JACKSON, Miss. (AP) — Mississippi Power will convert from coal to natural gas or retire several units at plants in south Mississippi and Greene County, Alabama, as part of an agreement to end litigation over construction of a coal-fired power plant in Kemper County.
The company and the Sierra Club announced Monday that they are ending the litigation.
"The Sierra Club had the opportunity here to do something the Sierra Club is best in," said Robert Wiygul of Ocean Springs, the attorney for the environmental group.
The agreement is "going to help clean up the air in Mississippi, get some help to the people most affected by rate increases with Kemper and move Mississippi toward a future where homeowners and businesses owners can install clean air equipment," Wiygul said.
Wiygul said the Sierra Club will drop regulatory challenges before the Public Service Commission and legal appeals pending in local and state courts. It also is dropping its appeal pending before the Mississippi Supreme Court on whether it is constitutional for Mississippi Power to recover costs before the Kemper plant is running.
The Kemper County power plant will use a soft form of coal called lignite mined adjacent to the plant, converted into a gas and burned for energy, stripping out carbon dioxide and other hazardous chemicals. The plant has been burdened by cost overruns.
Ed Holland, Mississippi Power president and CEO, said the changes are needed to comply with new federal environmental standards. By next spring, Mississippi Power will stop using coal at Plant Watson in Gulfport, he said.
Right now, Plant Watson has three units that use natural gas. Two coal-fired units still be used will be converted to natural gas by April 15, 2015.
At Plant Sweatt in Meridian, the company commits to retire two of the existing natural gas units, repower with more advanced technology or convert to an alternative non fossil-fuel source, no later than Dec. 31, 2018.
And at Plant Greene County, Mississippi Power will cease coal operations and convert two units to natural gas no later than April 16, 2016.
"With the repowering, natural gas conversion or retirement of certain units, Mississippi Power's energy mix is expected to be 60 percent powered by natural gas in 2020. This further illustrates the importance of the Kemper County energy facility, which will use locally mined, low-cost lignite, in maintaining a diverse fuel mix for our customers," Holland said.
The conversions are being driven by the need to reduce mercury pollution from burning coal.
Alabama Power announced the conversion of its share of Greene County last week. Alabama Power and Mississippi Power share ownership of Greene, which is near Demopolis, Alabama.
Wiygul said Mississippi Power will establish a $15 million fund with the Mississippi Gulf Coast Community Foundation providing low-income residents with insulation, energy-efficient appliances and other ways to save on their bills. The fund also will be used to provide grants for schools and charities for solar and other renewable energy.
Louie Miller, state director of Mississippi Sierra Club, called the settlement "a quantum leap" in allowing Mississippi residents to determine their own energy choices.
"This is fuel diversity extraordinaire," he said, and will reduce demand for large generation plants like Kemper.
The price tag for the Kemper County facility, a lignite mine and associated pipelines is expected to run to $5.2 billion overall, up from an original estimate of $2.8 billion.
Mississippi Power, a unit of Atlanta-based Southern Co., has 186,000 customers in 23 counties from Meridian to the Gulf Coast.