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

(Bloomberg) — 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.”

To contact the reporter on this story:
Mark Drajem in Washington at
mdrajem@bloomberg.net

To contact the editors responsible for this story:
Jon Morgan at
jmorgan97@bloomberg.net
Steve Geimann

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