Mississippi Power Co. says a key part of its $5.5 billion Kemper County power plant is operational.
The unit of Atlanta-based Southern Co. announced Thursday that it has put three power generating turbines into commercial operation burning natural gas piped to the east Mississippi plant. It comes even as Mississippi Power completes the permanent fuel source, a part of the plant that will turn lignite coal into synthetic gas.
Vice President of Generation Development Bob Huggins said starting the turbines now is required by accounting rules and will allow Mississippi Power to capture tax benefits while providing power to customers.
"It's ready to serve the customers, it is a low-cost energy source for our customers, we have the summertime peak season demand that it's supporting, plus we'll capture its share of the tax benefits," Huggins said in a phone interview.
Right now, while burning natural gas, the plant will be able to send out about 700 megawatts to the grid. That will fall to 582 megawatts when the company starts using some of the power to gasify coal and extract carbon dioxide.
While it's burning natural gas, the plant is expected to run often during the hot summer months, but less at times of year when power demand is lower. What Mississippi Power calls Plant Ratcliffe will displace some of the company's more expensive generators of power, Huggins said, although he didn't specify which plants are most likely to be sidelined.
The company built an $11 million, 6-mile natural gas pipeline to the rural site because it always planned to use natural gas to test and start the turbines. Even when the company is making synthetic gas, it plans to use natural gas to start and stop the turbines.
Gasifying coal and extracting chemicals are what's made the plant so expensive. Critics have said Mississippi Power should have skipped those parts and just built a conventional natural gas plant. But the company has said using coal is better because it guarantees a low-cost fuel source not subject to market fluctuations like natural gas.
"Kemper was chosen as the best solution to meet customers' needs because of the company's need for fuel diversity," spokesman Jeff Shepard wrote in an email. "Lignite will complement our existing use of natural gas and coal as power generating sources."
Mississippi Power estimates bonus depreciation tax rules that allow the company to write down the value of the investment more quickly if it goes into service this year will save customers about $60 million over the life of the plant. It also says plant operators will benefit from more time controlling operations.
The company's 180,000-plus customers from Meridian to the Gulf Coast are paying 18 percent higher rates to pay for Kemper. Shepard said there will be no further rate impacts from the unit starting service.
The Mississippi Public Service Commission ordered the company on Aug. 5 to file further analysis on the costs and benefits of running the plant now. Shepard said Mississippi Power expects to file those documents by the end of the week.
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