Mississippi regulators are drafting a plan for utility giant Southern Company to use only natural gas at its state-of-the-art “clean coal” power plant in Kemper County, and that it not be allowed to recoup the cost of the expensive coal portion of the power plant by charging ratepayers.
The Mississippi Public Service Commission on Wednesday unanimously passed a motion instructing its counsel to prepare an order by July 6 that outlines “potential solutions” for keeping the Kemper County Power Generation Facility running on natural gas in order to reduce the burden of the plant’s construction on consumers.
The power plant has faced a number of cost overruns and delays over the last seven years it has been under construction. It is a coal gasification plant, which means it essentially turns low-grade coal into natural gas that it then burns to produce electricity.
But that also means it can use natural gas that isn’t derived from coal. And given the low cost of natural gas compared to coal in most regions of the country, it appears the state utility commission wants the Kemper facility to burn non-coal derived natural gas indefinitely.
Last month, Mississippi Power, which is the Southern Company subsidiary that operates the plant, asked the commission to raise electricity consumers’ rates to make up for the higher costs of building the coal portion of the plant, which also removes carbon dioxide in a bid to make coal-fired power a climate change-friendly energy solution.
But the commission wants options, saying any settlement presented to the regulators should “[r]emove risk from ratepayers for the lignite coal gasifier and related assets,” including “no rate increase to Mississippi Power Company customers,” according to a commission statement.
“The commission strongly encourages serious discussions leading to potential rate reduction, particularly for residential customers,” it continued, adding that any settlement should “allow only” the operation of the natural gas facility at the Kemper Project.
President Trump has made building clean coal power plants like the Kemper facility part of his energy agenda to boost coal demand. Experts say the widespread use of these types of power plants is much further down the road, as cost must be reduced and efficiencies improved to make them commercial.
However, many large coal firms continue to want the government to support the technology in order to improve the technology, while pursuing more near-term clean coal technologies.
The Kemper plant is running on natural gas for the time being, according to a Wall Street Journal report. Southern Company has spent seven years and nearly $8 billion to build the coal gasification plant, which had initially been projected to cost just $3 billion in 2010.
