Thursday, June 22, 2017

Southern Co.'s Clean Coal Plant Hits a Dead End

An aerial view of Mississippi Power's Kemper County Energy Facility. (Credit: Mississippi Power) Click to Enlarge.
Southern Co.'s $7.5 billion clean coal plant in Mississippi should run as a natural gas plant, state regulators said yesterday, throwing a gut punch to the utility's hopes of recovering billions of dollars in cost overruns and paving the way for next-generation coal plants.

The Kemper County Energy Facility would be the first large coal-burning power plant in the United States to capture and store the majority of its carbon dioxide emissions.  The power plant is supposed to gasify lignite coal into synthetic gas, capturing the CO2 for use in enhanced oil recovery.

The plant has been running on natural gas for years, and each of Kemper's two gasifiers has successfully produced electricity from synthetic gas.  But Mississippi Power, the Southern Co. unit building the plant, has struggled to keep the plant's complex systems running nonstop. That has delayed its full startup.

The surprisingly aggressive move by the three-member panel of Mississippi regulators is a significant financial and political setback for Southern, which has promoted the idea of building a first-of-its-kind clean coal plant at scale.

Mississippi Power, for its part, could be stuck with a massive bill the state won't allow it to pass on to electricity customers.  Instead, the state Public Service Commission wants the utility to plan on running on gas.

Kemper originally was supposed to be operating in 2014, and its original price tag was a little under $3 billion.  Now at $7.5 billion and a projected startup date of the end of the month, Kemper is at a crossroads.  Mississippi Power filed a new rate plan for Kemper at the beginning of the month, as required by the PSC, but the utility had to hold off on formally asking to collect $4.3 billion from customers because the plant is not yet operating.

It was that rate filing that triggered the commission's response, which came after a special meeting and a closed executive session.  The PSC directed the utility to work with the staff attorney and other stakeholders to come up with a settlement within 45 days.

The settlement should allow Kemper to operate on natural gas only and not raise customer rates, the commission said.  What's more, Mississippi Power should find a way to lower rates, especially for its residential class of customers.

Read more at Southern Co.'s Clean Coal Plant Hits a Dead End

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