Dive Brief:

• Mississippi Power has once again failed to reach agreement with state regulators over its failed Kemper integrated gasification combined-cycle project, the Associated Press reports. 

• In late August, Mississippi Power asked for $250 million more than the Public Service Commission was willing to approve in a settlement agreement, prompting an extension of the settlement deadline to Sept. 5.

• The Public Utilities Staff, which is independent from the PSC, raised the offer by $110 million, but the utility rejected that offer too. 

Dive Insight:

Mississippi Power could not get the gasifiers on the 582 MW Kemper IGCC project to work consistently, even after spending $7.5 billion on a project that was originally budgeted at about $4 billion.

The utility, a subsidiary of Southern Co., pulled the plug on the project in late June, saying it would instead run the facility as a natural gas-fired plant and not use the gasifiers that were supposed to convert local lignite into a clean burning synthesis fuel. Abandoning the gasification portion of the project leaves behind the thorny issue of who will pay for which portions of the project and how much will they pay.

The PSC is trying to limit how much ratepayers have to pay for the Kemper project, despite its failure. The original approval capped at $2.4 billion the amount the utility could collect from ratepayers for the project.

The PSC has directed Mississippi Power to come up with a settlement agreement that would not subject ratepayers to a rate increase and could even result in rate reductions. Regulators also said the settlement should remove any risk of ratepayers bearing costs associated with the gasifiers or related assets.

Mississippi Power says accepting the settlement proposed by the regulators would harm the company financially and damage its ability to continue providing the same level of service to customers. In March, Moody’s Investors Service downgraded $800 million of the utility’s debt to a negative outlook.