Kemper power plant nearing completion

Mississippi Power officials say lignite will mean cost certainty into future

pochs@sunherald.com Twitter: PatrickOchsJuly 17, 2014 

KEMPER COUNTY -- After more than four years, construction is beginning to wind down at the 582-megawatt Kemper County energy plant. Officials have set a deadline of May 31 as its target operation date.

Vice President of Generation Development John Huggins equated Mississippi Power's progress to building a house. Although its completion has been pushed several times from the original May 2014 date for a number of reasons, Huggins said they're now finishing the trim, painting their "new home" and could wrap up work sooner than May.

"We're working at a more-aggressive schedule than that," he said during a media tour Thursday, "but we believe we're comfortable with that date."

The plant just north of Meridian already has a coal mine that went commercial in June 2013. The rest will begin rolling out later this summer.

Huggins said hundreds of systems must be tested before the plant can become operational, "but we're in the midst of all of that," he said.

Diverse energy mix

Huggins said the goal of Mississippi Power's newest plant is to diversify energy sources in an effort to ensure long-term price stability.

Without Kemper, Huggins said Mississippi Power's energy-source mix in 2020 would be 75 percent natural gas and 25 percent non-lignite coal. With Kemper, natural gas, which Huggins said is susceptible to price volatility, is reduced to 50 percent. That reduction is due to a 25 percent addition of lignite to the mix. Non-lignite coal makes up 25 percent in both equations.

"The biggest benefit of lignite is that it is a local resource," mining engineer Matt Jones said. "We don't have bituminous coal, we don't have anthracite in Mississippi. What we do have is lignite.

"We're not subject to those market fluctuations in price or railroad transportation costs.

"It's right here. There's a stable price. And there's plenty of it."

Mississippi Power projects average retail rate increases associated with the project to reach 22 to 26 percent, depending on the amount of the securitized bond, through 2020.

Long-term 'protection'

Jeff Shepard, company spokesman, said although rates have increased about 18 percent, the potential long-term cost certainty of the $5.5 billion project will be worth it to the customer over the long haul. "Whenever there's a capital investment there's going to be an associated rate increase," he said. "Natural gas plants are not free. What Kemper offers is we already have coal and we already have gas. You add lignite into our fuel portfolio and you're protecting customers from the risk of being over-reliant on one fuel source."

Mississippi Power projects the sale of by-products such as carbon dioxide, sulfuric acid and ammonia, which are captured during the lignite-gasification process, to generate between $50 million to $100 million annually. That projected revenue is already factored into the current rate structure.

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