‘Clean coal’ project of­fi­cially ends in Mis­sis­sippi

Northwest Arkansas Democrat-Gazette - - MUTUAL FUNDS - MARK CHEDIAK

A seven-year, $7.5 bil­lion ef­fort to build a first-of-it­skind “clean coal” power plant in Mis­sis­sippi is of­fi­cially over.

Mis­sis­sippi reg­u­la­tors or­dered util­ity owner South­ern Co. on Thurs­day to come up with a deal that will have the Kem­per plant — once hailed by for­mer Pres­i­dent Barack Obama’s ad­min­is­tra­tion as the fu­ture of coal — run­ning as a nat­u­ral gas-fired gen­er­a­tor in­stead. That rat­i­fied South­ern’s June 28 pro­posal to pull the plug on us­ing coal there.

The rul­ing seals the fate of the Kem­per plant and memo­ri­al­izes the state util­ity com­mis­sion’s call last month for the com­pany to give up on “un­proven” tech­nolo­gies at the plant. It also as­sures that cus­tomers won’t pay for the fail­ure. Al­most three years af­ter the plant be­gan gen­er­at­ing power with gas, South­ern has been un­able to put cru­cial coal-gasi­fiers into ser­vice.

The death of Kem­per’s “clean coal” com­po­nent rep­re­sents a ma­jor set­back for the very tech­nolo­gies that Pres­i­dent Don­ald Trump has pro­moted as a way to help save min­ing jobs. It also marks the end of a high-pro­file project that was plagued by con­struc­tion slow­downs, equip­ment fail­ures and slid­ing gas prices. Kem­per is al­ready years be­hind sched­ule and more than $4 bil­lion over bud­get.

The Mis­sis­sippi Pub­lic Ser­vice Com­mis­sion told South­ern that it wants to fi­nal­ize a set­tle­ment within 90 days guar­an­tee­ing that cus­tomers won’t pay for the coal por­tion of the plant. South­ern last month warned in­vestors that it may take a $3.4 bil­lion second-quar­ter charge if the com­pany isn’t au­tho­rized to re­cover the costs of the project from cus­tomers.

“To­day’s pro­ceed­ing is in line with the frame­work the com­mis­sion laid out two weeks ago,” Jack Bon­nikson, a Mis­sis­sippi Power spokesman, said by email Thurs­day. “We look for­ward to re­view­ing the or­der.”

Kem­per was sup­posed to turn coal into gas to pro­duce elec­tric­ity — all while re­mov­ing car­bon diox­ide emis­sions linked to global warm­ing. At least that was idea as the U.S. gov­ern­ment poured $382 mil­lion of grants into the project and then-En­ergy Sec­re­tary Steven Chu stressed its “na­tional im­por­tance.” Now, Kem­per’s only claim to fame is be­com­ing quite pos­si­bly the most ex­pen­sive gas plant ever built.

When Kem­per was con­ceived, Amer­ica’s gas re­sources were thought to be shrink­ing, and South­ern pitched the plant as a valu­able hedge against volatile com­mod­ity prices. The shale boom has since un­leashed so much nat­u­ral gas that it’s glut­ted mar­kets and sent prices plum­met­ing to the low­est level since the 1990s.

By Fe­bru­ary, South­ern was es­ti­mat­ing that run­ning the Kem­per plant on gas was more eco­nom­i­cally vi­able than us­ing coal un­der two of three gas-price sce­nar­ios.

The com­pany has 45 days to pro­pose a set­tle­ment to the com­mis­sion with a fur­ther 45 days for pub­lic com­ment, ac­cord­ing to Thurs­day’s or­der.


Cranes stand at the con­struc­tion site for South­ern Co.’s Kem­per County power plant near Merid­ian, Miss., in this file photo from 2014.

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