By The Sun Herald, Biloxi-Gulfport
Again (last) week, an official with Mississippi Power Co. assured ratepayers the shareholders of the Southern Co., which owns Mississippi Power, would absorb any cost increases associated with the power plant being built in Kemper County.
It was one thing to say that when the plant exceeded its budget – and the amount ratepayers are obligated to cover – by hundreds of millions of dollars. Now the cost overruns are approaching a billion dollars.
Has the plant now become “too big to fail?”
If the Southern Co. had known years ago this project would bust its budget to this extent, would it still have gone ahead with it?
Would then-Gov. Haley Barbour and the Mississippi Legislature and the Mississippi Public Service Commission have been as supportive of a proposal whose finances were so flawed?
This is not idle speculation.
The Sun Herald has, from the start, appreciated the need to expand the capacity of Mississippi Power. And Mississippi Power has, from the start, been honest about the cost ratepayers would have to bear.
But now that the project is well under way, its actual cost is shredding prior projections.
Mississippi Power customers and ratepayers are right to be concerned. And the Southern Co. shareholders should be.
As the Associated Press reports, the cost of the plant, adjoining lignite mine and associated pipelines may well reach nearly $4.5 billion – more than $1.1 billion above original estimates.
Yet in a settlement with the Public Service Commission, the utility agreed to shield customers from further cost increases …
A 15 percent rate increase has been approved to start paying off the plant’s debt even before it begins operations, followed by an additional 3 percent increase in 2014. Mississippi Power has said it’s likely in 2014 to seek an additional increase of at least 4 percent over 20 years to pay off the bonds.
Despite the increasing problems at the construction site, Mississippi Power spokeswoman Amoi Geter told the Associated Press, “We still believe the 2014 completion date is achievable.”
But at what cost? … And who will pay for it?