Abby L. Harvey
GHG Monitor
5/8/2015
Southern Co. is exploring options for funding the construction of the Kemper County Energy Facility, a new build coal plant that will employ carbon capture, utilization and storage technology, 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. The utility filed an application for rehearing of the case in March, but is considering its options for going forward while it awaits a decision. “We’ve been having [a] series of discussions with the [Public Utilities] Staff, we continue to think they’re constructive. I think the result of a settlement could in essence preserve and form the rate structure that we put in place in 2013. Failing to reach a settlement, we will file a rate increase in a conventional rate case,” Southern CEO Tom Fanning said during the company’s first quarter earnings call last week. The Mississippi Public Utilities Staff is a state government agency tasked with representing the interests of Mississippi utility customers.
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.”
According to Southern Co. the Supreme Court decision would result in much higher electricity rates, and has led to opposition from a number of business groups and other stakeholders that have filed briefs with the court. “Most of the briefs emphasize that the rate plan agreed to in 2013 was of great benefit to the customers of Mississippi power and then a traditional rate case could mean rate impacts approaching 40 [percent] for some customers. This compared to the 25 [percent] rate increase contemplated in the original settlement 18 [percent] of which is already in place,” Fanning said.
No Cost Overage This Month at Kemper
Meanwhile, Southern Co. subsidiary Mississippi Power reported last week no change in the estimated project costs for the Kemper facility, with the project’s estimated cost still at nearly $6.2 billion. In this week’s earning call, Fanning applauded the progress at the plant, saying that the lack of an overage for the month is a refreshing change of pace. “We’re essentially in startup, and the team there is working wonderfully,” Fanning said. “We continue to make tremendous progress on our other start up activities as we look ahead to the first synthesis gas production planned now for third quarter.”
