A first-of-its-kind “clean coal” power plant that U.S. utility owner Southern Co. has spent years and billions of dollars building in Mississippi appears to be dead.
Southern’s Mississippi Power utility is suspending work on the part of the plant that was designed to turn coal into gas to generate electricity. Instead, the complex will run off natural gas only, the Atlanta, Georgia-based company said in a filing late Wednesday. While state regulators will ultimately decide whether to stop pursuing the coal portion of the project, they’ve already signaled their support for dropping it.
“It looks like the end of the road” for the clean coal project, said Paul Patterson, an analyst at Glenrock Associates LLC.
The move is a massive setback for advocates of “clean coal” technologies — the kind that the Trump administration has hailed as a way of saving mining jobs. While it could mark the end of a very costly venture that has Southern investors demanding pay cuts for executives, the company warned it may still incur a $3.4 billion second-quarter charge if state regulators won’t allow it to recover project costs from ratepayers.
Kemper is already on its way to becoming the most expensive gas plant ever built, costing about 10 times that of an average gas-fueled generator, said Kit Konolige, an analyst for Bloomberg Intelligence, said by phone.”It’s quite a monument to a big problem,” he said.
In February, Southern issued a report showing the plant was more economically viable burning gas than running off coal under two of three gas price scenarios. The company said at the time that the plant still stood to “play an important role in mitigating any such upward trend in natural gas prices” over its 40-year lifetime.
‘Prudent Step’
Southern described its latest move Wednesday as “a prudent step to manage costs in light of the current circumstances.” Earlier this month, the company disclosed issues with the so-called gasifiers at the complex that were keeping the plant from starting up. It has delayed the complex’s in-service date at least five times this year.
Last week, Mississippi regulators told Southern that they didn’t want it passing on more of the costs of the clean coal project to ratepayers and called on the utility to run Kemper on natural gas only.
Southern is meanwhile also grappling with its long-delayed, over-budget Vogtle nuclear project in Georgia. Toshiba Corp.’s Westinghouse Electric Co. unit, which was contracted to build two reactors there, went bankrupt earlier this year, and the utility is still deciding whether to move forward with them.