Bloomberg, Oct. 8, 2010.
  13. "582 MW coal-fired power plant breaks ground" Power-Gen, Dec. 17, 2010.
  14. "Miss. Power announces name for Kemper coal plant" Bloomberg, Jan. 28, 2011.
  15. Holbrook Mohr, "Judge Rules Miss. Coal Plant Project Can Continue" ABC News, Feb. 28, 2011.
  16. "Sierra Club Sues DOE Over Coal Plant" The Blog of Legal Times, March 11, 2011.
  17. Jeff Ayres, "Work on track for Kemper power plant" Clarion-Ledger, Aug. 30, 2011.
  18. Jack Elliott, "State high court: Regulators’ details on coal plant not clear," Sun herald, Mar. 15, 2012.
  19. "UPDATE 1-Southern unit to proceed with costly coal project," Reuters, March 16, 2012.
  20. Eileen O'Grady, "Mississippi allows Southern Co to keep building $2.8 billion coal plant," Reuters, March 30, 2012.
  21. "Stopping the Coal Rush" Sierra Club, accessed November 2011.
  22. "Millions of tons of lignite to power Kemper plant" AP, Sep. 12, 2011.

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