The Associated Press March 30, 2012, 3:58PM ET

PSC lets Miss. Power coal plant to proceed for now

Utility regulators voted 2-1 Friday to let Mississippi Power Co. continue building its Kemper County coal-fired power plant -- for now.

In a Friday meeting that lasted less than a minute, the state Public Service Commission granted temporary construction authority to the unit of Atlanta-based Southern Co, promising to follow up with a permanent decision by May 2.

Southern District Commissioner Leonard Bentz and Central District Commissioner Lynn Posey, both Republicans, voted for the temporary authority. Northern District Commissioner Brandon Presley, a Democrat, voted against.

The vote came weeks after the state Supreme Court ruled that the commission failed to adequately explain its reasons for easing financial restrictions on the $2.4 billion plant.

The Sierra Club, which sued the PSC and Mississippi Power, returned to the Supreme Court within hours Friday to challenge the action.

Neither Bentz nor Posey explained their reasons or took questions from reporters. In its order, the commission wrote that if Mississippi Power stopped work now and started again later, it would lose at least $86 million a month.

"At this stage, neither the ratepayer nor the company benefits from de-mobilizing and halting the Kemper project," the commission wrote. The PSC said that increased costs, in addition to possibly burdening customers, might make Kemper economically unfeasible and said it wanted to "preserve Kemper as a viable option."

Mississippi Power estimated that any interruption in work would increase costs by $250 million to $500 million, as contractors would shift workers and equipment elsewhere and the company might have to break contracts. The company told the commission it has already spent $1.1 billion and committed another $400 million.

The Sierra Club claims the Supreme Court ruling voided Mississippi Power's authority to build the plant and that the PSC must order the company to halt construction. Mississippi Power argued that the Supreme Court did not throw out the underlying certificate allowing the plant to be built.

The Sierra Club wrote in its petition to the Supreme Court that the 1-minute meeting, which was called Wednesday, was illegal.

"The majority's order was granted with no evidence presented, no opportunity for the parties or the public to be heard, and no notice to the parties," a lawyer for the club wrote. "It is a profound violation of the most basic due process, and is contrary to statute and law. The majority's order usurps the jurisdiction of this court, and will cause unnecessary injury to the Sierra Club and its ratepayer members."

The Sierra Club had been seeking to meet with PSC to discuss how regulators should proceed. Mississippi Power argues that the PSC doesn't need to consider whether circumstances have changed since 2010 and can just reissue its order with more detailed findings.

Company spokesman Jeff Shepard said the project is still on track to be completed in 2014 and cost about $2.4 billion. The company, under previous PSC orders, can spend up to $2.88 billion.

The Sierra Club's Louie Miller argues there needs to be an orderly shutdown of work in Kemper County and a conversion of the plant to a cheaper and more reliable source of power, such as natural gas.

Mississippi Power would buy lignite mined nearby, turn it into a synthetic gas and burn the gas, capturing byproducts such as carbon dioxide and selling them.

The technology is supposed to allow coal to be burned more cleanly and cut emissions of carbon dioxide, which scientists say contributes to global warming. Mississippi Power says the plant is needed to provide more electricity for its 193,000 customers scattered from Meridian to the Gulf Coast. Gulfport-based Mississippi Power serves parts of 23 counties in southeastern Mississippi. By revenue, it's the smallest of Southern's four geographic subsidiaries. It reported operating revenues of $1.11 billion and profits of $94 million last year.

The PSC originally voted in 2010 to cap at $2.4 billion the amount that Mississippi Power could charge ratepayers for the plant. Commissioners also said the power company couldn't charge ratepayers for the plant before it started operation.

Mississippi Power said it couldn't build under those conditions and asked the PSC to reconsider. Lawyers for the company said it needed wiggle room for cost overruns, and wanted to charge ratepayers early to cut the interest customers would pay on money borrowed for the project.

A month later, commissioners voted 2-1 to give Mississippi Power what it wanted, raising the cost cap by 20 percent, to $2.88 billion. It also allowed Mississippi Power to start charging before the plant's scheduled start in 2014.


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