Today the Mississippi Public Service Commission passed another conditional approval of Mississippi Power Company’s $2.4 billion Kemper County clean coal plant, relaxing the financial restrictions imposed in its April order. (Read order.)
The Commission raised the plant cost cap from $2.4 billion to $2.88 billion.
The Commission also agreed to allow the company to put CWIP in rate base for 2012, 2013 and 2014. CWIP will allow the company to charge customers for financing costs before the plant is operational. MPC had requested that they be allowed to put CWIP in rate base starting this year.
Southern District Commissioner Leonard Bentz said, “We didn’t waiver from the $2.4 billion cost cap… We expect (Mississippi Power) to build it for 2.4.” But if the company needs to spend more, the new order says the Commission will consider allowing additional prudent expenses not exceeding 20 percent, or $2.88 billion, he said.
Bentz said the Commission considered the volatile prices of construction materials when it amended the cap conditions. He also said the Commission would have monitors on the ground at the construction site to oversee the project.
The previous order denied the company’s request to put CWIP in rate base but left the door open for a reconsideration if MPC could make a good case for its need.
Bentz said CWIP could save ratepayers $500 million over the life of the plant and that he originally denied the request because he believed ratepayers could not withstand any immediate rate increases.
With the new order, customer rates will not increase until 2012, and the economy should be coming back by then, Bentz said. Also, assets will be on the ground and the plant will be under construction at that time, he said.
Bentz and Central District Commissioner Lynn Posey voted for both the April order and the current order. Northern District Commissioner and Commission Chairman Brandon Presley voted no to both orders, saying the project was too risky for ratepayers and would become “too big to fail.”
MPC has 20 days to agree to comply with conditions of new order to get project approval from the Commission.
MPC previously said the Commission’s original order seemed to make it impossible to build the plant. MPC also said it would be financially irresponsible to build the plant without the CWIP allowance, because it would make the project more expensive for ratepayers.
Read the full story in the Mississippi Business Journal’s June 3rd print edition.