Abby L. Harvey
GHG Monitor
7/10/2015
Mississippi Power must begin issuing refunds for 2013 rate increases issued to help pay for construction of the Kemper County Energy Facility, the Mississippi Power Commission ordered this week. The Kemper facility is a first-of-its-kind new build coal plant that will employ carbon capture, utilization and storage technology. In February, the Mississippi Supreme Court reversed the rate increases, ordering that customers be refunded though the judgment did not give a timeline for these refunds. “The Commission orders [Mississippi Power] to cease collecting the ‘mirror’ [Construction Work in Progress] rates effective with the August billing cycle, which should begin on, or about, July 20, 2015. [Mississippi Power] is also ordered to file within [14] days a plan for refunding the amounts collected pursuant to the Commission’s ‘mirror’ CWIP order. The refund plan should aim to complete the refunds within [90] days of the Commission’s approval of the refund plan,” according to the order.
Under the 2013 rate order, the commission approved retail rate increases for roughly 186,000 ratepayers of 15 percent effective in March 2013, and 3 percent effective January 2014, totaling approximately $257 million. According to the February state Supreme Court decision, “the Commission failed to comply with the language of the Base Load Act, inter alia, and exceeded its authority granted by the Act.” The Base Load Act was approved in 2008 and states that “the commission is fully empowered and authorized to include in an electric public utility’s rate base and rates, as used and useful components of furnishing electric service, all expenditures determined to be prudently-incurred pre-construction, construction, operating and related costs that the utility incurs in connection with a generating facility (including but not limited to all such costs contained in the utility’s ‘Construction Work in Progress’ or ‘CWIP’ accounts), whether or not the construction of any generating facility is ever commenced or completed, or the generating facility is placed into commercial operation.”
However, the decision states, the commission never found that the costs were prudently-incurred. “[Mississippi Power] and the Commission argue that the Act was followed when the Commission authorized MPC to increase rates by fifteen percent for 2013 and three percent for 2014. Yet the record is devoid of a ‘finding of prudency’ or that MPC’s expenditures were ‘prudently incurred,’ and for good reason – no prudency hearings have been held. In the absence of prudency hearings, we fail to discern how a rate can be arbitrarily declared as ‘fair, just, and reasonable’ and/or ‘just and reasonable,” the decision says.
