Mississippi power co-op ratings rise after abandoning Kemper clean coal project
- A Mississippi co-op's decision to exit its 15% stake in the Kemper County coal gasificiation and combined cycle project two years ago appears to be paying off, Hattiesburg Business Today reports. Fitch Ratings last month upgraded Cooperative Energy’s $35.4 million bond issue to A from A-, in part due to lower financial and operating risk, as well as a diverse power supply portfolio.
- Cooperative Energy, formerly known as South Mississippi Electric Power Association, nixed plans to purchase a stake in the Kemper County coal gasification and combined-cycle project in 2015, after five years of rising costs and delays.
- Southern Co. subsidiary Mississippi Power plans to begin commercial operations this month at the 582-MW coal gasification facility.
Cooperative Energy's decision two years ago to withdraw from the Kemper clean coal project appears to be paying dividends, with Fitch boosting ratings on its series 2009A Mississippi Business Finance Corporation Gulf Opportunity Zone Bonds.
While the cooperative's statement does not mention the Kemper project, it said among the reasons for the ratings upgrade were lower financial risks. “This rating upgrade reflects the success of our strategy to move from purchased power to owned generation resources, and from coal to natural gas and renewable energy,” said Cooperative Energy President and CEO Jim Compton.
Cooperative Energy serves members serve a region covering more than 32,000 square miles with a member base of approximately 423,000. Originally the cooperative had agreed to purchase 17.5% of the Kemper plant, but that was later dropped to 15% after costs escalated. Then, in May 2015, the company withdrew from the deal siting delays and cost overruns since the purchase agreement was signed in 2010.
Costs to construct the Kemper project rose from an initial estimate of $2.2 billion to now around $7 billion. The Mississippi project is one of two coal gasification plants in operation in the United States today, along with Duke's Edwardsport plant in Indiana. Kemper began generating gas-fired power last year but expects to begin full commercial operation, with production of syngas, in the near future.
- Mississippi Business Journal Power co-op gets bond rating upgrade after exiting Kemper deal
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