By Bill Crawford
Shortsighted politics is bad for business. Those states desiring economic prosperity restrain shortsightedness and leverage long-term business investment. They pragmatically gauge regulation against opportunity, taxation against job creation, and liability against competitiveness.
The original Blueprint Mississippi (2003) made improving Mississippi’s “business climate” a top priority. Governors Phil Bryant and Haley Barbour championed this goal to make the state more competitive for business investment. Both also strived to make Mississippi welcoming to energy-related investments.
In particular, Barbour, as governor, and Bryant, as lieutenant governor, played key roles in passing legislation to make Mississippi Power Company’s investment in a lignite gasification power plant feasible. The innovative technology used in the plant, now under construction in Kemper County, will turn Mississippi lignite coal into gas for power generation. Carbon emission sequestration and other innovations will make this abundant, cheap fuel source as “clean” as natural gas.
Two other political leaders held the same view as Bryant and Barbour, Public Service Commissioners Leonard Bentz and Lynn Posey. They understood Mississippi Power Company’s long-term need to add a reliable, low-cost fuel source for base load power generation. The commissioners also understood the complex long-term financing and rate adjustment mechanisms the company needed to fund a multi-billion dollar facility and mitigate impact on electricity rates.
That was two years ago. In the meantime volatile (that means they go up and down) natural gas prices have fallen to record lows and plant construction costs are coming in at the top of the company’s approved limit.
Not surprisingly, plant opponents, with support from the third Public Service Commissioner, Brandon Presley, are using these short-term conditions to stir public discontent and bully Bentz and Posey into second guessing their earlier well-considered decision. Surprisingly, they yielded, at least temporarily, to this shortsighted view and backed away from implementing the agreed upon rate adjustment mechanism needed to cover construction financing costs.
Credit ratings companies pay attention to regulatory business climate, so Fitch’s lowered Mississippi Power Company’s bond rating. Moody’s may follow suit. Both the rate adjustment reversal and lower bond ratings will increase future costs to rate payers.
The plain facts are these:
Mississippi Power Company has already spent $1.5 billion on plant construction so backing out is not an option.
Contracts for by-products – sulfuric acid, carbon dioxide, and ammonia – are coming in far above projections which will help reduce future rates.
Despite speculation that natural gas prices will stay low, prudent power companies will ensure long-term access to a variety of fuel sources.
Roadblocks and delays will only increase costs and, ultimately, electricity rates.
Mississippi needs energy companies with long-term viability, not shortsighted politics.
Bill Crawford (email@example.com) is a syndicated columnist from Meridian.