Mississippi Power settlement clears way for expansion of renewables

Source: Kristi E. Swartz, E&E reporter • Posted: Wednesday, August 6, 2014

A legal settlement between the Sierra Club and Mississippi Power Co. sets the stage for the utility to transition away from coal and expand renewable energy in the state.

The agreement also leads the company’s sister utility in Alabama to close some additional coal-fired units, further shifting its parent, Southern Co., away from coal.

The Sierra Club said yesterday it agreed to drop its lawsuit challenging the construction permits for Mississippi Power’s next-generation coal plant in Kemper County. Mississippi Power has agreed to a host of environmental and clean energy steps, including converting four coal units to run on natural gas and repowering an existing natural gas plant to run more efficiently (E&ENews PM, Aug. 4).

“We feel that we are helping to build a future to where there will be no more coal plants in Mississippi, and that is important to us,” Jenna Garland, deputy press secretary for Sierra Club’s Beyond Coal campaign, said in an interview.

The deal ends the Sierra Club’s six-year challenge to the Kemper County Energy Facility. The project has been in the spotlight for several reasons.

The coal-to-gas plant aims to capture most of its carbon emissions, earning praise from U.S. EPA as the way utilities could build coal plants in the future. The project has also busted its budget, which now stands at $5.5 billion, up from an original $2.88 billion (ClimateWire, July 23).

The settlement comes two months after EPA proposed a rule requiring utilities to reduce carbon emissions from existing power plants. The rule follows a suite of other environmental regulations that continue to shift the nation away from coal and toward natural gas and other sources of fuel.

Shifting from coal to gas

The Southeast was once dominated by coal, with some states still getting the bulk of their electricity from it. Atlanta-based Southern has made a dramatic transition away from coal and to natural gas, but its Mississippi and Alabama subsidiaries have been more resistant to the change compared with its other electric companies.

Mississippi Power owns all or part of six steam or combustion turbine power plants. Yesterday’s announcement is the first time the utility has said it would convert any of its coal-fired units to run on natural gas.

The utility has agreed to convert two coal-fired units at Plant Watson in Harrison County to run on natural gas by April 2015. The power plant already has three units that operate on natural gas.

Mississippi Power also will convert two coal units at Plant Greene County, which is in Alabama, to run on natural gas by April 2016.

At Plant Sweatt in Lauderdale County, Mississippi Power will retire two natural gas units, repower them to operate with more advanced technology or convert them to another non-fossil-fuel source. This will happen by the end of 2018, the utility said in a statement.

The shift will make natural gas 60 percent of Mississippi Power’s energy mix by 2020, the utility’s chief executive said.

“Mississippi Power has been working through resource planning options to comply with standards set under federal environmental mandates,” said Ed Holland, president and CEO of Mississippi Power.

The utility also agreed to set up and fund a $15 million grant for an energy efficiency and renewable energy program with the Mississippi Gulf Coast Community Foundation, comply with certain rainfall standards for future retention ponds at the Kemper County project, and contribute to the conservation fund for the habitat of the Mississippi gopher frog.

Besides dropping the Kemper lawsuit, the Sierra Club also has dropped legal and regulatory challenges to Plant Daniel. The environmental group also has agreed to not formally intervene in any current or future regulatory proceeding with Kemper or Daniel for three years.

Provisions for solar expansion

Another key point in the settlement involves the potential expansion of solar power in Mississippi. State utility regulators are considering a net metering policy, which credits customers for excess energy put onto the grid.

Mississippi Power has agreed not to oppose certain parts of the net metering proposal. The Sierra Club has also agreed not to oppose the utility’s efforts to recover costs from net metering, “as long as those costs do not punish people who try to net meter,” said Garland of the Sierra Club.

Mississippi Power’s sister utility in Georgia proposed a tariff for certain solar customers. The utility argued that the charge is necessary to pay for the cost of backup power when customers’ solar panels weren’t in use.

Utilities and clean energy advocates have engaged in fierce net metering battles across the country. Those debates are getting started in the Southeast in states including Louisiana (EnergyWire, July 9) and South Carolina (EnergyWire, July 10).

Earlier this year, Alabama Power said it would convert 1,600 megawatts of coal-fired units at three of its plants to run on natural gas. Additionally, now Alabama Power says it will close two coal units at Plant Gorgas in Walker County. The utility also will convert an additional two units at Plant Barry but use them only a limited amount of time. A third unit will be converted to run on natural gas and will run more frequently.

At Plant Greene, which Alabama Power also uses, the utility said the switch to natural gas would cut the number of workers at the plant by half.

“Federal environmental mandates are forcing us to change how we generate electricity for our customers,” Matt Bowden, Alabama Power’s vice president for environmental affairs, said in a company statement. “They are putting new restrictions on our ability to provide our customers with the energy they need in a cost-effective manner.”

The environmental community had a different take, as expected.

“Alabama has historically leaned heavily on coal for half to two-thirds of its power. This rebalancing toward natural gas increases the state’s fuel diversity,” Stephen Smith, executive director of the Southern Alliance for Clean Energy, said in a statement.

Alabama has vocally opposed EPA’s proposed carbon rule as well as previous regulations to curb mercury and other air toxins.

Elected officials as well as business and community leaders testified at EPA hearings in Atlanta and at rallies saying that the greenhouse gas regulations would be a blow to the state’s economy (EnergyWire, July 30). The state is one of a group suing EPA, saying the agency is illegally using the Clean Air Act to overstep its bounds.

The state’s political and economic leaders frequently argue that climate change does not exist (ClimateWire, July 17). Alabama Public Service Commission President Twinkle Andress Cavanaugh recently called on Alabama residents to ask for God’s intervention on the proposed EPA rule on carbon.