Maxwell wants the PSC to revisit planned retirement of coal units at Mississippi Power’s Jackson County plant

The PSC voted in 2020 to accept the plan but the Southern District Commissioner says times have changed, voicing concerns for reliability, ratepayers and the local economy.

During its monthly meeting on Tuesday, the Mississippi Public Service Commission discussed the planned early retirement of coal Units 1 and 2 at Mississippi Power Company’s Plant Daniel in Jackson County. One unit is owned by NextEra Energy and the other is owned by Mississippi Power. While those units are set to be retired by the end of 2027, the plant, however, is not closing in its entirety.

Southern District PSC Commissioner and Chairman Dane Maxwell (R) brought the issue back before the Commission in an effort to revisit the current plan to retire the coal units. He and the other two commissioners voted to accept the plan put forward by Mississippi Power to retire those units in December 2020.

Maxwell, who represents the area, said his reason for wanting to keep the units open now and pushing for a review of that prior decision is the rising costs of natural gas, the importance of keeping diversity in Mississippi’s energy resources, and other impacts to the local economy.

In seeking to relook at the unit retirements, Maxwell asked the three-man Commission for a “robust review” of the plan given the current state of energy prices, specifically natural gas, fearing the negative impact the move will have both on ratepayers and the local economy. He wants the PSC to thoroughly review the supply side update pending from Mississippi Power.

“I have spoken numerous times about my concerns regarding the pending closure of these units,” Commissioner Maxwell told Magnolia Tribune. “The Commission voted on this plan when natural gas prices were under $3, and over the past year prices have skyrocketed to over $9 which tells me it’s time we revisit the plan.”

Maxwell reminded his colleagues that the PSC has seen reliability issues across the state, adding that dependence on one fuel source raises economic concerns for ratepayers. He also expressed the need to be mindful of the jobs these changes will impact given the changes in the economy since that 2020 decision was made.

“To be clear, we have seen a volatility of natural gas markets and we need a fuel hedge such as an operational coal plant that can be switched on when natural gas prices are too high,” Maxwell said.

Northern District PSC Commissioner Brandon Presley (D) was quick to point out that all three commissioners – including Maxwell – signed on to the order in 2020.

“It’s kind of funny that we’re talking about this today because yesterday was the five-year anniversary of the Commission’s decision to end the Kemper County case and the result to the ending of that was that there was to be a management review, a reserve margin plan, and several other things related to it,” Presley said. “And so, this reserve margin plan that all three of us voted yes on December the 17th of 2020 that led to this question was a voluntary response by Mississippi Power Company to retirement of certain generation assets that they made that decision on based upon economics and based upon Commission’s prodding.”

While Commissioner Presley said he was not opposed to trying to find ways to do better, he said he did not like the characterization that “big bad somebody is shutting down this coal plant.” He said that is just not true as none of the commissioners are against coal despite he and Central District Commissioner Brent Bailey (R) being labeled as such. Presley said the decision to retire the units was based on good economics with ratepayers in mind at the time.

As for the impact on the workforce and local ad valorem tax payments, Presley said the PSC has four years to consider ways to mitigate those concerns.

Presley, a candidate for governor this year, added that Mississippi Power wasn’t required to pick the Jackson County plant.

“There was nothing from this agency that required Mississippi Power to pick a coal plant to shut down,” Presley said. “They could have picked a natural gas plant. They could have picked certain other asset generations.”

Commissioner Presley said that while he wasn’t disagreeing with Chairman Maxwell’s thought of relooking at the plan as it moves ahead, he believes it was clear when the Commission voted in 2020 that unit retirements were coming due to having more generation than needed usage.

Commissioner Bailey shared Presley’s point of view, saying that the capacity factor – the anticipated time a plant could run over the actual time it ran in a one-year period – for Plant Daniel’s two coal units was approximately 21.5% in 2021 while the natural gas units were over 91%. Compared to the company’s Plant Watson down the Coast had a capacity factor for its coal unit of 35%.

“When you talk about plants that have approximately just over 20% capacity factor, you know a thousand megawatts, sitting idle 80% of the time, and with that comes extensive costs around [operation] and maintenance, labor and these things still must be refurbished on a schedule every five to seven years which gets very costly,” Bailey said. “So, to have that type of asset sitting around unused it does potentially have a draw on the cost of the rate base and customers.”

Commissioner Maxwell said the state and its ratepayers are in “a whole different world today” than it was in 2020 in terms of energy costs and reliability.

“We’ve had rolling blackouts. We’ve had rolling brownouts,” Maxwell said. “I think it’s important to look at being diversified in fuel, whether it’s natural gas, solar or coal. I don’t think we should automatically take everything off the table. And all I’m saying is let’s take a look at this thing again and see. Since the whole landscape’s changed, why we couldn’t look at it and see if there’s something else we could talk to Mississippi Power about doing.”

Commissioner Presley again reiterated that he did not have a problem at looking at the facts, but his issue was the “continual mischaracterization” of the PSC’s action, saying he’s not sure why this issue continues to stir.

Commissioner Maxwell said the people on the Coast he represents are concerned about the impact the unit closures will have locally. He believes it’s only right for his constituents that the PSC revisits whether it’s a smart move to continue down the path given the current circumstances the state and nation are facing in terms of costs and dependable energy sources.

There was no official vote or action taken by the Commission during the meeting. Commissioner Maxwell said he hopes to gain the support of his fellow Commissioners as well as Mississippi Power to revisit the Plant Daniel plans that would close the two coal units.