The change could come as early as 2027. What will the impact be on jobs, the local economy and ratepayers? Southern District PSC Maxwell provides insight.
Late last year, Southern Company, a leading energy utility company serving 9 million customers through their subsidiaries including Mississippi Power, announced that it would be closing more than half of its coal-fired power generation units in the coming years.
At least one of those units is located in Mississippi at Plant Daniel in central Jackson County.
The move comes following an order from the Environmental Protection Agency in 2020 during the Trump Administration that required the company to either update pollution controls using new technologies to reduce environmental impacts or close plants that would not be in compliance by 2028.
“Newer, more affordable pollution control technologies and flexibility on the regulation’s phase-in will reduce pollution and save jobs at the same time,” EPA Administrator Andrew Wheeler said at the time.
The Mississippi Public Service Commission (PSC) has endorsed this closure, ordering Southern Company subsidiary Mississippi Power in April 2021 to present a plan to reduce its capacity as the company is generating more power than is needed by consumers which are shouldering the extra costs.
This was welcome news to environmental advocates in the Sierra Group.
“The PSC Commissioners should be applauded for their due diligence in continuing to protect the public’s pocketbook when it comes to electric rates, while providing reliable electric service to Mississippians,” Louie Miller, Mississippi Sierra Club State Director, said in a release. “The PSC has taken extraordinary steps today to ensure Mississippi is well positioned to take advantage of new technologies such as solar, battery storage, and wind that will set our state on a path toward a clean, renewable, and affordable energy economy.”
Bigger Pie Forum advised caution and encouraged the PSC to “think twice” about their decision given the current economics at play.
“The energy markets have boomed over the past year with oil up 67%, natural gas up 158%, propane up 65% and coal up 241%. In Europe and the U.K., price hikes are even greater,” the free-market advocacy group stated. “Germany recently announced it would be reactivating old coal-powered plants to ensure security of its electricity supplies. Czechia, Bulgaria, Romania and Italy are also reconsidering coal as an option to ensure electricity security. Mississippi’s PSC needs to think twice about shuttering operational coal plants in the face of volatile fuel prices around the world.”
In an earnings review in November 2021, Southern Company CEO Tom Fanning said the company is taking these actions to achieve their long-term goal of net zero greenhouse emissions by 2050. He went on to outline the steps Southern Company is taking in their transition, noting changes in Alabama, Georgia and Mississippi.
“In our most recent climate report named Implementation and Action Towards Net Zero, we reaffirmed our long-term goal of achieving net zero greenhouse gas emissions by 2050. As an important step in the transition of our fleet, earlier this month Alabama Power and Georgia Power filed plans with their respective state environmental authorities detailing how each would comply with the U.S. Environmental Protection Agency’s Effluent Limitation Guidelines,” Fanning said. “With these expected changes and the recent retirement announcement of two coal units at Mississippi Power’s plant, Daniel, since 2007, Southern Company will have announced total decreases in its coal-generating capacity from more than 20,000 megawatts, across nearly 70 generating unit to less than 4,500 megawatts of coal capacity, remaining at 8 generating units. This equates to a reduction of nearly 80%.”
The announcement regarding Mississippi’s Plant Daniel was made in the Spring of 2021. The company noted then that it would be ceasing operation of the two coal units at the 1,004-MW Plant Daniel as early as 2027.
Keen energy onlookers opined that this move at Plant Daniel may have been an attempt to remedy past missteps related to the company’s Kemper facility. Yet, the Public Service Commission has maintained that these decisions were driven by economics, primarily the continued relatively low cost of natural gas, and were in no way related to the settlement of the Kemper matter.
RELATED: PSC to Mississippi Power: Kemper Facility should operate using only natural gas
Since the announcement of the operational changes, there has been little to no public comment on the operations at Plant Daniel and the impact this will have on the local area, the state and the ratepayers, fueling speculation and rumor within the community.
Some reports have stated that Plant Daniel is being “decommissioned” or closed entirely. However, according to the Public Service Commission, that is not the case. The gas fired units at Plant Daniel will continue to operate at that location.
Southern District Public Service Commissioner Dane Maxwell confirmed this when contacted by Y’all Politics for comment on Plant Daniel’s future.
“Just to be clear, Plant Daniel is not being decommissioned as the gas-fired units will continue to operate well past 2027. Only the coal units, which have operated for decades, are scheduled to cease operation,” Maxwell said. “The decision to retire the existing coal units at Plant Daniel was a part of Mississippi Power Company’s most recent Integrated Resource Plan filing, with the Company intending to retire its coal capacity in 2027.”
Maxwell, chairman of the PSC, added that Plant Daniel will continue to operate as a generating facility long into the future.
As for the jobs associated with these coal units, Mississippi Power has noted that its goal is to continue to provide every employee at Plant Daniel a job if they want one, something Commissioner Maxwell appreciates. Southern Company CEO Fanning has also previously stated that they are placing “a high priority on protecting the interest of our employees and the communities we are privileged to serve…”
Additionally, for local officials concerned with the tax revenue generated by the plant for the county, Commissioner Maxwell said Mississippi Power has indicated that it anticipates little to no change in tax revenue to Jackson County.
Ratepayers in the Mississippi Power area concerned with what this transition means for their monthly bills were provided at least temporary comfort when the Public Service Commission adopted the December 2020 Reserve Margin Plan order. The Commission authorized Mississippi Power to defer all plant retirement related cost into one or more regulatory asset accounts for future recovery.
This came after Mississippi Power spent almost $100 million to extend operations at its coal-fired Plant Daniel, despite the plant losing customers at least $245 million in the last three years, according to Synapse Energy Economics as reported by the Energy and Policy Institute.
Mississippi Power will now be required to make a filing with the Public Service Commission when the ultimate impact on cost and rates are known, allowing the PSC then to review and approve the cost and designate the amortization period as the remaining life of the assets that were deferred as defined prior to retirement.
Commissioner Maxwell said that while the future is unpredictable, the changes at Plant Daniel should not increase rates based on what is known now.
“The variables and inputs associated with setting rates provide for a fluid process. That being said, the retirement of the coal units at Plant Daniel, as an isolated input, should not provide upward pressure on rates in the future,” Maxwell said.
Frank Corder
