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The Associated Press April 30, 2010, 8:43AM ET

Mississippi Power will not build coal-fired plant

Mississippi Power Co. will not build a coal-fired generating plant in Kemper County.

The company made the decision after state regulators on Thursday said they would approve the application, but with a lengthy set of conditions -- conditions that Mississippi Power says make it impossible to finance or construct the plant.

The three-member Mississippi Public Service Commission voted 2-1 in favor of proposal, detailing its decision in a 50-page document.

The most significant condition was a $2.4 billion cap in the amount of construction costs the company would be able to charge to rate payers.

"We are disappointed in this decision," company Spokeswoman Cindy Duvall said in a statement. "We put forth the best option available to us to meet our customers' needs with reliable and affordable energy."

Mississippi Power, a subsidiary of Atlanta-based Southern Co., wanted to build a $2.4 billion plant in Kemper County. The plant would have use a new technology that converts a soft coal called lignite into a gas that would fuel turbines to create electricity. The lignite would have been locally mined. The technology is known as IGCC, or Integrated Gasification Combined Cycle.

Kemper County officials were disappointed in the company's decision not to build.

The county was counting on the plant to provide much needed jobs for residents in the area, said James Granger, president of the Kemper County Board of Supervisors.

The plant would have created 260 permanent jobs and 1,000 jobs during the construction phase.

The tax money from the plant would have also provided an economic "shot in the arm" to the county and its schools, Granger said.

"We're going to keep praying it happens," he said.

Lt. Governor Phil Bryant, who has supported the project from the beginning, and economic development officials released statements lamenting lost jobs.

"I am disappointed Mississippi cannot further its exploration of clean coal technology and the loss of numerous potential jobs," Bryant said.

The plant would not only have created jobs, but help attract other economic development projects that look for available, reliable, predictable and affordable energy, said Blake A. Wilson, president and CEO of the Mississippi Economic Council.

"We have a chance to make a difference in a part of the state that desperately needs jobs, industry and new tax base," Wilson said.

Leonard Bentz from the southern district and Lynn Posey from the central district voted to approve the project. The commissioners represent the counties in which the plant and its transmission lines will be built. Brandon Presley of the northern district voted against it.

In his 14-page dissent, Presley said the conditions do not do enough to protect rate payers from "great risks" associated with the project's construction.

The commission started holding hearings on the project in late 2009.

Opponents, including the Sierra Club, said the plant north of Meridian is unnecessary and that it would be dirty and expensive.

The Sierra Club also agreed with Presley. The organization felt that even with the conditions, it would be a huge risk for rate payers because there are too many unknowns, said Robert Wiygul, an Ocean Springs, Miss.-based attorney for the Sierra Club.

Mississippi Power has 23 generating units in south Mississippi. Six of them use coal and 17 use natural gas. Southern Co. announced in September that it would build the first IGCC plant in China, with operation expected to begin in 2011.

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