UPDATE 1-Sierra Club continues Kemper coal-plant legal battle

Mon Apr 30, 2012 3:51pm EDT

* Southern's smallest utility building a gasification plant
    * 2010 certificate vacated by Miss. Supreme Court in March
    * PSC re-issues certificate in April with $2.88 bln cost cap


    By Eileen O'Grady	
    April 30 (Reuters) - Sierra Club officials in Mississippi
are continuing a legal fight to stop construction of a $2.88
billion coal-gasification power plant by a Southern Co 
utility in Kemper County, Mississippi. 	
    Last week, the Mississippi Public Service Commission (PSC)
voted 2-1 to re-issue a certificate allowing the utility,
Mississippi Power Co, to build a 582-megawatt integrated
gasification combined-cycle (IGCC) power plant one month after
the state supreme court vacated the panel's original certificate
issued in 2010. 	
    The Sierra Club, which claims 1,700 members in Mississippi,
appealed the commission's latest action at the Mississippi
Supreme Court late last week, calling the order "arbitrary,
capricious, beyond legal authority and unsupported by
substantial evidence." 	
    The environmental group's filing described the commission's
April 24 order as "abandoning many of its previous finding from
the 2010 Kemper orders, and substituting new and contradictory
ones geared at supporting approval of the Kemper project." 	
    Sierra Club successfully appealed the earlier Kemper
certificate at the Mississippi Supreme Court after raising
questions about the high cost of the Kemper facility, the rate
impact on Mississippi Power's small customer base and the
plant's economics in light of the dramatic drop in natural gas
prices since the plant was proposed. 	
     Mississippi Power spokesman Jeff Shepard said the utility
expected ongoing opposition to the project. 	
    "We expect actions like this to continue until the Kemper
project comes online in May 2014," Shepard said in a statement.
"This project has proven time after time to be the most
reliable, environmentally-responsible energy option at the
lowest cost possible for our customers."	
    Mississippi PSC Chairman Leonard Bentz, who voted to
re-issue the Kemper certificate, also said the project is the
best long-term alternative for Mississippi Power customers.   	
    In a statement, Bentz said the April 24 order "has not
changed" from previous commission orders. "What we did today was
clarify our original decision, as requested by the Supreme
Court. They asked us for more detail, and we gave it," Bentz
said after the vote.  	
    Bentz said the rate impact from Kemper is not yet known and
subject to commission action. "If for some reason this plant
doesn't work or does not perform as advertised, the ratepayer
will not be responsible," Bentz said. 	
    Commissioner Brandon Presley, who has consistently opposed
the Kemper project, said it would have been appropriate for the
panel to reopen the case to consider gas prices, environmental
risk, the gasification technology and other topics. 	
    The 133-page revised order keeps a soft cost cap of $2.4
billion on the Kemper project and a "hard cap" of $2.88 billion,
according to the PSC's counsel. 	
    Mississippi Power has spent more than $1 billion on the
Kemper plant and another $109 million on the related lignite
mine. Kemper is expected to begin producing power in 2014. 	
    IGCC technology heats coal to convert it into a synthesis
gas that is processed to remove numerous pollutants before being
sent to a traditional combined-cycle power plant to produce
electricity.  	
    Kemper was designed to showcase a gasification technology
developed by another Southern Co unit to burn Mississippi
lignite.
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