In 2009 when Mississippi Power Company began discussions with the Mississippi Public Service Commission about its need to replace aging coal-fired plants, adding a new natural gas plant was considered. However, this would have made MPCo’s generating capacity 75% dependent on price-volatile natural gas. The Commission instead approved the lignite plant, giving MPCo a diversified capacity mix of 50% natural gas, 25% coal, and 25% lignite. Costs for lignite coal are low and stable.
Despite the sound reasoning that guided MPCo’s decision to build the lignite plant, based on EPA’s pending rules and the need for prudent fuel diversity, the company and the Commission have come under fire. Opponents voice concerns about the plant’s costs and electricity rate increases and argue MPCo should build a natural gas plant.
Reasons to avoid over-dependence on natural gas are profound. The plant is costing more than projected, but cost overages are being covered by company stockholders, not customers. To pay for the plant, MPCo has sought Commission approval to increase rates 22 percent; 15 percent of that has already occurred. But the impact is far less. As MPCo increased rates based on new capital costs it also reduced rates based on lower fuel costs. Today, despite the 15 percent increase, the company’s electricity rates are about the same as in 2009.
In 1985 when Entergy completed Grand Gulf nuclear plant, rates jumped 54 percent. In 1981 when MPCo completed its Plant Daniel coal units, rates increased 30 percent.
Both plants proved to be good investments, providing low-cost energy for decades.
“We the people” depend upon our elected public service commissioners to make prudent forward looking, long-term decisions. They did so in approving MPCo’s lignite plant.