Dive Brief:
- The Mississippi Public Service Commission on Tuesday unanimously approved a settlement between Mississippi Power and stakeholders over cost recovery of the failed Kemper coal gasification plant.
- Mississippi Power, a subsidiary of Southern Co., initially sought to collect more than $200 million after it decided to run the plant as a gas facility in June. But regulators since trimmed that amount to $112.6 million, while ensuring ratepayers will see a decline of $3/month on their bill.
- The Kemper plant ran over-schedule and over-budget, with expected construction costs ultimately rising to $7.5 billion. The failure of Kemper to gasify coal (and essentially reduce carbon emissions from the resource) was one of two high-profile challenges last year for Southern Co., whose Vogtle nuclear project was left in limbo after nuclear engineering firm Westinghouse Electric declared bankruptcy in early 2017.
Dive Insight:
The failure of Kemper to work as a gasification combined-cycle plant highlighted the difficulties carbon capture and sequestration technology faces — as well as the steep pricetag that goes along with it.
Originally budgeted at $2.9 billion, costs ballooned to its current pricetag of $7.5 billion, and construction ran years behind schedule. The utility already wrote off $6.4 billion in costs, according to a Facebook post from PSC Commissioner Cecil Brown.
"As part of the agreement, the company will not ask to recover any of these losses from ratepayers now, or in the future," he wrote.
The settlement stemmed from a PSC order issued in July after Southern pulled the plug on the project. The PSC wanted to ensure ratepayers would not be on the hook for costs related to constructing the plant as a coal gasifier.
The settlement also stipulates customers would not be liable for the costs should Mississippi Power pursue coal gasification in the future, even if the assets are successfully used. In addition, customers could see even more rate decreases due to corporate income tax overhaul, according to the Hattiesburg American.
In a statement, Mississippi Power said it "is pleased with this final order from the Public Service Commission."