Mississippi Power CEO 'very surprised' by failed Kemper negotiations

Dive Brief:

The CEO of Mississippi Power is "very surprised" the company has been unable to reach a settlement with Mississippi Public Utilities Staff regarding the failed Kemper integrated gasification combined-cycle project, according to the SunHerald. The deadline to reach an agreement has been extended to Sept. 5.
The utility and staff made separate filings last week with the Public Service Commission, despite regulators' demands the two sides reach agreement on how to close down the project while not charging customers.
Anthony Wilson, president and CEO of Mississippi Power, told the newspaper he believes the utility tried to do exactly as the PSC, but some staff demands would seriously hurt the company.

Dive Insight:

The PSC made several suggestions to Mississippi Power: It should strongly consider a rate decrease, and it could not charge customers for the failed gasification system. Wilson says the utility proposed just that, but Mississippi Public Utilities Staff still found sticking points.

According to the Public Utilities Staff website, it "was created in 1990 to represent the broad interests of the State of Mississippi by balancing the respective concerns of the residential, commercial and industrial utility customers, the state agencies and the public utilities."

Public Utilities Staff reportedly objected to some costs the utility proposed recovering, including one issue valued at up to $300 million. Agreeing to those terms could be "devastating" to the utility, said Wilson.

The Kemper "clean coal" plant was designed to turn lignite from a nearby mine into gas to fuel turbines and to capture about 65% of the carbon dioxide emissions. But Mississippi Power could not get the gasifiers to work consistently, and had to pull the plug on the $7.5 billion project that was years behind schedule and about $4 billion over budget.

An order from the PSC gave the utility 45 days to file a settlement with the PSC. Along with considering a rate decrease, it directed the company to absolve ratepayers of risks associated with the coal gasifiers.

Mississippi Power said it tried to reach a settlement, but counter proposals from the Public Utilities Staff would have left it unable to continue to provide a consistent level of service. The utility also proposed keeping rates level.

On Friday, the PSC extended the deadline for Mississippi Power, the Public Utilities staff and other parties to reach a settlement to Sept. 5.