Mississippi Power's Kemper Coal Plant Construction Fought By Activists

03/23/2012 01:05 pm ET | Updated May 23, 2012

JACKSON, Miss. (AP) — Environmental groups have asked regulators and the state Supreme Court to stop construction at Mississippi Power's $2.7 billion coal power plant in Kemper County.

The groups filed a motion Thursday asking the Supreme Court to finalize its March 15 ruling, which would officially revoke the approval for the Kemper coal plant.

Mississippi Sierra Club director Louie Miller says state law prohibits construction of a power plant without the valid approval of the Public Service Commission.

Earlier this week, the groups asked the Public Service Commission to convene a meeting to work out a plan for a safe and orderly shutdown of construction activities at the site.

"The only prudent course of action — which is what's required by law — is for the PSC to intervene and protect ratepayers," Linda St. Clair, President of Mississippians for Affordable Energy, said in a statement.

"Mississippi Power has been consistently reckless, and their actions are only adding to the price tag for ratepayers. The PSC must step in and manage this responsibly, and that means reopening the Kemper case for a full hearing."

Company spokeswoman Cindy Duvall said the company hopes the PSC will address the issue quickly.

"This is just another in a series of scare tactics by a group of extremists. Their agenda is to stop all coal plants, including the Kemper Project, in spite of its benefits to our customers. We continue to be confident that the record is clear authorizing Kemper, nothing has changed," Duvall said in a statement.

Miller said that in a hearing, the PSC must fully evaluate lower natural gas prices and current projected costs of the untested coal gasification technology at the Kemper plant. He said that a full review based on evidence would show that the Kemper coal plant is not the best option for Mississippi ratepayers.

The Supreme Court ruled March 15 that the PSC failed to lay out their reasoning clearly when they eased the financial terms under which the power company could build what it calls Plant Ratcliffe in Kemper County. The court said without such details it cannot determine if the PSC decision was supported by the evidence.

In a statement the next day, Mississippi Power said it would continue construction — begun last December — because "nothing has occurred since the order which should cause the commission to reverse its decision granting the certificate."

The Sierra Club has argued the PSC approved the plan without sufficient proof that the plant is needed and that customers will be charged reasonable rates for the power it produces.

The Sierra Club and other environmental groups claim the project is dirty, expensive and unnecessary. The group also opposes plans to pass $2.8 billion in construction costs on to ratepayers.

Mississippi Power has said rates will go up about 33 percent to pay for the plant. However, the Sierra Club says the figure is closer to 45 percent.

A unit of Atlanta-based Southern Co., 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.

Mississippi Power says the plant is needed to provide more electricity for its 193,000 customers scattered from Meridian to the Gulf Coast.

The PSC originally voted in April 2010 to cap at $2.4 billion the amount that Mississippi Power could charge ratepayers for the plant. The company is also getting about $300 million in federal assistance. 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.