Hearing ends on Kemper power plant

By The Associated Press

GULFPORT — Attorneys for Mississippi Power Co. and the Sierra Club spent nearly four hours in a Harrison County courtroom on Friday arguing about whether the economics of the power company’s Kemper County lignite plant make sense right now.

The Sierra Club is asking Chancery Court Judge Jim Persons to revoke the certificate the Mississippi Public Service Commission granted for the plant, saying the cost is too high, reports the Sun Herald. Mississippi Power argues the plant represents the most reliable and economical solution for ratepayers’ future power needs, the newspaper said.

The Sierra Club wants Persons to rule that the new permission granted by the commission in April was illegal.

By the time a decision is rendered in the case, construction of the plant should be 70 percent complete, the company said.

Ratepayers are expected to cover construction costs, but the PSC denied Mississippi Power authority to begin raising rates until the Sierra Club’s appeal is decided. A total rate increase of 33 percent would be phased in over time.

Plant costs have increased from an initial $2.4 billion to $2.88 billion.

The project could experience more cost overruns, or the technology to transform lignite, a form of coal, into power could fail, Sierra Club attorney Robert Wiygul said.

“There’s no margin for error,” Wiygul told the judge. “There’s no way of ameliorating the risk.”

The Sierra Club believes Mississippi Power should bear the cost if the judge revokes permission for the plant.

Mississippi Power disagrees. “The exposure of the ratepayer to this high initial cost is essentially fixed, regardless of the decision of this court or the Mississippi Supreme Court, in Mississippi Power’s view,” company attorney Ben Stone said.

The PSC would decide how the cost should be apportioned.

Persons said ratepayers could suffer regardless because Mississippi Power’s financial condition would be compromised if construction stopped. Wiygul said the Sierra Club wants to see the plant converted for natural gas, but Stone said the cost at this point would be “exorbitant.”

Stone said gas prices are highly volatile, while lignite is a relatively cheap and financially stable form of fuel. Ratepayers will be better off over the 40-year life of the plant, he said, if Mississippi Power can rely on lignite to generate power when gas prices are higher.

He said Mississippi Power has proceeded with construction because the company needs a new fuel source by 2014, when the plant should be completed.

The lignite plant is not expected to begin paying off for ratepayers until 2024, but Wiygul said that time frame could be extended if gas prices remain relatively low.

Stone told the judge: “The customers are pawns in the Sierra Club’s strategy to kill coal. That don’t care who pays what.”

Persons did not indicate when he would rule.