Bentz replacement should take long-term view of Mississippi energy

*First appeared in the August 22, 2013 edition of the Laurel Chronicle

This week, Southern District Public Service Commissioner Leonard Bentz officially resigned to begin his new role as executive director of the South Mississippi Planning and Development District.

While the PSC will meet again in mid-September, the timetable for replacing Bentz is uncertain. The responsibility to appoint a new commissioner rests solely with Gov. Bryant who has given no indication as to who he’ll appoint or when such an announcement would come.

This “in-between” period breeds a lot of speculation and pontification as to who should be picked; where they should come from; and the like. Naturally, I didn’t want to miss this opportunity to give my humble two cents.

While the position pays more than what most Mississippians earn (about $78,000), it also comes with a built-in controversy of sorts: the Mississippi Power coal-gasification plant in Kemper County.

Construction on the plant is nearly complete, but the project hasn’t been without challenges. Internal disagreement within the company coupled with unexpected construction costs resulted in major cost overruns and, frankly, some really bad publicity for Mississippi Power. Now, some fringe opposition groups (including the Sierra Club) are attempting to convince the next commissioner to pull the plug on the whole project.

While “I’m against raising electricity rates” may be a politically expedient talking point, I would caution the next Public Service Commissioner from such a blanket statement. Policymakers – including regulators – better serve the public when they take the long-term view.

Three things we know about Kemper: It’s needed, it’s expensive, and it’s good for Mississippi.

In 2009, the PSC determined that Mississippi Power needed to build a new baseload generation power plant to ensure the company could provide enough electric capacity to serve its customers reliably. In the last 40 years, every time the PSC has found a need for a new baseload power plant, whether by Mississippi Power or Entergy, construction of that plant has resulted in higher rates.

We know we need more power and that it’s going to cost us lots of money in the short-term. Long-term? Capital-intensive projects like power plants typically cause rates to increase, then to level off or decrease. When Entergy built Grand Gulf nuclear reactor, rates increased more than 50 percent; today, this same plant produces the lowest cost baseload electricity in Entergy’s system.

In Kemper’s case, customers are looking at a rate increase of 22 percent – significantly lower than the increase associated with Grand Gulf (a success story) and about two-thirds as much as Mississippi Power had originally projected.

We need the Kemper plant to ensure the lights turn on when you flip the switch, but the next commissioner would be wise to also recognize the often-overlooked benefits of building this new power plant.

First, the plant will use Mississippi lignite coal – a resource abundant in our state. Mississippi Power will pay lignite owners about $400 million for their coal, creating a windfall for Mississippians’ pocketbooks.

The next commissioner should be mindful of the creation of thousands of jobs needed to both build the plant (estimated at 2,000) and permanently run it (estimated at 1,000 if you count both direct and indirect jobs). More than 400 Mississippi companies have a significant role in the construction of the project. Even state and local coffers will reap the benefits in terms of new tax generation, estimated at $30 million annually for the 40 to 60 year life of the plant.

The Kemper County technology includes a carbon-capture and sequestration component, which is beneficial in two ways: First, Mississippi Power will be able to sell the carbon dioxide and other chemicals to the oil and gas industry for approximately $2 billion over the life of the plant. This revenue source will reduce customers’ bills by the same amount.

Second, capturing carbon emissions reduces Kemper’s carbon footprint, meaning this facility will have the same level of emissions as a natural gas-fired power plant. This is truly clean coal, y’all, and it will set the standard in the United States for clean coal electric generation. It will also create a model for China and India to copy this Mississippi technology to greatly reduce rising CO2 emissions in their countries.

Strident opponents say the next commissioner has to make the “difficult decision” to vote against Mississippi Power and for ratepayers, but I disagree. The next commissioner can and should vote to support reliable energy production with stable rates for decades to come.

My (unsolicited) advice to the next commissioner, whoever he or she may be, is simple: Remember to take the long-term view of projects like Kemper. We know that it’s needed; we know that it’s expensive; but we also know that it’s good for Mississippians in the long-term.