Kemper | EnergyNorthwest.com

Regulators Back Settlement for Costs of Failed Kemper IGCC Project

February 7, 2018

Shareholders of Mississippi Power will have to absorb the majority of outstanding costs resulting from the scuttled Kemper County coal gasification project, as the state’s Public Service Commission (PSC) on February 6 approved a settlement for the remaining liabilities associated with the much-touted “clean coal” plant.

Mississippi Power in a statement said it “is pleased with this final order from the Public Service Commission, which effectively settles all costs associated with the Kemper County energy facility.” Anthony Wilson, the company’s CEO, in a statement after today’s vote said, “The economics really didn’t work out and the technology was hard to perfect.”

The PSC in 2017 told Atlanta-based Southern Co. to end construction at Kemper. The gasification project, touted as the future of coal, never was operational, as costs ballooned from an original price tag of $ 2.9 billion to about $ 7.5 billion. The settlement agreement, which was reached last year pending approval, means Mississippi Power, a subsidiary of Southern Co.,…

Mississippi Power Will Absorb Costs for Failed Kemper Gasification Project

August 23, 2017

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A settlement Mississippi Power reached on August 21 with stakeholders of the Kemper County facility will ensure customers won’t be subjected to rate increases associated with the now-abandoned gasification portion of the project. While that will affect revenues, the resolution could soften controversy surrounding the project and avoid protracted legal and financial turmoil, the company said.

Mississippi Power reached the settlement with Denbury Resources—the company under contract to buy all the project’s captured carbon, and which had already built a 61-mile carbon dioxide pipeline—along with three advocacy groups: the Central Mississippi Building and Construction Trades Council, the East Mississippi Business Development Corp., and the Ministerial Alliance Partnership.

It essentially provides that the annual revenue requirement—which is necessary to cover the power company’s expenses and have the opportunity to earn a fair rate of return—for the 2018 Kemper IGCC–related costs would be $ 126 million, resulting in no rate increase for customers now or in the future. It also proposes to modify the project’s 2010-awarded certificate of public convenience and necessity to limit the facility to operations of the natural gas combined cycle power plant, which was completed in 2014.…

Billions Over Budget, Kemper Facility Gasification Portion Is Suspended

June 29, 2017

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Operations and start-up of the lignite gasification portion of the Kemper County Energy Facility, marred by exorbitant delays and cost overruns, and will be suspended immediately, Mississippi Power announced on June 28.

The Southern Co. subsidiary plans to continue running a combined cycle gas turbine (CCGT) plant that was completed as part of the $ 7.5 billion project three years ago, pending the Mississippi Public Service Commission’s (MPSC) decision on future operations.

Southern Co said the step was “appropriate” to manage skyrocketing costs, given the economics of the project, and the MPSC’s recent intent to establish a settlement docket to address matters related to the future operation of the gasifier portion of the project.

The proposed settlement docket is to be established by the commission on July 6. “The company will make any future announcements as to the status of the project based on the outcome of that process or future Commission action,” Southern Co. said.

Jack Bonnikson, a Southern Co.…

Mississippi PSC: Kemper Facility Should Operate Using Only Natural Gas

June 25, 2017

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The Mississippi Public Service Commission (MPSC) at an open meeting on June 21 unanimously passed a motion instructing its counsel to prepare an order pursuing potential solutions regarding the Kemper County Power Generation Facility.

In a press release, the MPSC said the “Kemper Facility should operate using only natural gas.” The commission said it wanted to remove risk from ratepayers for the lignite coal gasifier and related assets, and ensure no further rate increases were incurred by Mississippi Power Co. customers. (In fact, the commission strongly encouraged rate reductions, particularly for residential customers.)

Mississippi Power issued a statement on the MPSC decision. It said, “The PSC provided several guidelines to consider for the negotiations, including the possibility of the project only operating as a natural gas-fueled combined cycle plant. We expect the process for any negotiations and this new docket will be formally addressed as part of a proposed order the Commission will consider at their July 6 meeting. We look forward to reviewing the order.”…

Kemper, Now Slated to Start in Late June, Will Need Costly Post In-Service Improvement Projects

June 7, 2017

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Mississippi Power’s Kemper County integrated gasification combined cycle (IGCC) project is now expected to be in service by the end of June, but the company expects it will need post in-service improvements. It also said timing of when it will file a case to address the recovery of costs not currently reflected in rates is uncertain.

The Southern Co. subsidiary said on June 5 that it filed a rate plan with the Mississippi Public Service Commission (MPSC) that would allow current rates for recovery of portions of the Kemper project’s existing combined cycle gas turbine (CCGT) plant to remain in place. If approved, that filing will not increase customer bills, it said.

It added, however, that discussions with the MPSC continue on the status of the project and the nature and timing of a rate filing to address recovery of the remainder of the Kemper project costs, which includes its gasification component.

Mississippi Power wants a timely resolution of such a filing, which will likely require a settlement between the company and the Mississippi Public Utilities staff as well as other parties.…

Southern Co. to File Rate Case for Kemper IGCC, Already Economically Unviable in Face of Cheap Gas

June 3, 2017

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Announcing yet another lag beyond a new in-service date for its Kemper County integrated gasification combined cycle (IGCC) project, Southern Co. may raise discussions with regulators about the possibility of scrapping the project’s gasification component.

The company’s subsidiary Mississippi Power last said the first-of-its-kind project should begin operations by May 31. On May 31, however, the utility announced that the facility “is not currently fully operational.” It also said it would delay a monthly project status report that was due on June 1 to the Mississippi Public Service Commission (MPSC). It plans to submit the report on June 5 instead, because “the company continues to assess the project’s schedule and cost.”

On June 5, the company is also likely to make a rate filing for the project. It is expected to request an accounting order to defer all costs incurred after the project is operational, that are not subject to a cost cap, and are not already included in rates.

Mississippi law allows Mississippi Power to file both a traditional rate case and an alternative multi-year rate mitigation plan.…