MISS. GOVERNOR SIGNS BILLS TO HELP KEMPER PLANT’S BALANCE SHEETS

Tamar Hallerman
GHG Monitor
3/1/13

Mississippi Gov. Phil Bryant signed a pair of bills Feb. 26 aimed at helping Mississippi Power pay for its $2.88 billion Kemper County integrated gasification combined cycle facility. Bryant, a Republican, signed the legislation into law less than two weeks after the GOP-controlled legislature overwhelmingly passed the measures, which essentially codify a January settlement agreement between the utility and the Mississippi Public Service Commission (PSC). One of the measures allows for the Southern Company subsidiary to sell up to $1 billion in bonds to cover any costs above the $2.4 billion approved in the settlement agreement. That means the utility’s nearly 200,000 ratepayers would have to repay the debt on the entire project, but Mississippi Power could not collect a profit above $2.4 billion in construction costs and $377 million for the CO2 pipeline and lignite mine costs.

The second measure signed by Bryant allows the PSC to approve multi-year rate plans for the facility once operational. Following the Governor’s approval, Mississippi Power quickly filed for a seven-year rate plan with the PSC. If approved by the state regulators, the legislation would kick in beginning in 2014 and outline the rate recovery for the project through the end of the decade. Company CEO Ed Day previously said the deal would save ratepayers hundreds of millions of dollars in interest across the lifetime of the plant and limit average rate increases to about 20 percent, down from a previous estimate of 33 percent. “I am very pleased that we have been able to work with [the] PSC to accomplish what our customers need to lower the cost of the Kemper project,” Day said in a statement this week. “Special-interest naysayers, such as the Sierra Club, have questioned our state’s ability to move forward with advanced infrastructure investment, but the actions of our state leaders demonstrate that Mississippi will be an energy innovator and leader.”

The 582 MW project is currently under construction in the eastern portion of the state and is roughly three-quarters complete, according to the company, ahead of commercial operations slated for May 2014. The project received a $270 million Department of Energy grant under the Clean Coal Power Initiative to capture 65 percent of carbon emissions for storage via enhanced oil recovery. The local chapter of the Sierra Club, which has been a vocal opponent of the project from the beginning, has compared the legislation signed this week by Bryant to a $1 billion “handout” and has threatened to sue regarding the settlement agreement. The Sierra Club did not respond to a request for comment.