Southern Co. has withdrawn plans to seek a $1.5 billion federal loan guarantee for the 582-MW lignite-fired integrated gasification combined cycle (IGCC) power plant its Mississippi Power Co. unit is building in Kemper County.
A spokesman for Southern reportedly said Mississippi Power can borrow money elsewhere at a lower rate than available under the loan from the U.S. Department of Energy. "Mississippi Power has secured financing at a lower rate than our certified projected Department of Energy (DOE) loan, reducing overall costs to customers," Southern spokesman Tim Leljedal said.
Leljedal said Southern’s withdrawal is not related to recent actions taken by Mississippi to raise rates for the plant. The Mississippi Public Service Commission voted in March to approve a 15% rate increase this year, followed by a 3% rate increase in 2014. The increases would allow Mississippi Power to begin paying off debt related to Plant Ratcliffe, as the IGCC plant will be called, even before it begins operations, scheduled for next year.
That rate increase resulted from one prong of a settlement of litigation over the Kemper plant. Under another part of the agreement, lawmakers passed a bill allowing Mississippi Power to issue up to $1 billion in bonds to pay off accumulated interest and some costs that overrun the $2.4 billion level on the plant itself. The plant is projected to cost $2.88 billion, while associated lignite mines and pipelines are supposed to cost $377 million. Mississippi Power has said it’s likely to seek an additional 4% rate increase to repay the debt, although the company wouldn’t collect a profit on any of the up to $1 billion it borrows.
The facility will produce electricity with a syngas-only net output capability of 524 MW and with a peak net output capability of 582 MW, using syngas in the combustion turbine coupled with natural gas firing in the heat recovery steam generator. (See “Kemper County IGCC Project Update” in the March/April issue of COAL POWER.) The facility will produce marketable by-products of ammonia, sulfuric acid, and carbon dioxide (CO2). Approximately 65% of the CO2 will be captured and used for enhanced oil recovery, making the facility’s carbon emissions comparable to those of a natural gas–fired combined cycle power plant.
Leljedal said Mississippi Power has issued $1.1 billion in debt since 2010, using a majority of the money to pay for Kemper construction.
Southern told the Associated Press it is still pursuing up to $3.4 billion in loan guarantees for the two additional nuclear reactors it’s building at Plant Vogtle near Augusta, Ga.
"Mississippi Power and Georgia Power have been engaged in separate and distinct loan guarantee negotiations based on the utilities’ unique financing needs and alternatives," Leljedal said. "There continues to be constructive dialogue in the Vogtle 3 and 4 loan guarantee negotiations, and we are cautiously optimistic as we work toward the DOE’s June deadline."
Sources: POWERnews, POWER, Reuters, AP
—David Wagman, Executive Editor (@EPContentDirect)