Mississippi Power Co. should feel lucky. That might sound ironic for a company and its parent that have had to eat $6.4 billion of a bad investment, but it could have been worse.
The electricity provider could have, and should have, had to swallow the entire $7.5 billion it spent on its failed coal gasification plant in Kemper County.
Recently, after years of wrangling, the Mississippi Public Service Commission reached a settlement with Mississippi Power that lets the utility pass on the $1.1 billion it spent on the part of the plant that has been generating electricity since 2015 using natural gas as the fuel source.
Apparently the commissioners, and some of the groups that had fought this boondoggle from its inception a decade ago, decided to put the fiasco behind them. The PSC voted to allow Mississippi Power to stick ratepayers with footing a bill for a natural gas plant that cost almost twice as much as it should have, is unneeded and wasn’t what Mississippi Power promised it would deliver.
What Mississippi Power said was it could build a technologically revolutionary power plant that would convert low-grade coal into electricity, that it could do it all for $2.9 billion, and that its customers would be a huge beneficiary because it would provide them with electricity that would ultimately be as cheap or cheaper than that generated by other fuel sources.
It was all a lie.
The company didn’t have the technology worked out even as it started construction on the plant. It ended up spending two and a half times what it said the plant would cost. It missed deadline after deadline. And if Mississippi Power had gotten away with it, their customers would have been socked with rate increases of up to 40 percent.
Maybe there’s some consolation that, with this settlement, Mississippi Power’s customers will only pay 12 percent more than they would have had the company never turned the first shovel of dirt in Kemper County. Still, however, they’ll be paying more than they should: about 50 percent more than if they lived in the part of the state served by Entergy Mississippi, the state’s other privately owned electricity provider.
It was interesting to hear Mississippi Power CEO Anthony Wilson say, after the vote, what its executives should have known all along would be the case with Kemper: “The economics really didn’t work out and the technology was hard to perfect.”
The reason that Mississippi Power and its parent company, Southern Co., plunged ahead with the foolhardy project was they expected their Republican friends — on the PSC, in the Legislature and in the Governor’s Mansion — would have the utilities’ back and let them pass on the entire cost, no matter what it wound up being, to the ratepayers. These GOP friends would have done just that until a group of press and private watchdogs — and Democrat Brandon Presley, once the lone dissenting vote on the PSC — dug into the details and exposed the raw deal that was about to happen. The exposure changed the political dynamics, got two new public service commissioners elected who weren’t in Mississippi Power’s camp, and led to this settlement.
Had Mississippi Power been stuck with the entire $7.5 billion cost, its customers would have saved about $40,000 each. Instead they’ll save around $34,000. It could have been better, but thankfully it wasn’t worse.