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The Associated Press May 28, 2010, 11:01AM ET

Mississippi Power will proceed with coal plant

Mississippi Power Co. will proceed with a planned coal-fired, electric-generating plant in Kemper County after state regulators relaxed restrictions it had placed on the project.

The utility announced its decision Thursday after a thorough review of an order issued this week by the Public Service Commission.

Tommy Anderson, Mississippi Power vice president of generation development, said the company will move forward to finance and construct the plant.

"While this was not what was requested, we view this order as one we can accept and it will allow us to be able to unlock the tremendous value the Kemper County IGCC Project brings to our customers," Anderson said in a statement.

The PSC voted 2-1 Wednesday to ease restrictions it earlier had placed on the plant. The panel's latest order said Mississippi Power's construction costs passed on to ratepayers could be no more than $2.88 billion. The PSC said the costs could go no higher unless it could show that concrete, steel and other building costs went up.

The PSC said the rate increases could not occur until Jan. 1, 2012.

Last month, the PSC had capped construction at $2.4 billion, but the utility said that condition and others made it impossible to finance or build the plant.

Mississippi Power, a subsidiary of the Atlanta-based Southern Co., has said the plant would use a new technology that converts lignite into a gas that would fuel turbines to create electricity. Company officials said the lignite would be locally mined and would be cheaper than natural gas.

The utility said more than 4 billion tons of lignite are underground in Kemper County, and it has options on 30,000 acres.

The proposed 582-megawatt plant is expected to begin generating power by 2014, according to the utility.

Mississippi Power officials say the plant will create 260 permanent jobs and 1,000 jobs during the construction phase.

Brian Henson, executive director of the Kemper County Economic Development Authority, said many in the community support the project, mainly because of the jobs it will create. He said the county's unemployment rate is 14.1 percent.

"It's one of those projects you wish for, but you never actually see," Henson said.

Environmental groups, including the Mississippi Sierra Club, are among those opposed to the project, which they've described as dirty, expensive and unnecessary. Mississippi Sierra Club Director Louie Miller criticized the PSC's latest decision, saying the panel had shifted the risk of the project to ratepayers.

"Now customers of Mississippi Power likely will see their electric bills increase to pay for a coal-burning plant that no one including the PSC can prove is absolutely needed," Miller said.

Henson acknowledged there's some local concern about the rate increases, but many residents feel it's a fair trade-off.

"I know they're concerned about rates, period. The fact is, they're going up whether you build it or not," Henson said. "Most of the people that call me that are complaining are complaining because they want jobs and they want to go work."

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