Mississippi Power suspends coal portion of Kemper plant

The Kemper County plant will continue operating on natural gas, Mississippi Power said Wednesday.
The Kemper County plant will continue operating on natural gas, Mississippi Power said Wednesday.

It was designed to be the first-of-its-kind technology, but after the cost and timeline of the Kemper County energy facility ballooned, Mississippi Power announced Wednesday it is suspending start-up of the coal-fueled portion of the plant.

The company notified the Mississippi Public Service Commission of its decision Wednesday and said the plant will continue operating on natural gas.

This comes a week after the PSC voted to have Mississippi Power and other parties reach a settlement to re-license the plant as a natural gas facility.

That doesn’t mean at some point the company can’t resume its work to operate the plant on lignite coal. That depends on the action of the PSC, which also moved for a settlement that would result in no rate increase to customers and to shield customers from any risks surrounding the coal portion of the plant.

The PSC gave a deadline of 45 days for the settlement and in a press release said it will proceed with its plan to address the future of the plant at its meeting on July 6.

The company said it will “fully participate” in the proposed settlement and will make future announcements on the status of the project based on the action of the commission.

Mississippi Power and its parent Southern Co. said they came to the decision to suspend operations to “preserve the safety and health of the workforce and safety of the facility,” an issue that hasn’t been raised before.

“We are committed to ensuring the ongoing focus and safety of employees while we consider the future of the project, including any possible actions that may be taken by the commission,” said Southern Co. Chairman Thomas Fanning in a statement. “We believe this decision is in the best interests of our employees, customers, investors and all other stakeholders.”

Southern Co. stock dropped slightly after the announcement from its open of 49.52 to 49.15 at close.

Kemper is more than three years behind the original in-service schedule of May 2014. The estimated cost that originally was expected to be about $2 billion now stands at $7.5 billion and costs were increasing by millions of dollars each month.

Hattiesburg oilman Thomas Blanton, who successfully sued Mississippi Power over its Kemper plant rate increase and won a $281 million refund, said ratepayers should remain vigilant.

“I’m happy to see Mississippi Power has finally woke up,” he said. “But I have not heard the fat lady sing.” He said the hard work will be done over the next few months getting the Public Service Commission to pass and adopt an order that protects South Mississippi ratepayers from the costs of Kemper.

In December 2015, the PSC allowed Mississippi Power a 15 percent rate hike to recover costs for the portion of Kemper producing electricity with natural gas, which was approximately $850 million.

Southern Co. and Mississippi Power have absorbed $3.1 billion of the cost of the $7.5 billion facility, leaving $4.4 billion outstanding.

The PSC capped the cost of Kemper in 2010 to $2.88 billion to limit the amount ratepayers would be asked to pay. The project also had $245 million in grants from the U.S. Department of Energy under the Clean Coal Power Initiative. The closely-watched plant was seen as a model for coal’s future, designed to capture climate-warming carbon dioxide. But Wednesday, the company acknowledged that it might not be economical to run the plant in the face of low natural gas prices, regulatory opposition and conditions that the Mississippi Public Service Commission originally set.

The Associated Press contributed to this report.