Big gamble on coal-to-gas

Question of the Day

Is it still considered bad form to talk politics during a social gathering?

View results

Southern’s response at Kemper is to convert the coal to a gas, strip out carbon dioxide and other hazardous chemicals, and burn the gas for power.

Southern expresses confidence in technology developed and tested at Wilsonville, Ala. But Burns & Roe, the engineering firm that warns that Kemper’s cost will top $3 billion, says “there is still a technology risk,” partly associated with scaling up the gasifier to Kemper’s larger size.

The company would sell the carbon dioxide to be pumped into the ground for energy companies seeking to push up more oil from old oil fields.

“We are the Saudi Arabia of coal — very high-quality stuff. We’ve got to find a way to continue to preserve that important national energy resource to be used for the benefit of our citizens,” Mr. Fanning said. “What we’re doing here in Kemper County, I think, may be a way forward for coal in America. It is that important.”

The Sierra Club — which opposes coal-burning plants nationally — says the plant could harm the environment and raise customer bills by 45 percent or more. Mississippi Power says the rise in bills would be closer to 33 percent before falling.

Kemper, though smaller, may be financially riskier than Vogtle. In Georgia, Southern already is collecting its financing costs from ratepayers, and regulators are approving company expenditures every six months, though they can challenge that spending at the end of the project. Mississippi PowerSouthern’s smallest subsidiary with 186,000 customers — hasn’t won regulatory approval to collect any money it has spent on Kemper.

The Mississippi Public Service Commission’s decision to delay rate increases until legal challenges are resolved stunned executives and investors, especially considering a 2008 state law allowed rate increases during construction.

“That decision surprised the investment community and we saw it in our stock price,” Mr. Fanning said.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Comments
blog comments powered by Disqus
TWT Video Picks