Smitham ??mpny9? Miggiggipi ijmf: mm it ?f BESS f1? Amiim o? . L. - 2.3.caram? . w?n A SOUTHERN COMP David M. Ratclilfe Bin 801500 Chalman,?Presldent and Ivan Allen, Jr. Boulevard NW Chief Executive Of?cer Atlanta, Georgia 30308 Tel 404.506.0355 Fax 404.508.0853 SOUTHERN A COMPANY Energy to Serve World 3" February 15, 2008 The Honorable Samuel Bodman Secretary of Energy United States Department of Energy Room 1000 Independence Avenue, \Vashington, DC 20585 Dear Secretary Bodman: As 1 discussed with you earlier in our phone conversation, I am forwarding you the proposal we will be discussing on February 26. I believe that this proposal is a tangible dramatic demonstration of the new direction for clean coal research you outlined in our recent conversation. The key to making this happen is in the partnership that must exist among the Department'of Energy, the State of lVIississippi and Southern Company. Governor Barbour, who will also attend our meeting, is a progressive leader committed to developing clean, secure, domestic energy for our nation. The partnership between the Department and Southern Company has already produced the most advanced gasification technology in the world, and with your continued support, we will commercially demonstrate that capability. I look forward to our meeting and the opportunity for us to take a significant Step in achieving your vision for our nation?s energy future. Sincerely, (all.er David M. Ratcliffe Enclosure i "?llfl?l?, STATE OF MISSISSIPPI in I I. 5% OFFICE OF THE GOVERNOR I: lawn?, \Bb?wl "Jaw" HALEY BARBOUR GOVERNOR February 8, 2008 The Honorable Samuel Bodman United States Department of Energy 1000 Independence Avenue, SW Washington, DC 20585 Dear Secretary Bodman: I enthusiastically support Mississippi Power?s proposed Integrated Gasi?cation Combined Cycle facility in Kemper County, Mississippi. The jobs and economic opportunity brought to East Mississippi by this generating plant can result in a much needed economic catalyst for this region?s development and prosperity. In addition to serving its citizens, Mississippi will gain a new reputation as a leader in advanced, ef?cient clean coal technology. The realization of this facility would place Mississippi at the helm of America?s ongoing effort to achieve energy independence through increased domestic production of alternative and traditional energy sources. Mississippi is committed to lead the way in supporting the Administration?s goal of pursing energy supply options as part of a national energy strategy mix. In this endeavor, I believe clean coal technologies must play a major role. The proposed IGCC facility and the very impactof this technology can be a tremendous positive force on the nation?s energy policy. As you consider your support for the proposed facility, be mindful of the remarkable impact a state-of-the-art project of this magnitude will have not only in power generation, but in serving the country to achieve energy independence and dramatically enhancing the quality of life for our state. I feel strongly this project is in the very best interest for the United States and the State of Mississippi and ask that you extend the necessary federal support to move this project boldly forward. I, aley Barbour POST OFFICE BOX 139 0 MISSISSIPPI 39205 0 TELEPHONE: (601) 359?3150 0 FAX: (601) 3593741 0 Southern Company?s Mississippi Project Answering the Department of Energy?s Call for Action Southern Company?s Mississippi Project Answering the Department of Energy?s Call For Action Southern Company is prepared to demonstrate the advanced coal gasi?cation technology, TRIGTM, in Kemper County Mississippi. This technology, developed in partnership with the Department, was previously proposed in Orlando, Florida. Southern believes this project will be a clear and dramatic response to the Department?s goals of clean, secure, domestic energy for America. The Mississippi Project has been under development for over a year and was positioned with its 2013 commercial operation date to bene?t from the ?rst-of-a?kind risks and costs that the Orlando Project was to bear and help resolve. With the Orlando cancellation, the Mississippi Project, which is twice the size of Orlando, now becomes the commercial demonstration of TRIGTM, and requires the following assistance from the Department to proceed. (Appendices I, 2). I. Southern requests the Department?s approval of a site change from Orlando to Mississippi and use of remaining CCPI funds by March 31, 2008. A. The Department has the authority to act based on: 0 Principle - Has the authority to change a project?s characteristics (in this case location) as long as the public interest is at least as well served as originally planned, and the site change does not increase the overall cost to the Department or the percentage of the total project cost funded by the Department. (Appendix 3) Precedence - Has dealt positively with such transfer requests previously, having approved 12 site change requests since 1989. Southern is unaware of a site change request that met the requirements being denied. (Appendix 4) B. The Mississippi Project satis?es the objectives of the original grant in demonstrating advanced gasi?cation technology and creates greater opportunities for commercialization by demonstrating lignite as well as PRB. Objective Orlando Mississippi Demonstrate New Technology TRIGTM TRIGTM Demonstrate Gasi?cation of Low PRB Li gnite and Rank Coals PRB Demonstrate Commercial Scale 285 MW ~580 MW Total Capital DOE Contribution ~3 5% ~18% C. The Mississippi Project site provides a greater chance of commercial success and achievement of the Department?s goals for America. 0 The Governor and State are committed to the project because of its economic impact to a depressed region of Mississippi and for the opportunity to participate in technology development. This project is a signi?cant step in achieving the Governor?s Energy Strategy for Mississippi. 0 Mississippi is ideal for demonstrating Carbon'Capture and Sequestration. - Excellent geological formations. (Appendices 5, 6, 7) Naturally sequestered C02 is currently being pumped out of the Jackson Dome in Mississippi for enhanced oil recovery and provides a unique opportunity for CCS. (Appendices 8, 9) - The right of eminent domain for CO2 pipelines already exists in Mississippi. [Appendix 10) Potential to supply anthropogenic C02 to SECARB Phase project. 0 Demonstrating the use of lignite (as well as PRB) will open up the opportunity to use this largely underutilized resource which runs from Texas to Alabama to meet our nation?s energy requirements. (Appendix 11) The Mississippi site increases service reliability to facilities of national interest, including Colonial and Plantation Pipeline Companies? critical pumping facilities near Collins, MS. (Appendices 12, 13) II. Southern Company requests the Department expedite the NEPA Review required for the Site Change Application and for the Loan Guarantee Program. A satisfactory Record of Decision is required not only for the site change, but also for the loan guarantee the Mississippi Project quali?ed for under EPA 2005. Project viability hinges on these funds. Southern is proceeding with developmental activities. The longer the two NEPA processes take, the more money will have been spent and at risk. Southern asks the Department to insure that these two parallel processes be coordinated and expedited. 111. Southern Company requests that the Department exercise its authority to waive the CCPI repayment obligation. A. As stated in the agreement, the Department may terminate the repayment obligation if ?repayment places an Obligor at a competitive disadvantage in domestic or international markets.? Without this waiver, or other ?nancial support, this project will likely not be the least cost alternative for State certi?cation and a competitive resource in the wholesale market. (Appendix 14) The Mississippi Project is twice the scale and cost of Orlando, thus doubling its exposure to ?rst-of?a?kind risks and costs. The Department?s participation, designed to help make Orlando competitive, was 34.8%, but would only be 18.1% for Mississippi with the funds transferred. Orlando Utilities Commission which was to own 35% of Orlando is a tax exempt entity. Southern Company is a fully taxable entity and under current plans will own 100% of the Mississippi Project, thus making the project?s tax exposure signi?cantly greater and worsening the project?s economic viability. B. Southern is pursuing the opportunity to include carbon capture controls beginning in 2013. In light of the additional cost associated with carbon capture, the repayment obligation further disadvantages this project. The repayment obligation is inconsistent with recent Congressional action eliminating such requirements for clean coal demonstration projects and the CCS goals of CCPI 3, and creates a competitive disadvantage for this project. Southern is developing a strategy for carbon capture of one million tons of C02 per year at Mississippi with expansion as technology advances. FEED study for C02 capture is already underway. The Mississippi Project could provide the necessary C02 for sequestration associated with the SECARB Phase 3b proposal. The Mississippi project can become the commercial demonstration site for the carbon capture research the Department and Southern are performing at our Power Systems Development Facility, PSDF. Beyond the waiver, additional funds will likely be needed to help offset the added cost and loss of capacity to receive State certi?cation as the least cost option. Summary Southern Company and the Department have partnered for several years in pursuit of clean, secure, domestic energy for America through our research and development of the TRIGTM technology. Its introduction into the marketplace with CCS capability can be a reality in 2013 with the Department?s continued support of Southern Company?s Mississippi Project. >353? A 1330? SOUTHERN A COMPANY Energy to Serve Your War-la"c Project Overview - Loca?on Kemper County, MS . Approximately 20 miles north of Air Blown Integrated Gasrfication Meridian, MS Combined Cycle (IGCC) - In-Service Date 6/1/2013 - 2x1 Integrated Gasification Combined Cycle (IGCC) Utilizes TRIGTM Gasi'iica'lzion Technology Nagging . Nut-"u Primary Mine Mouth Lignite - I I - as? Ier an Backup - Natural Gas - - New Coal Conveyor .. - Potential to capture CO2 >533? 3.2.02 morons? One SOUTHERN A A COMPANY Energy to Serve ?anJr/dm a Project Schedule Regulatory Activities PSC Certfication Decision Case Environmental Permitting ITC Certification Lignite Quality Confirmation GE Turbine Testing Lignite Test Burn at PSDF Procure Mineral Rights Mine Development Kemper FEED Interconnection Transmission Gas Lateral Detailed Design Construction I Startup Testing 1/1/07 12/27/07 12/21/08 12/16/09 12/11/10 12/6/11 11/30/12 11/25/13 Bowman? 06.29.: BALCH BINGHAM LLP Alabama - Georgia - Mississippi - Washington. DC. ME RAND UM COMMUNICATION CONFIDENTIAL TO: Kim Flowers Vice President SPO Mississippi Power Company FROM: Grady Moore Steven Burns Leslie G. Allen DATE: February 7, 2008 RE: DOE Authority to Amend or Modify Cooperative Agreement to Transfer Site of CCPI Demonstration Project Introduction The US. Department of Energy selected Southern Power Company?s Integrated Gasi?cation Combined Cycle project under the Clean Coal Power Initiative The project proposed to construct an IGCC unit at an existing electric generating plant at Orlando Utilities? Stanton facility located near Orlando, Florida. Under the cooperative agreement, DOE would provide cost-shared funding for the project. However, concerns about possibly adverse state regulations have resulted in a decision not to proceed with the IGCC at Plant Stanton. DOE and Southern are contemplating continuing work under the DOE agreement at Mississippi Power Company?s similar IGCC project in Kemper County, Mississippi. This memorandum examines authority to make such a change in the site of a project selected for cost-sharing. Statutory Authority In the Energy Policy Act of 2005, Congress authorized funds to the DOE for the CCPI.1 DOE is authorized to provide ?nancial assistance to projects that meet the criteria set out in the statute.2 The Federal Grant and Cooperative Agreement Act of 1977 establishes the criteria for determining whether a transaction is ?nancial assistance, as well as whether to use a See 42 ??15961-15964. 2 42 U.S.C. 15962(d). 955354.] Kim Flowers COMMUNICATION February 7 2008 CONFIDENTIAL Page 2 grant or a cooperative agreement.3 Regulations implementing the FGCA and applicable to DOE's provision of ?nancial assistance are found at 10 C.F.R. Part 600. DOE Regulations and Guidance Part 600 of regulations govern ??nancial assistance,? which includes cooperative agreements.4 Section 600.315 authorizes the ?revision Of budget and program plans? with respect to ?nancial assistance to for- ro?t entities.5 This section focuses more on ?scal administration than program elements. However, according to this section, the ?contracting Of?cer? is authorized to approve a ?revision,? which includes a ?change in the scope or the Objective Of the project or program (even if there is no associated budget revision requiring prior written approval)?7 Parallel rules for ?nancial assistance to local or state governments emphasize this point. Similarly, guidance for the ?nancial assistance programs authorizes contracting of?cers to make ?project changes,? including a ?change in scope or objectives Of the project, even if there is no associated budget revision? or the ?transfer of a signi?cant part of the research or programmatic e?ort.?8 In determining whether to approve such a?change, the contracting of?cer is to ?consider the value to the overall success of the project or increased signi?cance and value of the amended project when reviewing request(s) for project revisions.? Although this provision is likely aimed at budgetary changes to an agreement, other changes should be considered to lie within the scope of this authority. For example, the guidance also speci?es: Project revisions to awards from a competitive announcement must remain within the programmatic boundaries of the announcement and should be considered meritorious under the merit review criteria of the announcement. Substantial changes to the project?s scope or objectives will require a determination of non-competitive 3 See 31 U.S.C. ??6301-6308 4 10 C.F.R. 600.3 (2007) (de?ning ??nancial assistance?). 5 10 C.F.R. 600.315 (2007). The regulations include parallel though not identical provisions with respect to ?nancial assistance to non-pro?t institutions and state and local governments. 10 CPR. 600.125, 600.230. 6 The ?budget plan? is ?the expression Of the project or program as approved during the award process? and ?includes the sum of the Federal and non-Federal shares when there are cost sharing requirements.? 10 C.F.R. 600.315(a) (2007). 7 10 C.F.R. (2007). Speci?c changes requiring the contracting of?cer?s prior approval involve actions such as personnel changes, cost overruns, and fund transfers. 10 C.F.R. 600.315(a) (2007). 8 DOE, GUIDE TO FINANCIAL ASSISTANCE: A GUIDE TO THE AWARD AND ADMINISTRATION OF FINANCIAL ASSISTANCE, at 4-2 (July 2006) (emphasis added). 955354.l Flowers Ll ENT COMMUNICATION February 7, 2008 CONFIDENTIAL Page 3 ?nancial assistance if the changes would not be acceptable under the original announcement.9 This language seems to contemplate technical changes to a selected demonstration project which would include changes to the location of the demonstration. Precedents In the past, DOE has agreed to revise cooperative agreements to ?resite? projects after decision to award the grant.10 For example, JEA (formerly Jacksonville Electric Authority) received from DOE approximately 25% of the $309 million cost to construct an advanced ?uidized bed combustion project at a Duval County, Florida facility. This project was originally sited for York, Reference was made in the Environmental Impact Statement for the JEA project to a memorandum to Patricia Godley, Assistant Secretary for Fossil Energy, from Rita Bajura, Director, Federal Energy Technology Center titled ?Requested Site and Participant Change to Large?Scale Circulating Fluidized Bed Combustion Demonstration Project, Clean Coal Technology Cooperative Agreement DE-FC21- dated August 18, 1997.?1 - Another project, the Commercial?Scale Demonstration of the Liquid Phase Methanol (LPMEOH) Process selected during the third phase of the Clean Coal Technology Program was resited to Kingsport, Tennessee, following the award of the cooperative agreement. Similarly, the Clean Coal Diesel project selected in round 5 of the CCT program was originally planned for Maryland. Following the signing of the cooperative agreement, however, DOE approved resiting the project in Alaska. Con?rming that ?nancial assistance is not DOE has also entered c00perative agreements for projects that had not yet identi?ed a site. For example, DOE selected Excelsior Energy?s Mesaba Energy Project to demonstrate IGCC technology. Minnesota state regulations required Excelsior to consider at least two potential sites for the proposed plant. Thus, the project was awarded without a speci?ed site. Conclusion DOE has the authority to modify the cooperative agreement between the agency and Southern for the IGCC project to re?ect a change of the site of the project. As discussed above, the regulations, supported by DOE guidance, allow the contracting of?cer to revise the agreement to re?ect a change in scope of the project, provided certain conditions are satis?ed. 9lat '0 We have attached to this memo project summaries or other excerpts from project-related documents that note these location changes. We do not have immediate access to this memorandum. 955354.] Kim Flowers COMMUNICATION February 7, 2008 CONFIDENTIAL Page 4 DOE has exercised this authority in the past in order to further the value of and ensure the success of the selected projects. cc: Ricky J. Cox 9553541 Appendix? 4 Site Change Precedence 27772008 Project Number DE-FC21-91MC27363 DE-FC21-91MC27403 DE-FC21-94MCS1260 89660 DE-FC21-94MC31261 DE-FC21-95MC31262 DE-FCZ1-97MC31271 427 DE-F022-93PC90543 . DE-FC22-91P090549 DOE SITE CHANGE PRECEDENCE Title Tampa Electric integrated Gast?cation Combined-Cycle Project McIntosh Unit 4A Demonstration Project JEA Large-Scale CFB Combustor Demonstration Project Clean Coal Diesel Demonstration Project Advanced Flue Gas Desuliurization (AFGD) Demonstration Project Mdntosh Unit 48 Demonstration Project Kentucky Pioneer IGCC Project Clean Power from integrated CoaUOre Reduction (CPICDR) Project Development oi Hybrid Advanced Control tor Detroit Edison River Rouge 3 Commercial?Scale Demonstration of the Liquid Phase Methanol (LPMEOH) Process Project Commeraal Demonstration oi the NOXSO SOZ7NOX Removal Flue Gas Cleanup System Project Self-Scrubbing Coal: An Integrated Approach to Clean Air Project Micronlzed Coal Reburning ior Nox Control Organization Tampa Electric Company (TECD) City of Laketand, Florida JEA TIAX, LLC Pure Air on the Lake, LP. City oi Lakeland, Florida Kentucky Pioneer Energy LLC CPICOR Management Co.. LLC. - UT TIAX. LLC AIR Products Liquid Phase Conversion Co, LP. NOXSO Corporatron Custom Coats lnternaiional New York State Eleuric Gas Product Line Lurgi, ?xed-bed air-blown gasii'ier Pressurized Fluidized Bed Combustion - One One-halt Generation Atmospheric Circulating Fluidized Bed Clean Coal Diesel Advanced Scrubber PFBC - Seoond Generation Integrated Gasltication Combined Cycle Steelrnaking Feedstocks Hybrid Advanced Control Liquid Phase Methanol NOXSO Removal Flue Gas Cleanup System Coal Cleaning Technology Reburning tor Control Gov't Share 5150894223 $6,998,587 $74,733.833 $20,805,979 561913.200 $5,568,789 $18,086,360 $144,438,802 $14,957,658 $92,708,370 $17,029,182 $35,875,135 52.701.011 Contractor Share Total Cost Value $152,394,223 57.026.636 $234,362,619 $20,805,979 $87,794,698 $6,763,511 $23,276,491 $909,817,134 $17,095,232 $120,991,630 $17,214,973 $35,935,600 $6,395,475 $303,288,446 $14,025,225 $309,096,452 541511.953 $12,632,300 $41,362,851 $1,054,255.936 $32,052,890 $213,700,000 $34,244,155 571.610.7215 Final Award Date End Date Demo Location 3718191 811791 11130190 7112194 12720189 811794 1272794 10711796 571706 10716792 3711791 10729792 7728792 3131102 Polk County, FL 675103 Lakeland, FL T131104 Jacksonville, FL 10731106 Fairbanks, AK 6,1196 Chesterton, IN 675703 Lakeland, FL 5716705 Houston, TX 1711705 Provo. UT 5131706 River Rouge, Ml 6730703 Kingsport, TN 371700 Newburgh, IN 10720799 Central City, PA 611799 Lansing. NY 8. Root-iester, NY Moved Fron-iiDate oi Move Tallahassee, FL 311992 Des Molnes. IA 10/1996 Tallahassee. FL 671993; York, PA 871997 Easton. MD 1996 Gary, IN 1939 Calvert City, KY t071996 Camden. 571996; Venice. IL 11/1999 Cleveland. OH 1994 Detrolthiver Rouge, MI in July 2003. Moved to Holyoke, MA in October 2004. Moved back to DetroitJRiver Rouge, In August 2005.Move riev6r award. ijat withdrawn. Great Plains?9907Cali1'ornia11993 Nils, OH 51194 Greene County, PA 199i West Paducah, KY 12/1995 Appendix 5 C02 Sequestration Geology CO2 Sequestration Geology (.- Legend ed Plants Depleted Cu! PL vs Gas Basms Deep saline - bet-dumentar-g - Deep Saline Formations Basalt Unmmea ble 2; 03! Sea ms Shut? Bn?ellc WIBITEII nal Insmute SOUTHERN A COMPANY fun?; in \rn-r Inurnu?'er Appendix 6 SECARB Deep Saline Formations "with 0 2 0 re 9 e. I?acl IL, - I . . . .rrx J. . I . ?11? a. . a Appendix 7 MS Project Sequestration Potential Mississippi Project Sequestration Potential 1 Mississippi Project Location Kemper County. MS Coal Seam Project near Tuscaloosa, Alabama Mississippi Test Site Mississippi Power?s Plant Daniel . - lrl?twm'tiwutl?ze? .. .. 4.. Mal Kemper County Geology - Located in the southern most tip of the Black Warrior Basin in east- central Mississippi (Kemper County) 0 Opportunities exist in flat-lying strata of the Black Warrior Basin and large folds of the Appalachian and Ouachita orogenic belts - Potential sequestration targets include: Thick successions of Cambrian-Ordovician limestone and dolostone; Carboniferous shale and sandstone; and Cretaceous sandstone and shale. Path Forward for Kemper County Sequestration Demonstration - Preliminary geology evaluation suggest that multiple sequestration targets exist but process analysis is needed to confirm such: Step 1 - Identify target formations and cap rocks through a site- specific literature study; Step 2 procure and interpret existing seismic information to quantify formation thicknesses and cap rocks; Step 3 Drill test stratigraphic well(s) to verify and characterize geology; and Step 4 - Perform laboratory analysis to quantify injectivity, capacity, and cap rock integrity. Appendix 8 Current C02 Sources and Pipelines Current CO2 Sources Pipelines to Canada Great Plains 'rr' Coal Gasification Antrim Gas Plant LeBarge McElmo Mountaln Dome Rid away CO2 Ammonia Discovery Plant Jackson Dome Eastern Gulf Coast . BFI Id Approximately 250,000 Operator: Denbury C02 Source: Natural Denbury Resources Inc. Appendix 9 002 Projects, Denbury Resources, Inc CO2 Projects - Total Potential Tertiary Oil Reserves (1) Phase 5 33 Phase 4 31 TEXAS LOUISIANA Phase 2 phase 3 77 Seabreeze Complex Phase1 Phase 6 Phase 7 26 Hastings Area fit? a Q. 036;: at: Denbury Resources Inc. Appendix 10 C02 Pipeline Eminent Domain Attorneys and Counselors I310 Twenty Fifth Avenue Gulfport, MS 39501 (228) 864?9900 BALCH BINGHAM LLP (228)864-8221Fax Alabama - Georgia - Miss'ssippi - Washington. DC. Ben H. Stone (888) 201?0157 (dircct fax) (223) 214?0402 MEMORANDUM ATTORNEY WORK PRODUCT BY HAND DELIVERY TO: Kimberly D. Flowers Mississippi Power Company FROM: Ben H. Stone DATE: February 6, 2008 RE: Authority Under Mississippi Law of Mississippi Power Company to Condemn Property for Pipeline for Transmission of Carbon Dioxide ISSUE Mississippi Power Company is considering constructing a pipeline to transport and sell carbon dioxide produced as a by-product at the proposed Kemper County generation plant. The carbon dioxide would be sold to a company for use in the recovery Of Oil and gas. If MPC were to construct such a pipeline, would it have authority under Mississippi law to condemn land for such a purpose? BRIEF ANSWER MPC is granted authorization to exercise the right of eminent domain for such purposes by Section 11-27-47 of the Mississippi Code of I 972, as amended. Under Section 11-27-47, a company is empowered to exercise the right of eminent domain in relation to the construction of pipelines and related appliances if the company is organized or incorporated ?for the purpose of building or constructing pipelines and appliances for the conveying and distribution Of oil or gas, including carbon dioxide or other gaseous substances for use in connection with secondary or tertiary recovery of liquid or gaseous hydrocarbons.? Articles Of Incorporation state that one of the purposes for which MPC is organized is to construct any and all kinds Of plants and systems for the manufacture, generation, supply, or disposition of electricity, gas or water, steam, or electric power produced thereby. Accordingly, MPC may exercise the power of eminent domain in relation to the construction of a pipeline to convey carbon dioxide for use in connection with secondary or tertiary recovery projects located within the state of Mississippi. 90087.6 Kimberly D. Flowers ATTORNEY WORK PRODUCT February 6, 2008 Page 2 DISCUSSION MISS CODE ANN. 11-27?47 MPC is authorized to exercise the right of eminent domain by Section 11-27-47 of the Mississippi Code 0f1972, as amended. Section 11-27-47 provides: All companies, associations Of persons, municipalities, associations of municipalities, public utility districts authorized by and under the laws of the state Of Mississippi, or natural gas districts, incorporated or Organized for the purpose of building or constructing pipelines and appliances for the conveying and distribution of oil or gas, including carbon dioxide or other gaseous substances for use in connection with secondary or tertiary recovemroiects located within the State Of for the enhanced recovery of liquid maseous hydrocarbons are hereby empowered to exercise the right of eminent domain in the manner now provided by law, and to build and construct the said pipelines and appliances along or across highways, waters, railroads, canals and public lands, above or below ground, but not in a manner to be dangerous to persons or property, nor to interfere with the common use of such roads, waters, railroads, canals and public lands. MISS. CODE ANN. 11-27-47 (emphasis added). MPC is a company organized for the purposes described in Section 11-27-47. Paragraph Third of Articles of Incorporation provides that MPC is organized to, among other things, ?construct, build, equip, improve, use, operate, maintain and work upon any and all kinds of plants and systems for the manufacture, generation, storage, utilization, supply or disposition of electricity, or water, steam, or electric power produced thereby. . A copy Of the relevant portion of Articles of Incorporation is attached. BHS2blw cc: Ricky J. Cox Leo E. Manuel Attachment 90087.6 I (TO BE EXECOTED IN DUPLICATE) OF INCORPORATION OF i418 ISSIPPI POWER COMPANY We, the undersigned natural persons Of the ape of twenty?one years Or more, acting as incorporators Of a: corporation under the-Mississippi Business Corporation Act, adopt the.following Articles of Incorporation for such corporation: FIRST: 'The_name of the corporation is MISSISSIPPI POWER COMPANY . a SECOND: The period of its duration istinety~nine (99) years. I The specific purpose or purposes for which the corporation is organized stated in general terms are: To acquire, buy, hold, own, sell, lease, exchange, dispose of, finance, deal in, construct, build, equip, improve,' use, operate, maintain and work upon: -any and all kinds of plants and systems ?or the. manufacture, generation, storage, utilizatiOn, supply or disposition of electricity,_gas or water, steam, or electric power produced thereby; and 2.925? .2 Fm. 03. ?332mm US Coal Regions owd er_R iver ?Ham as I ak ota i gn ite Northwest [a Northem Appalachia CA f] if Other "3 Westem Rockies - Central achia i fig?aamterior r. :th . 15. Soutliwest 35?4? a, - 1 I. I Southern 1 . Appalachia A Pd I a no a too 310 Suva. Ma: . r? 4? Northwest Gulf oast I - - w. xi}: A Egg-k am a 2m Stain Mlle: ,ronmzo: >ucm32x 3 00:59 209:3 Emu ?Managua-cw NEW JERSEY WEST VIRGINIA .- 1 KENTUCKY I MISSOURI TENNESSEE NORTH CAROLINA ARKANSAS CAROLINA If im- m: MISSISSIPPI - LEGEND I -- I mm haunt- LOUISIANA -. ALABAMA FLORIDA 3" [mmnm WATER PIPE LINE COMPANY 77 I mm? -. M. ?mm nggEngw 9-1455 [09 [Ma 1 WI 6 7 Appendix 14 CCPI Repayment Agreement 4532_001.pdf 1 W2 REPAYMENT AGREEMENT DE-FR26-06NT42392 In consideration of the United States Department of Energy (DOE) support for a clean coal technology Demonstration Project under the DOE's Clean Coal Power Initiative, for which Southern Company Services, Inc. (SCS) and Kellogg, Brown Root, Inc. (KER), both being de?ned herein as an ?Obligor,? acknowledge that they will receive substantial bene?t. The Obligors hereby agree to repay the Department of Energy in accordance with .the terms and conditions set forth below. Article I. general Objecg've The purpose of this Repayment Agreement is to set forth the conditions under which the Obligors shall repay to DOE an amount up to, but not'to exceed, the DOE share paid under Cooperative Agreement Number DEFC26- 06NT42391. such obligation being the direct responsibility of each Obligor and being for the direct bene?t of DOE, as accomplished via the conunercialization arrangement between both SCS and KBR and upon the terms set forth herein. Article 11. 92mm - I ?Emmi lunar" . Share" means the portion of the total project costs paid by DOE under the Cooperative Agreement. ?Obligor? means the organizations that are responsible for repayment under this Repayment Agreement, SCS and KER, as stated above. ?Obligor? includes these organizations? successors and assigns.- ?Repayment Period" means the period of time during which a transaction becomes subject to repayment under this Repayment Agreement. ?Total Project Costs? means the total amount of allowable direct and indirect costs incurred and paid, in part, by DOE under Cooperative Agreement. ?Demonstration Technology? shall mean the transport reactor-based gasi?catioanGCC technology which is proposed for demonstration under the Cooperative Agreement, including all past, Current, and future information and intellectual property developed by, on behalf of, or together by, SCS or KER, as Obligors, and their reSpective af?liates, present and future, that enhances or improves the perfomtance of'the'transport reactor in its application as a coal gasi?cr for the production of, raw gas which subsequently may be further processed to produce electricity (and/or steam), chemicals, orfuels. "Demonstration Project" shall mean the Integrated Gasi?cation Combined Cycle (IGCC) power plant project being undertaken by SCS and DOE under the Cooperative Agreement Number DE-FC26-06NT42391. ?Southern Company Services Af?iates" shall mean any subsidiary of, and under common control of, their single parent, The Southern Company, whether a ?rst tier subsidiary of The Southern Company or any lower tier subsidiary of the ?rst tier subsidiary. Article Repayment Period 56 2113/08 l:50:4l PM 453 2_ml.pdf 2 The'Repaymen't Period shall begin on the date of the first sale of the Demonstration Technology or on the date speci?ed in the Cooperative Agreement for the end of the Demonstration Period, whichever occurs ?rst. However. if SCS withdraws or terminates its participation under the Cooperative Agreement, or if the project is tenninated in accordance with Paragraph 2.34 (Termination) of the Cooperative Agreement or terminated due to disapproval of a continuation application in accordance with Paragaph 2.11 (Continuation Application) of the Cooperative Agreement,: this Repayment Period shall begin on the date the Cooperative Agreement is terminated. The Repayment. Period shall expire 20 years after the date the Repayment Period begins. .Obligors? obligation to repay DOE expires on the date the entire DOE share has been repaid, or the date on which repayments for all transactions entered into during the Repayment Period have been made, whichever occurs ?rst. This Rga?ignt Agreement may be terminated upon a determination by the Secretary of Energ, or designeg, that Lepaymenmaccs an Obligor at a competitive disadvantage 'gt (10113331? or international Elects. Article IV- Wat Though collection of payment to DOE by the Obligors shall be cumulative and consolidated into single payments submitted by SCS to DOE, each Obligor is individually responsible to DOE for amounts due to DOE from the Obligor. DOE shall have a direct claim againstan Obligor for breach of the terms of this Repayment Agreement by the Obligor. The obligations of either Obligor under this Repayment Agreement shall survive the expiration. termination, transfer, assignment, novation, sale, merger, consolidation, or other change in control of, an Obligor until the expiration of the repayment obligation to DOE. The annual amount of repayment to DOE by the Obligors is to be comprised of the cumulative effect of the provisions in?Article and KBR shall pay to SCS, for transfer by SCS to DOE, an amount equal to 12.5% of the license fees andfor royalties actually retained by KER from licensing of the Demonstration Technology to third-party users for the production of electricity (andlor steam), chemicals, or fuels, alter satisfying guaranty or warranty responsibilities. Distributions made by KER to SCS are considered to be included in the amount actually retained by KER. In the event that KBR does not charge a license fee to a third party for any installation of the?Demonstration Technology, KBR will be deemed to have incurred a license fee in an amount equivalent to the license fee on the most recent prior project of substantially similar scopeutilizing the Demonstration Technology and in the pro rata amount of the size of such installation If no prior license has been granted, the amount due to DOE shall be calculated at $4.00 per kilowatt electric (or equivalent) of installed capacity. KER shall not be responsible for such fee and KER have mutually determined and explicitly documented that the market for that project.will not bear this license fee. SCS agrees that it shall not accept any compensation in lieu of royalties due from KBR under the SCSIKBR commercialization agreement. In the event that SCS sells directly to third parties, SCS shall pay directly to DOE of the license fees auditor royalties actually retained by SCS ?om licensing of the Demonstration Technology. to third-party users for the production of electricity (andlor steam), chemicals, or fuels, a?er satisfying guarantee or warranty responsibilities. In the event that SCS does not charge a license fee to a third party for any installation of the Demonstration Technology, SCS will be deemed to have incurred a license fee in the amount equivalent to the license fee on the most recent prior?project of substantially similar scope and in the pro rata amount. of the size of the installation. if no prior license has been granted, the amount due to DOE shall be calculated at $4.00 per kilowatt electric (or equivalent) of installed capacity. A transaction shall be subject to repaymentunde?r this proVision if an Obligor enters into a license or contract for sale during the Repayment Period notwithstanding that repayment may occur after the Repayment Period. Repayment shall accrue a?er satisfying guaranty or warranty responsibilities.? (ii) For any commercial application of the Demonstration Technology by SCS, or SCS af?liates, for the production of electricity (andlor steam), excluding this Demonstration Project, SCS agrees to pay to DOE a one time fee of $4.00 per kilowatt of initial, actual tested performance for each commercial application. Such payment to DOE shall be prorated by or SCS af?liates?, initial percentage of ownership of such facility. An installation shall?be subject to repayment under this provision if SCS, 0r SCS af?liates, breaks ground for the installation during the Repayment Period, notwithstanding that repayment may occur after the Repayment Period. Repayment shall accrue upon the declaration of commercial operation. 57 2/13/08 1:50:42 PM 4532_001.pdf 3 For any commercial application of the Demonstration Technology by SCS, or SCSaf?liates, for the production of chemicals and fuels, excluding this Demonstration Project, SCS agrees to pay DOE a one time fee of $5,100 per one million (1,000,000) standard cubic feet/day of oxygen blown .syngas design capacity for each commercial application. Such payment to DOE shall be prorated by or SCSafiiliates'_1 initial percentage oWnership of such facility. An installation shall be subject to repayment under this provision if SCS, or SCS af?liates, breaks ground for the installation during the Repayment Period, notwithstanding that repayment may occur Repayment Period. Repayment shall accrue upon the declarationof commercial operation. Article V. for Repayment Payments to DOE by SCS of the cumulative amounts required for the period shall be due within 60 days after each one-year period following the start of the Repayment Period for Repayment Agreement Checks shall be made out to the US Department of Energy and be mailed to the Financial Management Division, USDOE, NETL, Post Office Box 10940, 626 Cochrans Mill Road, Pittsburgh, 1523 6-0940. Article VI. Repgrn'ng and Record RetentiOQ (A) Animal Benoit to DQE Within 60 days a?er the end of the of each one year period. the Obligors shall prepare a consolidated report and SCS shall submit such report to DOE which, for the one year period just elapsed. provides the applicable data described below: (1) The total dollar amount of repayment accruing to DOE. (2) A description of each transaction from which the repayment obligation accrued. (3) The total amount paid to DOE for all years and the amormt-of the DOE share remaining to be paid in succeeding years under this Repayment Agreement. Notwithstanding that SCS will submit the Annual Report to DOE, the responsibility for submittal of information to prepare the report, and the responsibility of preparation of the report, falls equally on the Obligors. DOE shall have a direct claim against either Obligor for failure to comply with the requirements of this clause. (3W For a period of ?ve (5) years after completion of the Demonstration Project, the Obligors shall be equally responsible for submitting a Commercialization Report describing the Obligors' progress and success in commercializing the technology used during the project as well as technology derived from that used during the project. The purpose of the Commercialization Report is to assist DOE to determine the bene?ts obtained from Government support of technology development. The Commercialization Report is independent from the Annual Report required by the Repayment Agreement and is not limited to the sale or licensing of ?Demonstration Technology" as that term is de?ned in this Repayment Agreement. The Commercialization Report shall include a discussion of the Obligors? efforts to commercialize the technology. The Commercialization Report shall also include descriptions and locations (or proposed locations) of all signi?cant technology embodied in the Demonstration Project, or derived from technology embodied in the Demonstration Project, that was sold or licensed during the preceding year (whether or not such-transactions were subject to repayment under the terms of the Repayment Agreement). The Commercialization Report shall also include a discussion of any impediments to the commercialization of the technology. It is understood and agreed by DOE that the Conunercialization Report shall be in a level of detail that is notrequired to- contain Limited Rights Data or Protected Data as de?ned in the Cooperative Agreement, recognizing that the commercialization efforts involve proprietary and con?dential business information which will necessarily be accorded secrecy treatment. The Commercialization Report shall be due on December 31 of each year. DOE shall look to each Obligor for .compliance with its applicable portion of the requirements of this clause and obtain performance directly from the responsible Obligor. (C) Period of Retention With respect to each annual report to DOE, the Obligors shall retain. for the period of time prescribed in this paragraph, all related ?nancial records, supporting documents, statistical records, and any other records the Obligors 58 2/13/08 1:50:42 PM 4532301.de 4 reasonably consider to be pertinent to this Repayment Agreement. The period of required retention shall be from the date each such record is created or received by an Obligor until three years a?er one of the following dates, whichever is earlier: the date the related annual report is received by DOE, the date this Repayment Agreement expires, or the date final payment to DOE is received. If any claim, litigation, negotiation, investigation, audit, or other action involving the records starts before the expiration of the three-year retention period, the Obligors shall retain the records until such action is completed and all related issues are resolved, or until the end of the three-year retention period, whichever is later. The Obligors shall not be required to retain any records, which have been transmitted to DOE by an Obligor. (D) Authorized Co ies Copies made by micro?lm, photocopying, or similar methods may be substituted for original records. Records originally created by computer may be retained on an electronic medium, provided such medium is ?read only? or is protected in such a manner that the electronic record can be authenticated as an original record. (E) Access to Records DOB and the Comptroller General of the United States, or any of their authorized representatives, shall have the right of access to any books, documents, papers, or other records (including those on electronic media) which are pertinent to this Repayment Agreement. The purpose of such access is limited to the making of audits, examinations, excerpts, and transcripts. The right of access described in this paragraph shall last as long as an Obligor retains records, which are pertinent to this Repayment Agreement. (F) Restricting on Public Disclosure The Federal Freedom of Information Act (5 U.S.C. Section 552) does not apply to records-an Obligor is required to retain by the terms of this Repayment Agreement. Unless otherwise required by law or a court of competent jurisdiction, an Obl-igor shall not be required to disclose such records to the public. (G) Flow Down of Records, RetentiogI and Access Reguirernents Obligors shall include clauses substantially similar to the record retention and access requirements set forth in sections (C) and (E) of this Article in all agreements when necessary to-ful?ll the Obligors' obligations under this Repayment Agreement. . Article VII. Default lf either Obligor is responsible for the failure of SCS to make payment within the time speci?ed in Article V, or is responsible for ihilure-to submit the annual report within the time speci?ed in Article VI, the Obligor which is in default of its own obligations under this Repayment Agreement and fails to cure the default within 30 days after receipt of written notice of the default from DOE, notwithstanding any provision of the Cooperative Agreement, its flow down provisions, or this Repayment Agreement to the contrary, that Obligor shall pay to DOE the amount of $100.00 per day for eVery business day that the payment or report is delayed due to the fault of that Obligor. Obligors and DOE agree that such amount represents DOE's reasonable costs and acknowledge that the liquidated damages set forth herein are an adequate remedy for default and shall not be considered a penalty. Nothing contained herein shall preclude DOE from pursuing any other remedy against an obligor which may be available for the payment of moneys due including interest thereon in accordance with applicable statutes and regulations. Article Disputes Disputes arising under this Repayment Agreement shall be subject to the procedures set forth in 10 CFR 600.22 Disputes and Appeals. 59 1/1 3/08 1:50:42 PM wA?w?w wan?w? 4532_001.pdf 5 UNITED STATES DEPARTMENT OF ENERGY Signaturcz? I'liaim: ?RAqM'ng ?b . Date: It e: Contracting Of?cer: OBLIGOR (32.3mm erica) Signature: 1" 2340c p. Name: Title: s-H' Risa? 61w 443-3: 60 OBLIGOR (Kellogg, Brown Root. Inc.) Signature: Name: WW UP 759M090 7 Date: m-r?u. -31. 2/13/08 1:50:42 PM