Energy shutdown

The Mississippi Supreme Court dealt a blow to one of the nation's suspected "crony capitalism" beneficiaries on March 15 when it unanimously reversed a decision permitting the Mississippi Power Company to build a $2.4 billion power plant. Lobbyist and former Mississippi Gov. Haley Barbour was a vocal supporter of the project, and Mississippi Power as a subsidiary of Southern Company was a client of BGR Group, the Washington lobbying firm Barbour helped found. BGR helped to secure a $270 million U.S. Department of Energy grant for the plant. Barbour resumed work at BGR after leaving office at the end of 2011.

Approximately $1 billion has already been spent on Mississippi Power's Kemper County IGCC project (see "Capitols and capital," Oct. 22, 2011). Kemper would be the first commercial-scale plant in the nation to capture its carbon dioxide emissions.

In its reversal the Supreme Court said state regulators erred when they failed to provide specific reasons for plant approval. Regulators initially placed financial restrictions on the plant and expressed concerns for its high cost, to be borne by power company customers. After Barbour and U.S. Secretary of Energy Steven Chu expressed their displeasure, regulators issued a more lenient approval that did not detail how financial concerns had been abated.

Mississippi Power has previously gotten its way in state courts, but the state's Public Service Commissioners will now have to explain why they changed their minds in the absence of new evidence and the presence of urging from Barbour and Chu. The coal plant's economic justification was that it could provide electricity at a lower cost than a natural-gas-fired plant, but the price of natural gas has plummeted from $9 per mBtu to $2.25 and is not predicted to hit $5 again until 2020.

If a new permit does not come through, Mississippi Power could have to eat hundreds of millions of dollars in costs and may face a reduced credit rating; meanwhile, the Department of Energy will have another failed nine-figure grant on its books. If the plant does receive a permit, Mississippi consumers will pay more for energy.