R
E
P 2010 Annual Report
O
Managing Growth,
Focused on Fundamentals
R
T
R
E
V CORPORATE PROFILE 2010 PERFORMANCE HIGHLIGHTS MEMBER SYSTEMS
I South Mississippi Electric’s sole purpose is to
provide reliable and affordable wholesale electric
energy to its 11 Member-owner electric power
associations. This mission is accomplished through
($ In Thousands)
Operating Revenues
Operating Expenses
2010
$775,074
$705,672
2009
$772,121
$693,423
1. Coahoma EPA | Lyon
Keith Hurt, General Manager
Date energized 1/18/38
1,650 miles of line
7. Singing River EPA | Lucedale
Lee Hedegaard, General Manager/CEO
Date energized 12/5/39
6,968 miles of line
E
focusing on the core fundamentals of power Interest Expense $41,138 $41,597
generation, power purchasing, power delivery, Net Margin $29,100 $30,477 2. Coast EPA | Bay St. Louis 8. Southern Pine EPA | Taylorsville
and fuel risk mitigation. South Mississippi Electric’s Robert Occhi, President/CEO Donald Jordan, General Manager
professional employees seek to provide value to the Utility Plant - Net $967,454 $843,320 Date energized 5/20/38 Date energized 5/13/39
W
Member systems by achieving the highest levels of Total Assets $1,364,840 $1,176,905 6,680 miles of line 10,082 miles of line
safety, reliability, and economics. Total Equity $208,337 $179,237
3. Delta EPA | Greenwood 9. Southwest Miss. EPA | Lorman
South Mississippi Electric generates, transmits, Equity as % of Assets 15.3% 15.2% Ronald W. Robertson, General Manager Percy McCaa, General Manager
and delivers electric energy through more than MFI 1.77 1.78 Date energized 1/30/39 Date energized 3/27/38
1,700 miles of high-voltage transmission lines. Our TIER 1.71 1.73 5,768 miles of line 4,316 miles of line
Member systems own and maintain approximately DSC 1.24 1.23
56,300 miles of distribution line and provide service Average Cost of Debt 4.87% 5.18% 4. Dixie EPA | Laurel 10. Twin County EPA | Hollandale
to more than 411,000 homes and businesses in 56 Tim Dudley, Interim General Manager John Mosley, Manager
of Mississippi’s 82 counties, over half of the state’s Energy Sales (MWh) Date energized 7/28/39 Date energized 12/24/38
land mass. Members 10,645,623 9,781,030 4,719 miles of line 2,352 miles of line
Non-Members 60,284 129,506
South Mississippi Electric and its Members are Total 10,705,907 9,910,536 5. Magnolia EPA | McComb 11. Yazoo Valley EPA | Yazoo City
consumer-owned, not-for-profit businesses; Darrell Smith, General Manager Charles H. Shelton, General Manager
therefore, the rates of South Mississippi Electric Date energized 9/19/39 Date energized 3/23/38
reflect only the cost of supplying wholesale electric 4,445 miles of line 2,707 miles of line
energy to these rural electric systems.
TABLE OF CONTENTS 6. Pearl River Valley EPA | Columbia
The organization’s headquarters is located on Randy Wallace, General Manager
Highway 49 North in Hattiesburg. A new Field Date energized 5/19/39 1
Operations Center, located five miles north of the 1 . . . . . . . . . . . . Member Systems 6,658 miles of line
Headquarters facility, was opened in 2008. 2 . . . . . . . . . . . . Executive Summary
4 . . . . . . . . . . . . Board of Directors 3
South Mississippi Electric’s baseload generating 5 . . . . . . . . . . . . Executive Management Team
The Power of 12
10
fleet includes a coal-fired plant near Purvis and a 6 . . . . . . . . . . . . Repowering
10% undivided interest in the Grand Gulf Nuclear 10. . . . . . . . . . . Responding 11
Station in Port Gibson. Gas-fired generation 14. . . . . . . . . . . Renewing
facilities, utilized to meet intermediate and peak 18. . . . . . . . . . . Reinvesting
demand, include steam and combustion turbine 22. . . . . . . . . . . Resources 8
units near Moselle and a total of eight combustion 24. . . . . . . . . . . Milestones 4
turbine units located at Sylvarena, Silver Creek,
G R O W I N G M I S S I S S I P P I 9
25. . . . . . . . . . . Financial Review
Benndale, and Paulding. 45. . . . . . . . . . . Remembering 5
6
7
2
Cover photo (left to right): Daniel Riley, lineman I; Carl McSwain, lead lineman; Danny Hight, lineman III
South Mississippi Electric Annual Report | 1
R
E
V EXECUTIVE SUMMARY
I
These are challenging times in the electric industry. There explained the need for SME to spend $400 million in to achieve these capital expenditures and margin goals charges have a significant economic impact on our costs
is enormous uncertainty as to the legal and regulatory capex over three years. Today, we project to spend $900 without a rate increase. at Plant Morrow and on our ultimate wholesale rate.
framework under which our industry will be operating in million in capex for 2011 through 2014.
coming years. At the same time, our Members’ growth, South Mississippi Electric, like other G&Ts across Offsetting unfavorable higher coal energy costs was
E
combined with the need to evaluate replacing expiring The need for these large capital investments was made America, seeks to keep our wholesale service reliable an amazing and unanticipated reduction in the cost of
power purchase contracts, requires that we make near- clearer in 2010. After relatively flat years of energy sales and affordable. Unfortunately, as time goes by it seems natural gas. Just five years ago, we were seeing gas prices
term decisions on generation resources and the fuels and peak demands, 2010 delivered a cold winter, a that we are able to really control only reliability, as in the $13-$15/MMBtu range after Hurricanes Katrina
we will use to meet those future needs. To date, the return to a normal hot Mississippi summer, and increased affordability is increasingly influenced by decisions and Rita. While gas prices were lower during the next
W
resource decisions we have made continue to make good industrial growth. SME reached an all-time total system made by others. An example is Plant Morrow, our largest several years, prices continued to be very volatile until
economic and environmental sense, in large part because hourly peak of 2,454 MWh on January 11 and a new generation asset. For years, Morrow was the economic recent increased shale gas production brought prices
of the exhaustive studies and evaluation we undertake total system summer peak of 2,174 MWh in August. SME workhorse of our fleet. However, as a conventional down and increased supplies. These favorable gas prices
in order to have the proper information for these very energy sales were above 10 million MWh for the first time, pulverized coal plant, dispatch costs at the facility appear to be secure for the near term although there
difficult and expensive long-term decisions. 8% above 2009 sales. Our Large Power Class (industrial) have increased significantly. Five years ago, a forced are longer-term environmental questions being raised
customers led the way with a 12.8% increase in energy outage of one unit in the summer would have cost SME about fractionation used in conjunction with shale gas
In 2010, we saw the current South Mississippi Electric usage over 2009, and an 18.6% increase in energy usage $300,000 a day (or more) for replacement power. The production. While these lower gas prices are not lowering
generation resource plan emerge. At Plant Morrow, our over 2008. While the recession is not over in Mississippi, “dark spread,” the difference in the energy cost of coal our wholesale rates due to higher coal energy prices, they
flue gas desulphurization system retrofit and upgrade these are indeed signs of strengthening economic and natural gas generation, was that great. Today, the have been a welcome development.
was completed for Unit 2, and the new equipment and growth. The five-year investment of more than $1 billion dark spread has disappeared and, for the first time in
processes worked well. Next is the completion of similar in our power supply, power delivery and communications SME history, the cost of Morrow generation is budgeted One of the key strategies for keeping our wholesale rates
work on Unit 1, plus some balance-of-plant additions systems will nearly double the assets of our company and higher than our natural gas options. We find that Morrow affordable for Members has always been our generation
such as new limestone silos and a ball mill (limestone will also provide the means to meet the growing needs of is now dispatched more as an intermediate resource, fuel diversity, which allows us to adjust sources of energy
pulverizer). The project is slightly below budget, with all our Members. It will also stabilize our costs and limit our with reduced output or even with a unit off-line for production as fuel prices change. We believe that Plant
work due to be completed as scheduled by mid-2011. dependence on tightening power purchase markets. economics. However, this leaves us short of around-the- Ratcliff, the IGCC plant being constructed by Mississippi
Construction activity on the Moselle Repower Project clock, economical baseload energy and with a need to Power Company in Kemper County, is an important
was initiated and the two combined cycle units are on Financially, we were able to maintain our equity develop replacement baseload options. new component of maintaining fuel diversity. Using
schedule for completion in May and November 2012. level target (15.3%) even with the increased capital gasified Mississippi lignite as the syngas to run the
Because construction costs have been well under budget expenditures. We exceeded $200 million in equity for the This dramatic change in dispatch economics occurred combined cycle units, Plant Ratcliff will avoid the fuel
there as well, our Board of Directors amended the project first time. We also added $11 million to our Power Supply due to multiple factors. Some are universal to all cost escalations we see occurring at other plants and will
budget, lowering the project costs by $30 million to Development Fund for future use to offset the rate conventional coal plant owners. EPA has severely avoid railroad overcharges, as it is a mine-mouth facility.
$237 million. The Extended Power Uprate at Grand Gulf impact of our next large generation addition. All required tightened air quality standards, driving up capital and Several conditions need to be met before we close on
Nuclear Station remains on schedule for completion financial ratios were met or exceeded. The number of operating costs. Second, the cost of Central Appalachian the proposed purchase of 17.5% of the facility, but the
in 2012 and is currently at or slightly over budget. meters served by our 11 Member systems also increased coal, the quality of which our boilers require, has risen process and the construction are going well.
That project will add 18 MW of new nuclear capacity to 411,339. In the reliability area, total outage time for significantly, in large part due to new EPA regulations
to our resource mix. In addition, energy delivery from the 87 delivery points served from the SME transmission dealing with water quality associated with the mining Again, these are challenging times. Despite the rapidly-
our 200 MW power purchase agreement at Plum Point system was 2.24 hours; 16.01 hours for 102 delivery of coal. The third contributor to the increase in delivered changing regulatory and economic environment for
began when the unit entered commercial operation in points served by Entergy’s transmission system; and 0.12 coal prices is the insatiable appetite of the rail carrier, electric utilities, we are and will continue to be a safe,
September. Together, these resource additions to our hours for the 71 delivery points served by Mississippi Norfolk Southern, for profit increases from captive reliable and economical energy source for the one million
fleet will provide 368 MW of efficient, economical and Power’s transmission system. shippers like South Mississippi Electric. Despite incredibly Mississippians counting upon us to keep the lights on.
environmentally friendly capacity and energy. poor delivery performance in 2010, Norfolk Southern
Our strengthened balance sheet and sound business demanded another substantial rate increase, leaving
As a result of these efforts, our capital expenditures plan were evidenced by the excellent reception in the us no option but to initiate a rate case at the Surface
(capex) in 2010 were $161 million, our largest capex bond market of our $150 million private placement bond Transportation Board and a separate lawsuit for past
in many years. In our 2009 Executive Summary, we offering. More important to our Members, we were able overcharges. These environmental and delivered fuel James Compton Henry C. Waterer, Jr.
General Manager/CEO Board President
2 | South Mississippi Electric Annual Report South Mississippi Electric Annual Report | 3
R
E
V BOARD OF DIRECTORS EXECUTIVE MANAGEMENT TEAM
I BOARD OFFICERS (left to right)
Henry C. Waterer, Jr., President
William Hardin, Vice-President
E
Mack Mauldin, Secretary-Treasurer
Donald Jordan, Acting Secretary-Treasurer
W
Delta EPA Coahoma EPA Dixie EPA Southern Pine EPA
Henry C. Waterer, Jr. William Hardin Mack Mauldin Donald Jordan Jim Compton Marcus Ware Ray Haley
Director Director Director General Manager General Manager/CEO Assistant General Manager Chief Financial Officer
Nathan Brown Terry Lee Brad Wolfe
Coahoma EPA Coast EPA Coast EPA Delta EPA Dixie EPA Magnolia EPA Chief Operating Officer Chief Engineering Officer Chief of Transmission
Keith Hurt Robert Occhi Charles A. Lopez Ronald W. Robertson Tim Dudley Darrell Smith and Support Services
General Manager President/CEO Director General Manager Interim General Manager General Manager
Magnolia EPA Pearl River Valley EPA Pearl River Valley EPA Singing River EPA Singing River EPA Southern Pine EPA
Bruce McCaffery Randy Wallace Joe Shelton III Lee Hedegaard Frank Ely Mickey Berry
Director General Manager Director General Manager/CEO Director Director Jeff Bowman Christine Ryan
Legal Counsel Special Counsel
EXECUTIVE
ASSISTANT
TRANSITION
Southwest Miss. EPA Southwest Miss. EPA Twin County EPA Twin County EPA Yazoo Valley EPA Yazoo Valley EPA
Percy McCaa Greg Kitchens John Mosley Jack Reed Charles H. Shelton Louis Thompson Patricia Rogers Yvette Evans
General Manager Director Manager Director General Manager Director Executive Assistant Retired in January 2011
4 | South Mississippi Electric Annual Report South Mississippi Electric Annual Report | 5
R
E
P Demand on South Mississippi Electric’s system continues to grow, requiring the
addition of more generation resources as well as new financing options for the projects
O 2010 POWER REQUIREMENTS STUDY INDICATES then combines those 11 projections to compile SME’s The project will add 150 megawatts (MW) of new happening without the teamwork of so many
Sammy Odom, storekeeper I
Lucretia McSwain, plant clerk
Gary DeFatta, system operator
Jay Fairley, instrument technician I
Employees above (right to left)
STEADY GROWTH ON TOP OF RECORD SALES 20-year projection for energy and demand. capacity at the 40-year-old facility. Two new GE Frame SMEPA employees, all of whom are dedicated to finding
7EA combustion turbines, similar to the plant’s existing ways to better serve our Members.”
South Mississippi Electric set a new record in 2010 “This forecast is utilized in all our system operations Units 4 and 5, will be installed behind the boilers that
W
with annual sales of more than 10.7 million megawatt and planning areas,” said Alan Wilson, system planning currently fire Units 1 and 2. The 7EAs are simple cycle Managing so much construction within a relatively
hours (MWh), the first year that overall annual sales manager. “It is an essential tool for the operations units with a summer capacity of 75 MW each. The confined space with so many different contractors is
ever exceeded 10 million MWh. Although some of the and planning group to use in making reliable and turbines and generators arrived via rail in late June and now the challenge for SME employees and the project
higher demand was weather-related, the resulting sales economic decisions regarding the future generation early July and were then transported to the plant. consultants on site. “Coordinating all of the work is
E
were seven percent higher than forecast and would and transmission needs of SMEPA. Five-, ten- and thirty- critical to the success of the project,” said Rhodes. “It is
also seem to indicate a rebound from the economic year studies are performed utilizing the new PRS in the In the new configuration, exhaust heat from the new like a huge, moving jigsaw puzzle–you have to get the
downturn of the past several years. evaluation.” 7EAs will be connected to two heat recovery steam pieces to come together by managing the timing of
generators (HRSGs) to provide steam for two of the when different steps happen. That can be challenging,
R
The 2010 Power Requirements Study (PRS) confirmed To meet the anticipated growth, several new generation three existing 59-megawatt turbine-generators, especially with so many contractors in a congested
that the Association’s eleven Members continue to projects are in various stages of development. creating the combined cycle system. The HRSG modules area, each with different responsibilities.
increase sales of electric power. The average annual and steam drums were delivered in October.
system growth over the next ten years is projected to CONSTRUCTION BEGINS ON MOSELLE’S “As a part of the bidding process, we stress to each
I
be 2.14% in total MWh sales–a slight drop from the REPOWER PROJECT The site preparation, foundations and underground contractor our expectations that everyone must work
2009 projected growth rate of 2.4%. The study projects construction contractor mobilized on July 26, and together to ensure that the project progresses as it
annual growth of 1.79% in peak power demand and Design and procurement work has been underway permanent construction on the project commenced on should. Now that we are well into the project, we have
1.29% in the total number of consumers. on the repower project at Plant Moselle for nearly two September 21. Once crews installed the underground weekly meetings with all the contractors to discuss
N
years. South Mississippi Electric’s Board of Directors electrical work, underground piping and completed their status and needs. Right now there are many
The PRS is an annual study that provides 20-year approved the project in late 2008, with an expected foundation work, mechanical construction of several of components coming together at once, so it is crucial
projections for each individual Member system, and completion date of late 2012. the major components got underway. By the end of the that everyone cooperate in order to complete the
year, more than 150 contractor personnel were on site. critical paths that are tied to major milestones.”
G “This project is a process,” said Chris Rhodes, generation
projects manager. “A great deal of effort and
attention to detail was required to design the project
and develop the specifications needed to bid the
The project was on schedule at year-end and, with
more than 75% of the costs confirmed, under its
$267 million budget. “We are close to having all
of the primary components purchased and major
equipment and construction contracts. As we moved construction contracts awarded,” Rhodes said. “We have
into the construction phase, we have been developing reduced the project budget by $30 million; and if we
the construction plans and sequences. It has been are able to maintain that status, the result will be an
exciting to finally see the system coming out of the even better value for our Members.”
ground.
GRAND GULF CELEBRATES 25 YEARS, BEGINS
“When you think about how far this facility has PREPARATIONS FOR UPRATE PROJECT
evolved–from three original 59-megawatt steam units
to what will be nearly 500 megawatts of capacity when On July 1, 1985, Grand Gulf Nuclear Station began
the repower project is complete–it really is a perfect commercial operation, marking a new era of safe,
reflection of how far we have come as an organization,” reliable, affordable and virtually emission-free
noted Rhodes. “And like everything else that has electricity production for the people of Mississippi.
occurred over the years, this project would not be Five years prior, SME had signed an agreement for a
Construction on the Moselle Repowering Project made excellent progress during 2010
6 | South Mississippi Electric Annual Report South Mississippi Electric Annual Report | 7
R
E
P
O 10% undivided ownership interest in the facility and its
original 1,250 MW output.
“Grand Gulf has proven to be a vital resource for South
than conventional pulverized coal-fired plants. The
plant’s technology will capture 65 percent or more of
carbon dioxide (CO₂) emissions, which is equivalent to
a natural gas combined-cycle generation resource of
The final steps of negotiating and closing a joint
ownership and operating agreement between the two
organizations are expected to occur in late 2011 or 2012.
and sound financial metrics. Fitch, in its evaluation,
also pointed out the Association’s strong financial
position with improved cash flow and liquidity; capable
management and solid leadership; robust Member
W
Mississippi Electric and our Members,” Assistant General comparable output. The carbon dioxide by-product will FINANCIAL STABILITY IS ESSENTIAL TO FINDING financial profile; and rates competitive in the state. S&P
Manager Marcus Ware said at a ceremony to mark the be marketed to the enhanced oil recovery industry. NEW CAPEX BORROWING OPTIONS added that SME’s strong debt service coverage ratio is
anniversary. “The leaders of our Association who made also a favorable factor in its analysis of the Association.
the decision many years ago to become a part-owner in “We need new generating capacity to meet the The Rural Utilities Service (RUS) Electric Loan Program
E
the facility are to be commended for their foresight and growing power demand of our Member distribution has traditionally been South Mississippi Electric’s SME took an additional step in 2010 to raise long-term
courage. It was not an easy decision to make, but today cooperatives and their consumers, and this is an primary source of funding for major capital projects. funding, closing on a $150 million private placement
Grand Gulf is one of our organization’s most valuable excellent fit for our system,” said Jim Compton, South With the RUS program facing an uncertain future, SME bond issue on December 9. When the process began
assets.” Mississippi Electric’s general manager/CEO, at the has been positioning itself to seek other borrowing in October, the original goal was to issue $75 million in
R
time of the announcement. “Our organizations have options. bonds; but the response from investors was so positive
The plant is known worldwide for its commitment to a close working relationship, and we have followed and interest rates so low that the transaction was
safe operation, industry-leading performance records the planning for this facility very closely. Our studies “Financing is in place for the Moselle and Morrow upsized to $150 million.
and a legacy of community leadership. In 2010 it was have indicated potential long-term savings for the projects currently underway, as well as for certain
I
taken off line for the 17th refueling outage in its history. Association by owning a portion of the facility. upcoming transmission projects,” said Ray Haley, The Association selected two tranches that will be
While the usual maintenance and troubleshooting work chief financial officer. “However, our total capital repaid in installments over the life of the bonds:
was being completed during the outage, employees “As we make plans to meet future needs and are expenditures in the 2010-2014 period will be more · $40,000,000 with a 20-year final maturity at an
were also laying the foundation for an extended power faced with fluctuating fuel prices and possible new than $1 billion. As we pursue future financing options interest rate of 4.08%;
N
uprate which, when completed in 2012, will make environmental regulations, we believe it is vital to beyond RUS, maintaining our strong financial standing · $110,000,000 with a 30-year final maturity at an
the reactor at Grand Gulf the largest single nuclear maintain a diverse mix of generation options,” said will be very important.” interest rate of 5.40%.
generating unit in the nation. The upgrade will increase Compton. “We believe the Kemper County project
Grand Gulf’s output by approximately 178 MW. offers an excellent opportunity to construct a solid-fuel SME initiated ratings reviews by the national credit “The issuance resulted in a great outcome for the
G
facility that makes use of a state resource (lignite) which rating agencies three years ago, beginning with Association,” said Haley. “Several other G&Ts also issued
SME PURSUES MINORITY OWNERSHIP IN KEMPER will ensure a stable, low-cost fuel source for the life of Standard & Poor’s (S&P) and Moody’s. In 2010, Fitch bonds in the same timeframe and our results compared
COUNTY IGCC PROJECT the plant.” Ratings was also engaged to provide an additional very favorably. The bond investors we dealt with were
opinion. The opinions of all three agencies have, impressed by SMEPA’s financial strength.
In June, South Mississippi Electric and Mississippi The $2.4 billion project will be the first commercial- once again, concluded that the Association’s financial
Power Company (MPC) agreed to an Asset Purchase scale plant to use TRIG (Transport Integrated position is very strong. “In retrospect, our timing was also very good, as U.S.
Agreement allowing for SME to purchase a 17.5% Gasification) technology for gasification of lignite. TRIG Treasury interest rates rose steadily after we priced
interest in MPC’s Kemper County Integrated Gasification was developed by Southern Company and a partner “Moody’s and Fitch rated SMEPA’s senior secured debt the bonds. If we had done the same transaction later,
Combined Cycle (IGCC) Project, which was granted company, KBR, along with the U.S. Department of in the ‘A’ category with an ‘A3’ and ‘A-,’ respectively,” annual interest expenses would have increased by
approval by the Mississippi Public Service Commission Energy, which endorses the project. Haley said. “S&P kept the Association’s rating at ‘BBB+,’ more than half a million dollars.”
in May. Under the agreement, SME will purchase 103.5 but revised the outlook to ‘positive.’ These favorable
MW of the 582-megawatt plant scheduled to begin Groundbreaking ceremonies for the facility were held assessments of SMEPA’s creditworthiness should help SME passed a milestone in 2010 when the Association’s
commercial operation in 2014. in December. Mississippi Governor Haley Barbour, a with our efforts to borrow in the future.” net worth exceeded $200 million for the first time.
vocal supporter of the plant, was among many speakers The organization’s net worth passed $100 million in
The state-of-the-art plant, to be located in Kemper at the event. He said the Kemper plant will help keep Moody’s credit opinion noted SME’s stability of long- 2005 and is forecast to reach nearly $300 million in
County, Mississippi, will convert Mississippi lignite Mississippi “a reliable energy state” and noted that it will term wholesale power contracts; the ability and 2013. “Continuing to build SMEPA’s capital account
coal into synthetic gas to power a combined-cycle produce reliable and economical power for customers willingness of the Board to adjust rates in a rising during this period of expansion is a key element of our
generating unit with much lower carbon emissions for decades to come. energy cost environment; strong Member profile; financial plan,” Haley noted.
8 | South Mississippi Electric Annual Report South Mississippi Electric Annual Report | 9
R
E
S In the face of numerous operational and regulatory challenges,
South Mississippi Electric employees must be responsive and innovative
P PLANT MORROW KICKS OFF SCRUBBER PROJECT In addition to the normal maintenance tasks conducted During the Unit 2 outage, work related to the upgrade operate primarily as peaking and reliability resources;
Matt Tillman, substation design engineer
Vic Miller, system operator
Brandi Bracey, internal auditor
Robert Davis, mechanic I
Employees above (right to left)
during fall outages for the plant’s two units, additional included: however, the additional capacity and efficiency that
An August groundbreaking ceremony at the R.D. work required for the scrubber upgrade project was · Installation of new, modified inlet and outlet ductwork will result from the repowering project will transition
Morrow, Sr. Generating Station marked the beginning conducted on Unit 2 during the fall. and dampers; some of the units to intermediate generation resources.
O
of a project that, when completed in late 2011 or early · Replacement of the scrubber module existing internal The increased demand and reliance on Moselle and
2012, will make Plant Morrow the state’s only utility- “In order to complete the scrubber upgrade project, components with a new three-level slurry spray all of the other gas-fired units in SME’s fleet for the
owned, coal-burning electric generating facility to certain work has to be completed on each of the system, which includes new recycle pumps and valves, Association’s now 411,000 end-users have heightened
capture nearly 100 percent of sulfur dioxide emissions. Morrow units when the units are off line and in a new fiberglass reinforced plastic (FRP) piping and the need to develop additional resources to ensure the
N
planned outage,” said Ronny Kimbrough, environmental slurry distribution headers, new distribution tray, and availability of the fuel supply.
The $62 million Environmental Control System Upgrade process engineer responsible for the scrubber upgrade new liquid distribution rings;
project will modify and enhance the performance of project. “This work was successfully completed on Unit · Installation of new mist eliminators;
the existing scrubbers at less than half the cost of new 2 during a planned fall outage and will be completed · Modifications to the recycle tank, including new
D
scrubbers, allowing the units to scrub 100% of its flue on Unit 1 beginning in February 2011.” agitators and forced oxidation air piping;
gas with 98% SO₂ removal. The project will · New DCS controls for the Unit 2 scrubber;
also upgrade other existing equipment · Installation of new piping, valves, and pumps for
and processes to help improve the long- other related systems.
I
term reliability of the plant.
In addition, the 262,000-gallon filter feed tank,
Plant Morrow’s existing scrubbers were which will hold gypsum produced as a by-product
designed to scrub 62% of flue gas, based of the new system, was completed; and work
N
on Rural Electrification Administration continued on the installation of the new limestone
(REA) guidelines at the time of the plant’s ball mill, which is expected to be in operation by
construction. The plant complies with June 2011.
all current environmental regulations,
NEW NATURAL GAS STORAGE AND SUPPLY
G
and the project will help the Association
comply with new, revised governmental OPTIONS ADD TO RELIABILITY
and environmental standards.
As a result of agreements which were reached
Additional project benefits include: during 2010, South Mississippi Electric’s supply
· Increasing SO₂ removal by 95% annually; options for natural gas will increase in 2011 with
· Enabling the plant to meet compliance the availability of two new resources–one for
using coal with up to 1.4% sulfur fuel transporting the fuel and one for storage. The new A second gas pipeline connection at Moselle will enhance reliability
(currently limited to 1.1% sulfur content); resources are solutions to longtime concerns about not
· Helping to position Plant Morrow as a having a backup for the Association’s current natural
viable generation resource into the gas supply and for meeting future needs once the “We have considered several options for transporting
future. current Moselle repower project is complete. gas to Plant Moselle,” said Joey Ward, director of
environmental affairs and fuels. “Southeastern Supply
Overall, the project will have a peak One high-pressure gas pipeline has been the Header (SESH), a relatively new pipeline, proved to be
construction work force of 125 personnel sole supplier of natural gas since the plant began our best option. The connection point is only eight
on site and add more than $7.5 million in commercial operation in 1970, when the Association miles from the plant, and the pipeline has more than
construction payroll to the local economy. served 100,000 end-users. The plant’s units now enough capacity and pressure to run the entire plant.”
A new limestone ball mill was added as part of Plant Morrow’s scrubber upgrade project
10 | South Mississippi Electric Annual Report South Mississippi Electric Annual Report | 11
R
E
S
P The new pipeline can provide 100 percent redundancy
for Moselle’s gas supply and will also have the ability
to supply the units at Silver Creek and Sylvarena.
SME will pay for the capital costs associated with
2010 PEAKS BROKE WINTER, SUMMER AND
ALL-TIME DEMAND RECORDS
While South Mississippi’s summers are notoriously hot
maintenance crews worked to repair the leaks,
additional freeze protection precautions were
implemented. Crews also worked to isolate one cooling
tower to prevent ice build-up in the towers due to load
employees manned the site during the afternoon
and evening hours and our maintenance personnel
continued to operate in this manner for ten days.”
O
constructing the new pipeline between the plant and and humid, resulting in high energy demand, recent reduction and to keep lube oil and other systems warm System operators made numerous contingency plans
interconnection point through gas transportation rates winters have also produced weather extremes leading on the shut-down equipment. to import power and react to any problems arising with
over the next ten years. Upon completion in April 2011, to record usage. Normally a summer-peaking system, any Association-owned units, as well as transmission
the line will be owned and operated by Southcross the Association’s all-time hourly combined system peak Similar challenges were faced at Plant Moselle and at limitations and uncertainty about fuel supply.
N
Energy. of 1386 megawatt hours (MWh) had lasted since August each combustion turbine site–Sylvarena, Silver Creek,
2007. By the end of 2010, that total had been surpassed Benndale, and Paulding. “Having Morrow Unit 1 back on line helped solve many
SME will also enter into a 20-year contract in the spring several times. of the issues that we encountered,” said Gary Hutson,
of 2011 with Petal Gas Storage, a salt dome storage “With the frigid temperatures creating a much larger system operations manager. “We were making hourly
D
facility located in close proximity to the plant. Temperatures in excess of 100°F for several consecutive load demand, the availability of the combustion turbine purchases and working around transmission and
days in early August drove South Mississippi Electric’s peaking units and steam units became very critical,” pipeline limitations, but having our largest on-system
“We have attempted to procure storage space at this energy demand to new summer highs. A new summer said Trey Cannon, plant engineer at Plant Moselle. resources available assisted us in getting through
facility in the past, but nothing was available until now,” hourly combined system peak of 1421 MWh was set on “Beginning on January 5, a mechanic and an instrument the event. The fact that we were able to overcome
I
said Ward. “Beginning in April, we will have the capacity Monday, August 2, and load on the following two days and electrical technician were on site at Sylvarena and significant challenges while reliably serving load at
to store 0.5 billion cubic feet of natural gas, which is also exceeded the 2007 mark. Silver Creek to ensure that the turbines would be ready record levels was a direct result of a combined effort
enough to run our natural gas-fired generation fleet for to start when called upon by the Control Center during from a lot of employees.”
three days at our record peak demand.” Those totals, however, could not match an the early morning load peaks. A second shift of Moselle
N
unprecedented week in early January when
An additional benefit of the Petal storage facility is consecutive daily hourly combined system peaks were
that it is interconnected with SESH, enabling the new 1403 MWh (January 9), 1470 MWh (January 10), and
pipeline to transport fuel from there to Moselle. then 1488 MWh on January 11. The record-setting mark
G
was nearly 16% higher than January the year before
“Having an easily accessible supply of gas in storage and 102 MWh above the prior summer combined
will allow our system operators a lot of operational system peak. Total metered system sales for the month
flexibility when they need to start our combustion- were more than one million MWh.
turbine units and peaking units quickly,” said Ward. “It
will also be advantageous when emergencies occur, like To meet the record demand during the first weeks
hurricanes, or in times of extreme heat or extreme cold. of 2010–which saw a combination of extreme cold
weather, high electric demand throughout the country,
“We have recognized the need for a reserve supply for and generating units across the region stressed to the
our natural gas well before now, but it took us finding point of breaking–South Mississippi Electric employees
the right opportunity for all the pieces to fall into place,” displayed creativity, hard work, professionalism, and
said Ward. “The timing is perfect with the addition of dedication.
the new combustion-turbine units at Moselle. I am
confident this will pay off in the future and pay for itself. Plant Morrow’s Unit 1, one of SME’s primary resources,
One day we will look back and wonder how we ever got experienced boiler tube leaks during the week which
along without it.” caused it to be taken off line twice, but maintenance
crews made repairs in each instance and returned
the unit to service as quickly as possible. While System operators Pat Simmons (foreground), Gary DiFatta and David Baggett (right) monitor all aspects of SME’s operations in the control center
12 | South Mississippi Electric Annual Report South Mississippi Electric Annual Report | 13
R
E
N South Mississippi Electric’s employees are constantly seeking new
ways to deliver improved and more reliable service to Members
E ADDITIONS TO MICROWAVE SYSTEM ADDRESS Work has also been underway to upgrade the Each new tower is unique and must be designed to
Trevor Cameron, coal and utility supervisor
Irmalene Rainey, budget and payroll accountant
Roy Peters, painter
Gary Hutson, system operations manager
Employees above (right to left)
GROWING NEEDS microwave communications network and metering meet a variety of considerations, including location,
equipment required to provide real-time telemetering topography, soil and weather conditions. Towers
In 2008, South Mississippi Electric determined that data for the affected delivery points. constructed along Mississippi’s hurricane-prone coastal
W
it would be advantageous and economical to take counties are designed to withstand winds up to 150
over generation responsibility for thirteen Member “Such data is critical for ensuring proper generation miles per hour and are rarely more than 300 feet
delivery points which are currently served through dispatch to match the real-time needs of the new loads,” tall. In contrast, towers constructed in the Delta are
Mississippi Power Company (MPC) Market Based (MB) said Richard Ashley, design engineering director. “The designed to withstand only 90-mile-per-hour winds
I
power purchase agreements. The three-year effort towers permit the transfer of supervisory control and and, therefore, will be able to be much taller. Tower
should ultimately lead to lower overall costs to provide data acquisition (SCADA), telephone communications, foundations in the Delta might average six feet in
wholesale power needs to the affected substations and security monitoring. The network expansion is diameter and 35 to 40 feet in depth, compared to the
operated by Pearl River Valley EPA, Coast EPA and designed for a high level of reliability utilizing both foundation averages along the Coast of eight feet in
N
Singing River EPA. route diversity and equipment redundancy.” diameter and 55 feet in depth.
With the changeover scheduled to take effect on The new network will also provide for future options Completion of the entire project is scheduled for 2013.
April 1, 2011, numerous activities involving planning related to enhanced consumer usage and demand
G
and construction occurred in 2010 in order to meet response.
reliability standards associated with controlling,
measuring and monitoring the new loads. “The construction of an adequate and flexible
communications infrastructure is the fundamental
“From an operations standpoint, the primary challenge first step in building the Smart Grid,” Ashley noted.
is determining how to integrate the load on the “When people talk about a Smart Grid, they are
thirteen substations, which we estimate will swing essentially talking about communication from
between 30-150 megawatts, into our existing systems,” the generator to beyond the distribution meter,
said Gary Hutson, system operations manager. “We are with multiple points of control and monitoring
currently tracking the load and determining the best in between. This project lays the foundation for
way to serve the load using our existing generating that communication by providing the backhaul or
resources and power purchase agreements.” transport network for high volumes of data.”
The new microwave tower and equipment shelter at Singing River
EPA’s Monaco Lake substation
To help meet the new demand, SME negotiated a The project will add nine new towers or monopoles,
power purchase agreement with MPC, and employees equipment and buildings to accommodate
spent the year negotiating the details of scheduling “The entire project has been a very long and communication paths in the MPC transmission area.
and delivery responsibilities through the Southern thorough process,” Hutson noted. “It has involved In addition, planning is underway to significantly
Company transmission system. Additional areas of numerous employees and work groups, as we worked expand the network in the Entergy transmission
focus included working with system operators to through issues involving operations, metering, area, with the addition of 65 new towers. Upon
incorporate information associated with the new load telecommunications and other Member considerations. completion, SME’s communications network will
into the control center computer and displays, as well As we get closer to the implementation of this span most of the state, reaching from the Mississippi
as adding the information into existing operations extremely complex project, I believe that the efforts of Delta to the Gulf Coast.
programs for planning, reporting and accounting. everyone involved will result in greater value for our
Members.”
Josh Beech, substation technician I (left), and Matt Simpson, meter technician II,
install connections on a new 448 MVA transformer at Purvis Bulk substation
14 | South Mississippi Electric Annual Report South Mississippi Electric Annual Report | 15
R
E
N
E SMART GRID GRANT RECEIVES FINAL APPROVAL
South Mississippi Electric received confirmation in
April from the Department of Energy (DOE) that the
ENERGY EFFICIENCY AND DEMAND SIDE PROGRAM
MOVES FORWARD
The Coordinated Energy Efficiency and Demand
LINE CREWS DEPLOY VERSATILE NEW TOOL
A Mantis Crane was delivered in June and immediately
put to work by transmission crews working on a new
The vehicle’s most dynamic feature, however, is its
mobility. Its tracks can be spread wider than that of a
W
Association’s smart grid investment grant had been Reduction (CEEDR) group, consisting of SME and Member delivery point. The vehicle has the ability to digger derrick truck, lowering its center of gravity and
formally approved. Member employees, met throughout 2010 in an effort dig holes, set poles, and lift and carry equipment. It can enabling it to carry heavy objects across difficult terrain.
to develop possible ways to reduce consumer electric also be outfitted with a two-man bucket, and its boom
Advanced Metering Infrastructure and Associated demand and/or usage. Options may ultimately include can be extended to heights of well over 100 feet.
I
Smart Grid Investments for Rural Mississippi, a $61 implementing energy efficiency programs or demand
million project proposal developed jointly by SME and response programs, depending on further analysis of
five of its Member systems, was selected by DOE in studies conducted to better understand consumer
2009 as one of 100 recipients of the stimulus grants. usage across the system.
N The grant amount totals $30,563,967. The overall
project calls for installing nearly 241,000 retail and
229 wholesale meters that will help provide member-
Information collected from detailed residential audits
of 384 homes and 63 commercial and industrial sites
has been compiled to assist in the study. The survey
G
consumers with valuable information regarding their of mobile homes, single-family and multi-family
electricity usage. Participating Members include Coast residences in seven co-op service areas examined
EPA, Magnolia EPA, Southern Pine EPA, Southwest heating and cooling systems, insulation, windows, air
Mississippi EPA, and Pearl River Valley EPA. infiltration, duct sealing, lighting, appliances and water
heating–all in an effort to understand how consumers
Roger Smith, wholesale services manager, worked with use energy and how they might use it more efficiently.
a wide variety of SME employees and representatives of
each participating Member to complete the application “We are looking for areas where we can help consumers
process. After the application was announced as a improve their energy use,” said Smith. “We still have
selectee, Smith and his team spent several months a long way to go, but we must first understand the
negotiating the details of the grant contract, as well residential consumer energy use patterns before
as sub-recipient agreements between SME and the programs can be designed that will benefit SMEPA, the
Members that involve reporting and reimbursement Member systems and consumers.”
arrangements.
Objectives of the CEEDR program include finding
South Mississippi Electric’s portion of the $61 million economical ways to reduce overall costs of service to
collaborative project is slightly more than $1 million. Members and consumers through demand response
Work has already begun on replacing and upgrading and energy efficiency programs. The resulting programs
meters at some delivery points. In addition to will be focused in an effort to reduce overall system
adding automated meter infrastructure and meters, peaks and usage–all of which may help delay the need
several of the Member systems will also be installing for new generation facilities. A secondary purpose
communication, control and data management of any programs that are implemented is that such
equipment to improve the capability of their delivery programs may also help meet future regulatory
systems. All projects are to be completed within 30 requirements related to energy efficiency.
months of the award date.
Line crew members and heavy equipment operators received initial training on the Mantis Crane’s capabilities at Dixie Electric’s Lynn Ray Road substation site
16 | South Mississippi Electric Annual Report South Mississippi Electric Annual Report | 17
R
E
I South Mississippi Electric continually looks for opportunities to enhance the relationships
and responsibilities required to serve its Members, employees and the local community
N HEADQUARTERS EXPANSION AND consoles–one for generation, one for transmission, one heating and cooling system uses the Earth’s constant “John has many accomplishments at SMEPA that will
Jerry Pierce, director of transmission construction
Eddie Hill, electronics supervisor
Kelly Johnson, buyer
James Tatum, materials handler
Employees above (right to left)
RENOVATION COMPLETE for coordination, and one for training. The center, which temperature to provide more efficient heating and be remembered for many years to come,” said Tommy
also includes its own kitchen and a 650 kW generator, cooling through an intricate system of ground loops, Clark, who has worked with Carley for more than 30
After nearly two years of construction, the is fully capable of operating independently during indoor heating units and air-delivery system. The years. “But perhaps the greatest accomplishment from
V
Headquarters campus facility additions and renovations emergency conditions. ground loops form a system of underground pipes those years is his and (wife) Peggy’s choice to invest in
were completed in 2010, helping to accommodate that continually circulate water from the buildings to the lives of those around them. I am one of those lives.”
South Mississippi Electric’s growing organizational Another addition during the project was a new the ground. The 205-ton system used an estimated
needs and to strengthen the Association’s compliance communications and electric shop. The new facility 50,000 feet of piping and 172 geothermal wells at an Nathan Brown, chief operating officer, commented on
E
and security requirements. boasts a 3,241-square-foot shop, a climate-controlled average depth of 270 feet each. The $1.6 million system John’s contributions to the success of South Mississippi
project room and an indoor bay. is expected to pay for itself through operational savings Electric and his continued support of the Association
Expansion of the facility, which was first occupied in in five years. and its Members.
1973, included the construction of a new 6,000-square- Security and compliance controls were enhanced
S
foot administrative building that connects to the through the addition of an access-controlled perimeter SYSTEM OPERATIONS CENTER BUILDING “In addition to his life-long impact on his family, friends,
original office building. The new building was dedicated fence, campus-wide monitoring systems, controlled DEDICATED TO HONOR JOHN CARLEY and co-workers, during his career John has made
in 2009 in honor of former Board President W.C. access to all campus facilities, and limited access to the significant contributions that have helped shape SMEPA
McKamy, Jr., of Twin County Electric Power Association. control center and other high-security areas. Employees, retirees, family, and friends gathered in into what it is today,” said Brown, who enumerated
T
May to dedicate the John Carley System Operations a long list of contracts, projects and negotiations
Campus renovations included converting the former Plans to design a more productive, work-friendly Center. The new building houses offices for Bulk Power overseen by Carley throughout his career. “John has
Transmission and Support Services warehouse into campus also created an opportunity to build a facility Operations as well as the Association’s new control been and continues to be a huge benefit to me as a co-
the new Bulk Power wing, which now houses offices that was more environmentally friendly and energy- center. worker, as a role model, and as a friend,“ Brown noted. “I
I
and a new control center. The 2,400-square-foot efficient. The most innovative improvement was the am proud to work in the System Operations Center that
control center boasts four state-of-the-art operations addition of a new geothermal HVAC system. The Carley retired in 2000 as Manager of Corporate has been named in his honor.”
Planning and Operations and continues to serve South
Mississippi Electric as a power supply consultant. “This event honoring John is a great reflection of his
N
During a ceremony recognizing the occasion, several work ethic and character,” said General Manager/
long-time co-workers spoke about John’s continued CEO Jim Compton in his remarks. “He has been a
dedication and service to SME. Each speaker tremendous asset to the Association throughout
mentioned many of the special qualities that he has his years of service as an employee and now as a
long been known for, including his leadership, sacrifice, consultant. We appreciate all that he has done, and
G
spirit, care for his fellow employees, and good nature. we are honored to name this building–which is so
important to our overall operations–after him.”
“Whether I worked for John as one of his employees or
whether I work side by side with John in his current role SME HEART WALK TEAM AGAIN SURPASSES GOAL
as a consultant to SMEPA, he has always been a cheerful
man dedicated to his job, dedicated to his family and South Mississippi Electric’s Heart Walk Team made
dedicated to his faith,” said Curt Holland, hired by Carley great strides in the fight against heart disease in 2010.
in 1997. “Winston Churchill once said, ‘Attitude is a little The team, with the support of all SME employees,
thing that makes a big difference.’ Thank you John for raised approximately $4,500 for the American Heart
having an attitude that is filled with faith, devotion, Association (AHA), surpassing the goal by $1,000.
kindness, and caring.”
The two-year Headquarters facility addition and renovation project was completed in 2010
18 | South Mississippi Electric Annual Report South Mississippi Electric Annual Report | 19
R
E
I
N “Our team once again did an excellent job raising
money for the Heart Association,” said Richard Ashley,
director of design engineering, who is a heart disease
survivor and SME Heart Walk team member every year
groceries, personal hygiene items, basic kitchen
necessities, bedding, clothing, and other household
items for the designated family, as well as bikes and
some toys for the family’s three children.
SME INITIATES LEGAL ACTION IN RAIL DISPUTE
South Mississippi Electric initiated legal action against
Norfolk Southern Railway Company in December,
amount the railroad charged under contract as recently
as 2003.
“This has been a continual issue with Norfolk Southern
V
since undergoing heart bypass surgery in 2004. “We seeking relief from excessive transportation rates and to for many years,” said SME spokesman Kurt Brautigam
were thrilled when we exceeded our goal. The team Employee volunteers worked with Sister Carmelita, the recover unjust charges due to breach of contract. after the filings. “Each contract over the past decade has
had great participation from the employees from early founder of St. Thomas Catholic Social Services, who resulted in costs 60% to 80% higher than the preceding
planning through the day of the walk.” recommended the family through her work throughout Norfolk Southern (NS) is the only rail carrier able to one. Our rail costs have continued to rise significantly
E
the Hattiesburg area. serve the route required to deliver coal from Appalachia while the service we receive has steadily deteriorated.
The team hosted several fundraisers throughout the to the R.D. Morrow, Sr. Generating Station, the It has been troubling to have received no reasonable or
months leading up to the Walk, and 27 SME employees “It is an eye-opening experience to walk into a Association’s primary baseload generating station, thus substantive response to our concerns.
and family members participated in the event, which home that has very little, then meet the family that making SME a captive shipper. NS exerts sole control
S
attracted more than 4,000 walkers to the campus is so full of joy and so gracious,” said Sara Peterson, over the rates, rules and other terms of transporting “Unfortunately, we have no other recourse than to
of the University of Southern Mississippi. The AHA’s communications coordinator. “The family knew we coal to Morrow and has been the sole carrier of fuel litigate to seek relief from the monopolistic abuse
community goal of $150,000 was shattered by the were coming, but I do not think they realized what all since the plant began operations in 1978. The most NS has subjected us to. The most frustrating and
attendance and support. was coming with us.” recent contract between the two parties expired at the disappointing aspect to this trend of higher costs and
T
end of 2010. poorer service is that the costs negatively impact our
DONATIONS REACH BEYOND ADOPTED FAMILY The donations were so generous that the family end-use consumers, who can least afford the extra
decided to share their gifts with two sets of close South Mississippi Electric filed a complaint against NS in expense.”
South Mississippi Electric’s employees support relatives who are in a similar financial situation. the United States District Court for the Southern District
I
numerous charities and fundraisers, but the response is of Mississippi, Hattiesburg Division, claiming breach of
especially strong for the Christmastime Adopt-A-Family “It was gratifying to know that the generosity of our its current coal transportation contract. The Association
project. In 2010, donations were used to purchase employees was going to make a difference in the lives also filed a complaint with the federal Surface This chart shows the change in Norfolk Southern’s rates to SME over
the past 20 years. The black line up until 2004 indicates actual charges.
of this family, but Transportation Board (STB) seeking relief from excessive
The red line indicates what rates should have been based on normal
N
now to know that and unreasonable future rates proposed by NS. cost adjustments, including the railroad’s expected productivity and
they are sharing inflation. The green line reflects the actual charges to SME during the
their blessing The federal court action claims that NS breached last two series of contracts and the tariff NS imposed during 2011.
with two other the previous transportation contract through: (1)
$45.00
families makes its application of a fuel surcharge that SME believes
G
$39.25
it even better,” overcompensated NS for fuel cost changes; (2) $40.00
$26.39
said Reagan improper application of the contract adjustment clause $35.00
$27.11
Griffin, corporate that SME alleges resulted in contract overpayments; $30.00
communications and (3) service failures that resulted in approximately Rate Paid
$25.00
intern. 130,000 tons of delivery shortfalls in 2010. SME also $20.84
$20.00
alleges that NS breached its obligation to act in good Rate Paid $14.25 $20.84
faith in performing the contract. $15.00
$8.34
$10.00
In the STB action, SME is seeking the establishment of $10.12
$5.00
Rate Changed by RCAF-A
just and reasonable rates, rules and other terms from $0.00
NS for its services going forward. NS has notified SME 1991 1996 2001 2004 2007 2011
that rates beginning in 2011 will be four times the
SME’s team of employees, relatives and friends exceeded its Heart Walk goal again in 2010
20 | South Mississippi Electric Annual Report South Mississippi Electric Annual Report | 21
R South Mississippi Electric Headquarters R. D. Morrow, Sr. Generating Station George B. Taylor, Sr. Generating Station
E Location: Hattiesburg, Forrest County
Employees: 122
Commercial Operation: 1978
Location: Purvis, Lamar County
Capacity: 400 MW
Commercial Operation: 2003
Location: Jefferson Davis County
Capacity: 250 MW
S
Fuel: Bituminous Coal Fuel: Natural Gas
Employees: 115
O
U
R Henry C. Thomas Field Operations Center Grand Gulf Nuclear Station (10% Undivided Interest) Paulding Station
C Location: Hattiesburg, Forrest County
Employees: 62
Commercial Operation: 1985
Location: Port Gibson, Claiborne County
Capacity: 1,250 MW
Fuel: Nuclear
Commercial Operation: 1972
Location: Jasper County
Capacity: 20.6 MW
Fuel: Diesel Fuel
E
Employees: 1
S
J. T. Dudley, Sr. Generation Complex
Moselle Generating Station Sylvarena Station Benndale Station
Commercial Operation: 1970 Commercial Operation: 2003 Commercial Operation: 1969
Location: Moselle, Jones County Location: Smith County Location: George County
Capacity: 344 MW Capacity: 141 MW Capacity: 16.2 MW
Fuel: Natural Gas/Fuel Oil Fuel: Natural Gas Fuel: Natural Gas
Employees: 48
22 | South Mississippi Electric Annual Report South Mississippi Electric Annual Report | 23
R
E
V 2010 MILESTONES
I
JANUARY • Completed 9 miles of new 115kV line from Joe Batt Road
• All-time combined system hourly peak record of 1488 to Vancleave, as well as GOABs at each location
MWh set at 7 a.m. on January 11 • Contractors mobilized and began preliminary work on
• Jeff C. Bowman named board attorney Moselle Repower Project
E FEBRUARY
• Energized new Coast EPA delivery point at Landon
• Headquarters facility addition and renovation project
AUGUST
• Groundbreaking ceremony held at Plant Morrow to
mark the beginning of the $62 million scrubber upgrade
W
completed after nearly two years project
• New summer combined system hourly peak of 1421
MARCH MWh set at 3 p.m. August 2
• Completed transformer replacement project at • Mobile substation storage facility at Delta EPA completed
Purvis Bulk (installed two-new 448MVA 230/161kV
autotransformers) SEPTEMBER
• Morrow employees completed restoration of plant’s • Contractors broke ground on Moselle Repower Project
1941 GE Locomotive • Plum Point Energy Station began commercial operation;
• SME contracted with Tenaska to increase resources SME receives 200 MW through purchased power
available for bulk power sales and purchases agreement
• First distributed generation agreements with end-use
APRIL consumers finalized
• Board of Directors toured Southern Company’s National • SME began 19th year supporting North Forrest
Carbon Capture Research Facility near Birmingham, AL Elementary School through the Adopt-a-School program
MAY OCTOBER
• New Dixie EPA delivery point at Highway 588 energized • Fourth Annual All-Employee meeting held
• John Carley System Operations Center dedicated • SME ranked 62nd in the National Consumer Cooperative
• SME, Coast EPA, Southwest MS EPA, Pearl River Valley Bank’s 2010 Co-op 100 List
EPA, Southern Pine EPA, and Magnolia EPA received $30.5 • SME assigned senior debt credit ratings of A3/BBB+/A-
million Smart Grid Grant from the Department of Energy from Moody's, Standard & Poor's and Fitch
JUNE NOVEMBER
• Board of Directors voted to pursue a 17.5 percent • Energized new Dixie EPA Lynn Ray Road substation
interest in Mississippi Power Company’s Kemper County • Conducted first day-long orientation for recently-hired
Integrated Gasification Combined Cycle Project employees
• New Mantis Crane delivered and deployed for
transmission projects DECEMBER
• Fourth Annual All-Directors’ Update held • Completed $150 million bond issuance
• Board of Directors enacted a one mill/kWh decrease • Energized new Coast EPA delivery point at Stennis
in wholesale rate to Members • Completed installation of new telephone switching
system at Plant Morrow
JULY • Completed Taylorsville 69kV switching station
• Grand Gulf Nuclear Station celebrates 25 years of improvements
commercial operation • Completed mobile substation storage facility at
• Microwave communications network expanded from Magnolia Electric
Traxler to Polkville and a new self-supporting tower • Exceeded 10 million megawatt hours of annual sales for
installed at the Polkville 161/69kV sub first time
24 | South Mississippi Electric Annual Report
R
E
M HENRY THOMAS
E
Henry Thomas, South Mississippi Electric’s general manager from 1985 to 2004,
died on January 1, 2011. He was 72.
Under his direction, the Association experienced significant growth and
M
maintained low rates to its eleven Member systems. SME grew from serving
246,996 meters with revenues of $193 million in 1985 to serving 377,367 meters
and generating $464 million in revenue by 2004.
B
While at SME, Thomas served on the National Rural Electric Cooperative
Association (NRECA) Board of Directors from 1985 to 1988 as well as the NRECA Resolution
Committee. In 2005 he received the NRECA Regional Outstanding Service Award. In 2008, SME’s newly
constructed Henry Thomas Field Operations Center was named in his honor.
E Prior to joining South Mississippi Electric, Thomas spent 16 years with Coast Electric Power
Association, serving as a district manager beginning in 1970 and later as general manager until 1985.
R
HARLAN ROGERS
Dr. Harlan B. Rogers, a 24-year veteran of South Mississippi Electric’s Board of
Directors, passed away on September 22 at the age of 81. Dr. Rogers, who served
I
as president of the SME Board from October 2003 until June 2006, was one of
only three Board presidents to lead the Association during the past 25 years. In
addition, he served as vice president of the SME Board for ten years and was a
long-time director of Southern Pine Electric Power Association.
N “We have been very fortunate to have had excellent Board leadership for the past
25 years, which has enabled our organization to make great strides in serving our
Members,” said Jim Compton, general manager/CEO. “Dr. Rogers’ dedication and contributions to
G
South Mississippi Electric will long be remembered and appreciated.”
EQUAL EMPLOYMENT OPPORTUNITY AND STATEMENT OF NONDISCRIMINATION
South Mississippi Electric is an Equal Opportunity Employer. Employment is based upon personal Section 504 of the Rehabilitation Act of 1973, as amended; the Age Discrimination Act of 1975, as
capabilities and qualifications without regard to race, color, sex, age, religion, national origin, disability, amended; and the rules and regulations of the USDA. In accordance with federal law and USDA and
veteran’s status or any other protected characteristic as established by law. This policy applies to all Dept. of Energy policy, the Association is prohibited from discriminating on the basis of race, color,
areas of employment including recruitment, hiring, training and development, promotion, transfer, national origin, sex, religion, age, or disability.
termination, compensation, benefits, and all other conditions and privileges of employment.
Any individual, or specific class of individuals, who feel that this Association has subjected them
All supervisors and managers are responsible for creating an atmosphere free of discrimination. Further, to discrimination may obtain further information about the regulations from and/or file a written
each employee is expected to maintain a productive and non-discriminatory work environment and to complaint with the Association’s Human Resources Director; the USDA, Director of Office of Civil Rights,
treat all colleagues with respect and professionalism. Room 326-W, Whitten Building, 1400 Independence Avenue, SW, Washington, DC 20250-9410, or call
(202) 720-5964 (voice or TDD), or the U.S. Department of Energy, Director of Civil Rights and Diversity,
As a recipient, either directly or indirectly, of federal financial assistance from the Rural Utilities Service, 1000 Independence Avenue, S.W., Washington, D.C. 20585, or call (202) 586-2218 or TDD (202) 586-
an agency of the U.S. Department of Agriculture (USDA) and from the U.S. Department of Energy, South 5329. USDA is an equal opportunity provider and employer. Complaints must be filed within 180 days
Mississippi Electric is subject to the provisions of Title VI of the Civil Rights Act of 1964, as amended; after the alleged discriminatory action. Confidentiality will be maintained to the extent possible.
OUR MISSION
Deliver the South’s best value for safe and reliable electric energy
and serve as a common resource for our Member-owners
OUR DAILY RESPONSIBILITY
Knowing and complying with all environmental
and regulatory requirements
OUR COMPETITIVE STRENGTHS
• An experienced, skilled work force
• A commitment to employee safety and system reliability
• A long-term contractual relationship with our Member systems
• Financial health, including that of our Members
• Sustained load growth in our Members’ service territories
• Long range planning for cost-effective generation resources
• Fuel diversity in generation resources
P.O. Box 15849
Hattiesburg, MS 39404-5849
601-268-2083
www.smepa.coop