BILL CRAWFORD: Fuel diversification real lignite plant issue for PSC – Mississippi News

BILL CRAWFORD: Fuel diversification real lignite plant issue for PSC – Mississippi News

BILL CRAWFORD

What will natural gas prices look like over the next 40 years?

 

Well, over the past 20 years, prices recorded at the dominant Henry Hub distribution center in Erath, LA, ranged from a low of $1.05 per million Btu to a high of $18.48. Over the past 10 years prices ranged from $1.46 to $13.31. 

 

The current price is $2.60. Forecasts show prices rising over the next two decades, but they vary in pace and amount. The U.S. Energy Administration projects natural gas prices through 2040 using multiple scenarios that encompass demand, supply, exports, and various consumption projections. Its latest forecasts indicate prices may remain below $4.50 or jump as high as $9.20.  

 

The only knowable thing about natural gas prices is they are volatile.

 

When Mississippi Power Company proposed its Kemper lignite plant to the Public Service Commission (PSC) over a decade ago, traditional coal-fired plants were under attack by environmentalists and EPA and natural gas prices were high, averaging $7.81 at Henry Hub from 2005 through 2008. The company and the commission deemed it prudent for Mississippi Power to pursue an alternative fuel source for its next baseload power plant. The alternatives were nuclear and clean coal. Given Mississippi’s vast, cheap lignite deposits, the clean coal alternative was chosen.

 

All know what happened next. Shale oil discoveries dramatically ramped up gas supplies, driving down prices. And the costs to build the lignite plant skyrocketed.

 

Over the next several months, PSC commissioners will be tempted, and politically pressured, to gaze into a…

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