trending Market Intelligence /marketintelligence/en/news-insights/trending/9SVh7jmVXf6WR7WwxEMKgg2 content esgSubNav
In This List

Mississippi Power stipulation would cut Kemper gasifier costs from rates

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


Mississippi Power stipulation would cut Kemper gasifier costs from rates

Mississippi Power Co. filed an amended and restated stipulation reached with several stakeholders that would reduce retail rate impacts related to the Kemper County integrated gasification combined-cycle project.

An attorney representing the Southern Co. subsidiary filed the proposed settlement on Nov. 22 with the Mississippi Public Service Commission. Signatories to the stipulation include representatives of "federal executive agencies"; the plant's largest customer, Chevron Corp. subsidiary Chevron Products; and Chemours Co. affiliate Chemours Company FC LLC.

The stipulation is part of ongoing case before the commission to determine what costs related to the Kemper plant can be recovered from customers. In June, Mississippi Power announced plans to suspend its development of the coal gasification portion of the controversial generation project following years of delays and cost overruns in the billions. The conventional combined-cycle generation portions of the Kemper facility, however, have been producing power from natural gas since mid-2014.

In the filing, Mississippi Power agreed to permanently remove from retail rates, "all costs of the Kemper Gasifier to insulate customers from any and all past, current and future operational and cost risk associated with Kemper Gasifier and lignite operations."

Under the stipulation proposed Nov. 22, Mississippi Power's overall retail annual revenue requirement would be $117.78 million. The PSC in 2015 previously approved recovery of about $126 million annually for the facility, and Mississippi Power has sought to continue that amount of annual recovery, but the utility has been at odds with regulatory staff and other intervenors over the recovery amount.

The stipulation represents a "full and final resolution of all known issues," related to Mississippi Power's capital investment in Kemper through 2018.

The cost of equity in the stipulation would be based on Mississippi Power's annual Performance Evaluation Plan rate schedule for the regulatory years 2018 and 2019 only, and the utility would have a cost of debt equal to 4.620% for 2018. The stipulated total investment in the Kemper project, or average net rate base, would be equal to $907.0 million. The utility would continue to target a 50% average equity capital structure for 2018 and 2019.

Since it began operating, the project has incurred a total of $6.0 billion in costs through Sept. 30, according to the the amended stipulation. In June, Mississippi Power recorded an additional charge of $2.8 billion for costs associated with the gasification portions of the plant and the lignite mine that was to supply the fuel.