March 30, 2012 / 5:05 PM / 6 years ago

Mississippi allows Southern Co to continue building coal plant

* Commission says delaying plant not in public interest

* Utility has spent more than $1.1 billion so far

* Opponents argued there abundant natural gas

March 30 (Reuters) - Mississippi utility regulators on Friday issued a temporary certificate to allow a unit of Southern Co to continue building an $2.8 billion coal-gasification power plant in the state despite a court ruling that overturned the existing certificate issued in 2010.

With only two days meeting notice and no discussion, the Mississippi Public Service Commission voted 2-1 to allow Southern Co’s smallest utility, Mississippi Power, to keep building the 582-megawatt integrated gasification combined-cycle (IGCC) power plant in Kemper County, according to the commission order obtained by Reuters.

The order, supported by commissioner chairman Leonard Bentz and commissioner Lynn Posey, stated that the halting the project would lead to “unnecessary costs” that would cause substantial injury to the utility and its customers.

“The commission finds that avoiding unnecessary costs is in the public interest; and that allowing the Kemper Project to proceed at this stage serves the public interest,” the order states.

Commissioner Brandon Presley who has consistently opposed the Kemper project for its high price tag and untried technology called the action to issue a temporary certificate “squarely contrary to state law.”

In a dissenting opinion, Presley said the order “totally misinterprets” the state statute “to Mississippi Power’s advantage and to the detriment of MPC’s customers.”

“It’s an absolute bailout of Mississippi Power,” said Louie Miller, director of the Sierra Club in Mississippi which successfully challenged the Kemper certificate in state court.

Miller suggested that Mississippi Power customers would be better served if the plant were converted to run natural gas rather than lignite as gas prices have fallen dramatically since Kemper County was proposed several years ago.

According to state filings, Mississippi Power has spent more than $1.1 billion on the Kemper County IGCC plant so far. It is expected to begin producing power in 2014. The utility has less than 200,000 customers.

The Kemper certificate, issued by the PSC in May 2010, was thrown into doubt earlier this month when the Mississippi Supreme Court ruled 9-0 that the commission failed to show evidence that the plant would benefit the utility’s customers as required by state law. The court sent the case back to the PSC.

Mississippi Power did not immediately respond to a call for comment on Friday.

Kemper opponents, including independent power producers, said Mississippi Power could only justify customer savings by using a long-term, high-priced gas scenario that did not take into account the abundant supply of gas from shale-rock formations.

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 Southern Co to burn Mississippi lignite and had support from state economic development groups and then-Governor Haley Barbour.

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