Southern Co. Court Loss Is Clean Coal’s Second Setback in Month

Southern Co. said it’s reviewing its options after Mississippi’s high court threw out a key element of a financing plan for an over-budget plant in the state, the second set back this month for a high profile clean-coal project.

The Mississippi Supreme Court on Thursday ordered refunds to customers of about $250 million and told regulators to must reconsider how to pay for the $6.2 billion project, the most expensive coal plant in history. The Kemper County project -- the first commercial-scale plant to capture carbon dioxide and bury it underground -- is seen as a showcase for supporters of the technology, including the Obama administration.

Mississippi Power, part of Atlanta-based Southern, is reviewing the ruling “to determine the company’s options,” according to a statement late Thursday. “Progress continues at the Kemper County energy facility with a focus on start-up activities.”

The decision adds to skepticism of the technology to capture and inject underground carbon dioxide gases tied to global warming. While environmental groups such as the Sierra Club argue that technology is too expensive and doesn’t make sense with advances in solar, wind and energy storage technology, groups such as the Clean Air Task Force say capturing emissions is the key to avoiding the warming.

Higher Rates

For customers in Mississippi, the decision may mean higher rates, said Steve Renfroe, one of the three members of the Mississippi Public Service Commission, which will have to decide on utility’s rates.

“It’s clear that those funds that have been collected will have to be returned,” he said. As a result, “you could expect a sharper spike in rates later.”

Kemper is among projects the Environmental Protection Agency cites in proposing rule that would preclude building coal plants lacking carbon-capture technology. Earlier this month, President Barack Obama’s Energy Department cut off $1 billion for the FutureGen project in Illinois, a carbon-capture project that has been more than a decade in planning. Two other federally backed projects are delayed and facing September deadlines.

The 582-megawatt Kemper project, the only major U.S. coal plant being built, won a $270 million Energy Department grant. Even with the support, Mississippi Power’s 186,000 ratepayers must pay most of the cost. The company sought rate increases of 15 percent in 2013 and 3 percent in 2014. The state court said the process to approve the increases was illegal.

The Hattiesburg oil man who sued over the rates said the company will need to show the new plant makes sense given other lower-cost options, and a falling forecast for power use.

“Southern is just going to need to eat” the costs, said Thomas Blanton, who vowed to fight the company he said wants to get ratepayers to pay for a “science experiment.”

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