Regulators turn down Miss. Power rate hike request

By Jeff Amy/The Associated Press

JACKSON — Mississippi Power Co. may someday collect more money to pay for the generating plant it’s building in Kemper County.

But not yet.

Friday, the Mississippi Public Service Commission denied the company’s request to raise rates by $58.6 million to help repay what it’s borrowed so far to build the $2.76 billion coal-fired power plant. The company’s proposal would have cost the average residential ratepayer about $20 a month from July through December.

The three commissioners voted unanimously to deny the rate increase until the Sierra Club’s current lawsuit contesting the legality of the plant is resolved. That lawsuit, filed after the commission reapproved the Kemper plant in April, is in its early stages in Harrison County Chancery Court. Southern District Commissioner Leonard Bentz stated in his motion to deny the rate increase that he didn’t want to allow Mississippi Power to collect for the plant until the case had made its way through the trial and appeal courts.

“The Supreme Court needs to act and we need to ensure that whatever the Supreme Court acts on, that the ratepayers are protected,” said Bentz, a Republican.

He said he continues to support the plant because its fuel, a soft coal mined nearby, has a fixed cost. Though opponents say burning natural gas would be cheaper, Bentz said the cost of natural gas could rise far above today’s low price.

“What the commission said today is you’re not going to raise power bills to pay for your credit when it hasn’t made it through the appellate courts,” said Northern District Commissioner Brandon Presley, a Democrat and consistent opponent of the plant.

Mississippi Power’s 185,000 customers are in 24 southeastern counties, from Meridian to the Gulf Coast. None are in Presley’s district.

The company said it was “extremely disappointed” in the decision, saying customers would have saved hundreds of millions in interest costs if Mississippi Power had been allowed to collect for those charges during construction, as allowed by a 2008 state law.

“The actions today do not negate the need for the Kemper facility,” the company said. “Construction on the plant will continue as we review the order and determine next steps.”

The company could appeal the commission’s decision, either into chancery court or directly to the Mississippi Supreme Court. If Friday’s decision were overturned, the issue would return to the commission for further action.

If no action occurs before the Sierra Club case concludes, that seems to rule out rate increases for Kemper in 2012. The plant is supposed to start operation in early 2014.

Bentz expressed confidence that Atlanta-based Southern Co., Mississippi Power’s parent firm, could continue to finance construction while waiting for litigation to end. “The last thing we want them to do is shut construction down,” Bentz said.

The commission’s decision was unexpected to both proponents and opponents of the plant.

“I was a little surprised, yes, because we demonstrated a need for this facility,” said Moses Feagin, Mississippi Power’s chief financial officer.

“That’s unprecedented and I applaud the hell out of the commission,” said Louie Miller, Mississippi director for the Sierra Club. The club has fought the plant out of concern that burning coal contributes to global warming.

Feagin said he didn’t think the decision would jeopardize the project. Miller, whose group is pushing to convert the plant to burn natural gas, questioned that assumption.

Under Mississippi Power’s proposal, average bills would’ve been 15.7 percent higher over six months. On a yearly basis, bills would’ve risen 7.8 percent.

Friday’s decision came after a hearing where business leaders supported the plant, while community activists from the Mississippi Coast spoke against it.

Blake Wilson, president and CEO of the Mississippi Economic Council, argued that Mississippi should not become too dependent on burning natural gas for electrical generation.

Opponents, though, argued that rate increases would be too high, especially for people of limited means. Pat Harvey of Gulfport, representing the AARP, told commissioners that a rate increase in the summer, when bills are already high because of air conditioning, was poorly timed.

During testimony, Presley took aim at Mississippi Power’s vice president of generation development, Tom Anderson, who had previously said he was confident the company could build the plant for $2.4 billion. Mississippi Power recently said cost projections are now $366 million higher than that. Friday, Anderson told Presley that the company now is confident that it can build the plant for less than $2.88 billion, the cost cap that the commission imposed after it raised the cost ceiling from an earlier $2.4 billion.

Howard Page, a community organizer for the Steps Coalition in Gulfport, said he was pleased that the commission had put off action.

“I’m really glad they decided not to raise our rates and really take their time to consider this,” he said.

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