Abby L. Harvey
GHG Monitor
3/20/2015
Mississippi Power officially filed an application for rehearing with the Mississippi Supreme Court late last week looking for a reversal of a February court decision ordering the utility to return to ratepayers approximately $257 million collected since March 2013 to help pay for construction of the Kemper County Energy Facility, a new build coal plant that will employ carbon capture, utilization and storage technology. “Because the Court action will result in higher rates and bills to customers, Mississippi Power is asking the Court to reconsider its decision,” Mississippi Power President and CEO Ed Holland said in a Mississippi Power press release. “The company is committed to ensuring our customers are not hurt by this decision and that we do what is in their best interest.”
According to the Mississippi Power filing, the court should not have required the return of the funds, but should have left the course of action to be taken up to the Public Service Commission. “The Opinion improperly engaged in a legislative function by directing that MPC refund all Mirror CWIP revenues. The Court’s actions raise separation of powers concerns,” the filing states. “The Commission is best situated to consider the many ‘real-world’ impacts associated with the Court’s mandates and exercise its expert judgment to find a solution balancing the complex interests at hand and, in the end, promote the public interest.”
Further, the utility argues that: the PSC appropriately used its authority under the Mississippi Public Utility Act to establish fair and reasonable rates for Kemper, which the Court failed to address; the company and the PSC complied with Mississippi law and the PSC’s rules concerning public notice of the rate proceedings regarding Kemper and; the Court’s decision will require rate increases of 35-40 percent rather than the approximately 24 percent increase anticipated under the rate proposal considered by the PSC. “If the Supreme Court ruling stands, our customers will see a substantial increase in rates,” Holland said in the release. “We do not believe that was the Court’s intent.”
Court Ruled PSC Failed To Determine Costs Were Prudently Incurred
The February decision overturned a 2013 rate order, under which the Public Service 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. In its ruling, the Mississippi Supreme Court ordered Mississippi Power to refund the increases stating that “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.
