Abby L. Harvey
GHG Monitor
6/12/2015
Rate increases proposed by Mississippi Power last month to meet the cost of the Kemper County Energy Facility, a new build coal plant that will employ carbon capture, utilization and storage technology, have been challenged in a filing submitted to the Mississippi Public Service Commission last week. The increases were filed in the wake of a Mississippi Supreme Court decision ordering the utility to return to ratepayers approximately $257 million collected since March 2013 for the project. Thomas Blanton, whose case led to the State Supreme Court decision, has officially filed a challenge to the rate increases as well. “Intervener Blanton understands that both the Mississippi Public Service Commission and Mississippi Power Company, Inc. are seeking a rehearing of the Supreme Court’s February 12, 2015 Opinion. However, unless and until the Mississippi Supreme Court reverses or otherwise modifies its February 12, 2015 decision, the Opinion of the Mississippi Supreme Court is still in full force and effect. Under the Supreme Court’s decision, the Commission is prevented from granting or even considering any rate increases until the Commission complies with the Court’s decision,” the filing says
The February decision overturned a 2013 rate order, under which the PSC 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.”
Mississippi Power submitted three potential rate increase options last month. Of the three proposed rate plans, the company’s preferred option would keep rates at current levels until the first half of 2016, when the plant is expected to be fully operational. Rates would then be increase $6-9 per month over a four-and-a-half year period. This plan also assumes that the company will be able to use the money already collected under the 2013 rate order. The other two plans would result in higher monthly costs and would span two years. The first is a traditional plan which would increase monthly costs by $17 for the first year and an additional $20 in the second resulting in a total increase of $37. The second plan would result in a $5 monthly increase for the first year and an additional $29 in the second year for a totally of $34.
Mississippi Power Credit Rating Downgraded
Meanwhile, Fitch Ratings announced this week that Mississippi Power’s credit rating has been downgraded one point to ‘BBB+’ from ‘A-‘ with a continued outlook rating of ‘negative.’ “The downgrade and continuation of the Negative Rating Outlook for Mississippi Power is driven by still elevated risks surrounding the Kemper Integrated Gasification Combined Cycle (IGCC) project, which include the regulatory uncertainty around the recovery of costs and execution risk associated with the completion of the project within currently estimated cost and timeline,” according to a report released by Fitch late last week.
