Meridian Star

September 29, 2013

Kemper facility provides affordable power

By Ed Holland
Special to The Star

MERIDIAN — Mississippi Power is investing in innovation for the future of Mississippi and America. The Kemper County energy facility, being constructed right here in your backyard, is expected to demonstrate its value to our customers for decades to come. In many cases, it already has.

    Its key innovation is to combine a state-of-the-art coal gasification process with carbon capture. The result is a reliable and affordable power source, fueled by low-grade coal, and a steady stream of captured carbon to be used for enhanced oil recovery.

    With low expected operating costs, the Kemper facility should be an effective hedge against volatility in natural gas prices, to the benefit of Mississippians and the environment.

    Mississippi Power is maximizing the advantages of the facility’s Mississippi location. The plant’s gasification technology will benefit by access to the kind of lignite coal that is plentiful in east Mississippi. We will capture at least 65 percent of the carbon dioxide (CO2) produced, and we are contracted to sell it to oil companies to satisfy the region’s large and growing demand for enhanced oil recovery. More than two million extra barrels of Mississippi oil will be produced annually as a result.

    Not only is the Kemper facility perfectly suited to Mississippi, but many other places around the world share its characteristics.

    The Kemper County energy facility is a technological marvel being built by and for Mississippians. On-site today are 6,000 dedicated workers making tremendous progress. And, more than 450 Mississippi companies have provided construction, equipment, materials or services to the project.

    It’s having a positive economic impact in our region and the state and will for years to come. An Ernst & Young study revealed that during construction, the Kemper project is generating nearly $75 million in state and local taxes. Once operational, the project is expected to create $30 million annually in state and local taxes over the life of the plant.

    The success of the Kemper facility is of great interest to Mississippians, America and the world.

    Earlier this month in Washington, D.C., the Atlantic Council, a non-profit organization which promotes engagement in international affairs, hosted a panel made up of domestic and international energy experts. Much of the panel’s discussion focused on the benefits of carbon capture technology for the environment and the world’s future energy supply.

    The panel’s experts agreed that Kemper’s state-of-the-art technology to capture at least 65 percent of the plant’s carbon emissions would have global benefits. Several agreed that the Kemper facility will play “a critical role in driving carbon capture technology forward, not just for coal-fired power generation, but for natural gas and all other energy-intensive industries and enterprises.”

    One of the most important statements made at the event was by Ambassador Paula Dobriansky, a senior fellow at the Belfer Center for Science and International Affairs at Harvard University’s John F. Kennedy School of Government. In her remarks, Ambassador Dobriansky noted, “When you turn your back on innovation, all you do is guarantee that, wherever power plants are built in the future, they are built using yesterday’s technologies instead of tomorrow’s.”

    We recognize that the road to innovation is not easy. Yes, we have had to increase the cost estimate in building the Kemper project. Anytime a first-of-a-kind project is constructed, there can be unexpected costs. But we are aggressively managing these costs and Mississippi Power customers will not pay a penny above the limit agreed to by the Mississippi Public Service Commission and the Legislature.

    We are building the Kemper facility to protect our customers from unnecessary exposure to volatile natural gas prices. It is ironic that those most vocally opposed to this project are those with vested interest in driving natural gas prices higher.

    Between 2004 and 2009, Mississippi Power’s fuel rates increased more than 43 percent because of the volatility in the natural gas market. Without building the Kemper project, as much as 90 percent of customers’ electricity could be generated with natural gas, leaving our customers highly exposed to natural gas market price fluctuations.

    Our fuel prices in 2009 were as high as they are projected to be in 2015 when all of the Kemper-related increases go into effect. This plant is expected to offer the most stable, low-cost energy available to our customers over the long term.

    I have said many times and will repeat here, we’re estimating that we will not raise customer rates more than a total of approximately 22 percent for the Kemper County energy facility. That’s far less than the more than 30 percent predicted at the time of certification.

    The majority of the 18 percent already approved by the Commission earlier this year is being collected in current rates. Approximately 4 percent will be recovered by low-interest bonds, which was approved by the Legislature earlier this year to be recovered after the plant goes into service.

    Mississippi Power is committed to our customers, Meridian and the surrounding communities, and to the development of Mississippi. We believe the leaders and people of our state seek out innovation and value home grown resources. The Kemper facility is delivering both.



Ed Holland is president and CEO of Mississippi Power