Power plant prudency hearings delayed indefinitely

By Steve Wilson | Mississippi Watchdog

An order issued by the Mississippi Public Service Commission during its monthly meeting Tuesday might prove to be a game changer in the fight over Mississippi Power’s expensive Kemper Project power plant.

The order placed the utility’s ability to get ratepayers to pick up more of the plant’s $5.53 billion cost, on top of an 18 percent rate increase on its 187,000 customers, in jeopardy. The uppercut of a 1-2 combination was the postponement of the prudency hearings in front of the PSC. The gut punch was the rejection of a Mississippi Power motion to put Kemper’s turbines running on natural gas into the rate base.

At the meeting, the three-member body voted unanimously to postpone the prudency hearings, originally scheduled for September, for the plant located in eastern Mississippi north of Meridian. The hearings will decide how much of the plant’s cost was “prudent,” which will determine how much will be paid by the company or shifted onto ratepayers.

Brandon Presley, Northern District commissioner for the PSC, said he wants to see the facility generating reliable power on a constant basis before the commission will hear its case on prudency.

“I’ve been arguing this for four years that we should not render any decision about whether those dollars were spent correctly or not until we see if this plant will work. Or not,” Presley said. “Back to my pickup example, this is like saying ‘if the transmission works, I’ll buy the truck.’ But what about motor? What about the windows or the air conditioner?

“I’m proud to have won the vote to add more protections for the ratepayers of Mississippi Gulf Coast. We’re not going to render any decision until we see that this is going to work.”

The PSC ordered that Mississippi Power’s motion — to run the turbines on natural gas — be spun off in a separate filing from the integrated gasification plant. The gasifier plant is a prototype facility that converts low-grade lignite coal into a natural gas-like substance called synth gas to fuel the plant’s electrical generation turbines.

“The decision made by the PSC about Kemper County today reflects an awakening by the commissioners, the staff and the attorneys for the PSC to the reality that the Supreme Court of the State of Mississippi has these matters before it, on appeal, of which they all wish they could escape.” said Thomas Blanton, a Hattiesburg resident who has a lawsuit regarding Kemper in front of the Supreme Court.

His lawsuit challenges the constitutionality of the 2008 Baseload Act, which was signed by then-governor Haley Barbour. It allowed power companies to charge customers for power plants before they begin generating electricity. Blanton’s attorneys filed a motion asking the justices to delay dismissing lawsuits against the Kemper project until they address his constitutional challenge to the Baseload Act.

Also on Monday, a settlement was reached between Mississippi Power and the Sierra Club, one of the Kemper Project’s biggest foes, in a case before the state supreme court. The settlement ended the group’s lawsuit against the utility, which provided some concessions.

“It would’ve been great in a perfect world for Mississippi Power to say they’re through building the plant (Kemper),” said Louie Miller, president of the Mississippi Sierra Club. “We all know that’s not going to happen. But what we got out of this agreement were things that we couldn’t have gotten through litigation.”

Included in the settlement is the retirement or conversion to natural gas of four coal-power generating units in Mississippi and two in Greene County, Ala. Also part of the agreement was the end of the utility’s resistance to net metering in Mississippi.

Net metering is defined by the Federal Energy Regulatory Commission as a service under which electricity generated by a consumer from an on-site generating facility such as wind or solar and delivered to local distribution facilities might be used to offset electricity provided by the utility.

Mississippi is one of five states with no law on state metering and the agreement mandates that any customer-generated kilowatt hours be compensated by Mississippi Power on a one-to-one basis.

Also in the agreement were:

• The building of flood-resistant retention ponds at the Liberty Mine at the Kemper site. Miller said the original ponds were built to 20-year flood standards, which are insufficient, and new ponds will be constructed to a 100-year flood standard
• $15 million for helping poor people improve the energy efficiency of their homes
• $2 million to buy habitat for the endangered gopher frog