Lance Moore
GHG Monitor
7/17/2015
Mississippi Power is requesting authorization from the Mississippi Public Service Commission to take immediate action on implementing interim rates that reflect the new “In-Service Asset” option with regards to its Kemper County energy facility. This would outline a replacement of the 18-percent rate increase that the Commission repealed based on a ruling by the Mississippi Supreme Court; which is in direct response to the July 7 PSC ruling to halt the collection of the Kemper-related rates. These interim rates would allow for cost recovery of portions of the Kemper project already operating and providing reliable electric service to customers.
Mississippi Power President and CEO Ed Holland highlighted the essential need for this option to be implemented in a timely fashion. “The longer we are without permanent rate recovery for the project, the more it jeopardizes the company’s ability to access the funds needed for continued business operations and for completion of Kemper. This new option will provide us with the minimum financial support we need to begin the process to improve the company’s financial strength,” Holland said.
This assertion of continued time passing without a permanent rate recovery for the project was echoed by Mississippi Power spokesman Jeff Shepard, and would result in business operations for the Kemper facility coming to a standstill. However, Mississippi Power is seeking alternative options as well, “Mississippi Power still has other options offered in the May 2015 rate filing to the PSC that are under consideration,” Shepard said.
Per the 2013 Mississippi Supreme Court ruling, Mississippi Power is to issue refunds for 2013 rate increases intended to help pay for construction of the Kemper County Energy Facility. The Kemper facility is a first-of-its-kind new build coal plant that will employ carbon capture, utilization, and storage technology. The commission in 2013 approved a roughly 15 percent retail rate increase for roughly 186,000 customers, effective in March 2013, and 3 percent hike effective January 2014, totaling approximately $257 million. This sequence of events comes at a peculiar time for the developing Kemper facility, and operations by Mississippi Power. “Unfortunately, recent legal and regulatory decisions involving Kemper have greatly impacted and weakened the credit quality of Mississippi Power,” Holland said.
The Mississippi Supreme Court ruling was decided based on prior stipulations in the 2008 Mississippi state Base Load Act, which 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, this is not predicated on a still-pending final decision from the PSC to determine whether these rates are subject to refund. If approved, these interim rates would be effective July 20, 2015, and would at best be a cost recovery option outlining current operating assets including the Kemper project’s combined cycle unit, electric transmission lines, water lines and storage pond, natural gas pipeline, and regulatory assets.
