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Mississippi regulators approve settlement for Kemper Project power plant

The nearly decade-long battle over Mississippi Power’s Kemper Project clean coal power plant ended Tuesday after the Public Service Commission voted unanimously to approve a deal to cover costs on the controversial plant.

Under the deal reached with Mississippi Power, the separate Public Utilities Staff and several intervenors including Chevron, Walmart and Chemours on December 1, the utility will run the plant on natural gas — which it has since August 2014 — and will receive $729 million on capital costs for the combined cycle turbines, transmission lines and other equipment.

The utility would also reduce what it collects from customers annually to pay for Kemper from $126 million as it originally requested to $99.3 million and will end collection of various regulatory costs such as legal fees after eight years, saving its 187,000 customers in 23 coastal counties tens of millions of dollars.

The company will divest $18 million worth of land at the Kemper site and the deal mandates that the company pass that to ratepayers.

The company wanted to collect regulatory costs over the predicted lifespan of the plant, which was 40 years.

The $7.5 billion plant was originally designed to be fueled by lignite coal converted into synthesis gas and emit less carbon dioxide than a conventional coal plant. It will now become a natural gas power plant after the company decided to abandon the gasifier units after three years of trying to get them operational.

The plant was originally supposed to be operational by May 2014 and the company has already written off more than $6 billion in costs related to the gasifier.

The deal also includes:

  • The company would receive a smaller guaranteed rate of return on the power plant.

  • The removal of the company's ability to recover costs for the gasification plant, from ratepayers

  • Changing the plant's certificate to allow Mississippi Power to operate it as a natural gas plant only.

  • After six months from the deal's approval, the PSC would conduct hearings and investigate issues with Mississippi Power's excess generation capacity, which would be 27 percent more than before with Kemper added to its fleet.

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