Mississippi Power seeks Kemper County prudence review

Under a settlement agreement worked out in January with the Mississippi Public Service Commission, Mississippi Power (MPC) on June 28 filed with the commission a request for a prudency finding on its in-construction Kemper County coal gasification plant.

The settlement agreement between MPC and the commission contemplates a prudence review to be conducted by the commission for Kemper Project within six months following the execution of the agreement, subject to any schedule modifications that may be mutually agreed to among the parties.

In addition, the settlement agreement contemplates a prudence review in connection with the commission’s consideration of MPC’s 7-Year Plan for all costs incurred as of the most recent reporting period for the Kemper project.

“Consistent with the requirements of the Settlement Agreement, MPC hereby respectfully requests that the Commission conduct a prudence review of all Kemper Project costs incurred as of March 31, 2013, which MPC contemplates to be the most recent reporting period,” said the June 28 application.

Sierra Club opens yet another avenue to slam the Kemper County project

The Sierra Club, in the meantime, said July 2 that it has launched billboards in Gulfport and Ocean Springs, Miss., calling on Commissioner Leonard Bentz to immediately repeal rate hikes for Mississippi Power to pay for the Kemper County plant. Louie Miller, director of the Mississippi Sierra Club, was joined by representatives from the Republic Elected Officials Association, the local NAACP and AARP chapters, and Mississippians for Affordable Energy to announce the new billboards and call on Bentz to immediately repeal the 15% Kemper rate hike previously approved by the commission.

“Commissioner Bentz needs to take responsibility for the damage the Kemper rate hikes are doing to his constituents and our struggling coastal economy,” said Miller. “Thousands of Mississippi voters took action to fight these rate hikes and to fight the state legislature, which gave Mississippi Power the ability to charge another billion dollars in Kemper costs to our monthly electric bills.”

“The governor needs to call a special session to rename the Mississippi Public Service Commission the Friends of Mississippi Power Company,” said former State Sen. Bob Usey, president of the Republican Elected Officials Association. “Two Commissioners voted to approve a 15% increase of our electric rates without all the necessary information. I am concerned about the elderly, disabled, people on a fixed income and others who will be plagued each month by the rate increase granted by a majority of the PSC. In my opinion, the Commission should repeal the rate hikes now.”

The Sierra Club has challenged the plant since Mississippi Power first proposed the project, calling the Kemper proposal dirty, expensive and unnecessary. The latest reports from May 2013 show the total cost of the plant and attendant lignite coal mine at $4.53bn, approximately $2bn more than Mississippi Power originally projected, the club said. Utility parent Southern Co. (NYSE: SO) was forced to absorb more than $500m in cost overruns earlier in 2013, the club added.

Mississippi Power files latest project update with the PSC

Mississippi Power filed a monthly series of cost breakdowns for the Kemper County project on July 1 with the PSC. One footnote in the filing said: “Management is currently reviewing additional cost pressures associated with ongoing construction activities, inventory necessary to mitigate startup risk, startup energy costs, and other startup activities, as well as productivity. This review is expected to be completed in July 2013 and any related changes to specific cost categories would be reflected in the Monthly Status Report through June 2013. Management has reviewed a portion of these items on a preliminary basis and has identified a minimum of approximately $160 million in likely cost increases. Further material cost increases may be identified as management completes its review.”

Among the project milestones mentioned in the July 1 report:

  • The purchase of 2,968 acres for the plant site has been completed.
  • Earthwork has been completed at the water reservoir and lignite delivery facility areas.
  • Concrete work is 98% complete, underground piping is 98% complete, electrical duct bank installation is 99% complete and structural steel erection is 92% complete.
  • Construction is complete on the three 115-kV line rebuild projects, and the East, West, and East-Vimville 230-kV lines are complete and energized.
  • Construction is complete on seven substations, the mine service line, and the Sweatt-Sykes fiber line.
  • The treated effluent pipeline and natural gas pipeline are 100% complete.
  • The CO2 pipeline system installation is 99% complete.
  • Long-term contracts have been signed for the sale of CO2, sulfuric acid and ammonia.

The July 1 update said the first lignite was “cut” at the adjacent coal mine on June 5. The 582-MW Kemper County IGCC will take feedstock lignite coal from a surface mine that is operated under contract by an affiliate of North American Coal.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.