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It’s the season of giving, and U.S. taxpayers are giving millions to the Kemper Project

By   /   December 30, 2016  /   News  /   No Comments

Photo by Mississippi Power

GASSED: The Kemper Project’s two gasifiers turn high-moisture lignite coal into synthesis gas to fuel the facility’s electricity-generating turbines.

Mississippi Power’s more than 186,000 ratepayers on the Gulf Coast could end up paying a large share of the cost of the Kemper Project clean coal power plant, but they’re not the only ones on the hook. U.S. taxpayers are helping to foot the bill.

At one point, federal funding for the plant totaled $657 million. But thanks to an array of missed deadlines, the company has had to pay back some of the largess. The total now stands at $427 million.

The company recently announced it will have to pay back $250 million in tax benefits to its parent firm, the Southern Company, because it won’t meet a Dec. 31 startup date.

The federal programs that have helped pay for the plant include:

  • $279 million in Internal Revenue Service investment tax credits awarded for the carbon capture system, which is supposed to make 65 percent of the plant’s carbon dioxide available for sale to enhanced oil recovery firms to pump into older oil fields, awarded in 2010.
  • $133 million in IRS investment tax credits received in 2009.
  • $245 million out of a possible $270 million in Department of Energy Clean Coal Phase II grants that the company will collect when the plant opens.
  • Up to $137 million out of a possible $167 million in DOE grants redirected from other clean coal projects in the 2015 budget deal, in addition to the Phase II grants.
  • $250 million in tax credits for bonus depreciation for 2016.

Southern had to repay $133 million in IRS tax credits in 2013 and $234 million last year when the utility missed a pair of deadlines to get the plant operational.

The state has also helped the company raise money for the power plant. In 2013, the Mississippi Legislature passed and Gov. Phil Bryant signed into law  a measure that allowed the company to issue a 20-year bond up to $1 billion payable by its ratepayers.

The bond, known as a special purpose entity, was designed to provide up to $1 billion to offset increasing costs on the Kemper Project. At that time the cost of the plant, estimated at $1.8 billion when the project was announced in 2006, was up to $3.8 billion.

Another deadline is looming for Mississippi Power on June 3, 2017. The company will have to submit a new, permanent rate case with the Mississippi Public Service Commission by then, because the previous 15 percent rate hike approved in December 2015 by the outgoing PSC will expire. The increase covers the parts of Kemper — the combustion turbines and transmission lines — already in service and generating electricity on natural gas since August 2014.

The 582-megawatt power plant is designed to convert the second-lowest grade of coal, lignite, into a natural gas-like substance called synthesis gas to fuel its electricity-generating turbines while removing 65 percent of the carbon dioxide with its carbon capture system.

The total cost of the plant is now up to $6.963 billion.

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Steve Wilson is the Mississippi reporter for Watchdog.org. Beginning his career as a sports writer, he has worked for the Mobile Press-Register (Ala.), the LaGrange Daily News (Ga.), Highlands Today (Fla.),McComb Enterprise-Journal (Miss.), the Biloxi Sun Herald(Miss.) and the Vicksburg Post (Miss.) Steve's work has appeared on Fox News, the Huffington Post and the Daily Signal. His bachelor's degree is in journalism with a minor in political science from the University of Alabama. Steve is also a member of the Mississippi Press Association and Investigative Reporters and Editors. He served four-plus years in the United States Coast Guard after his high school graduation and is a native of Mobile, Ala.