As a businessman in South Mississippi, I feel the need to explain why the recent decision of the Public Service Commission on the Kemper County generating plant makes it impossible for Mississippi Power to finance and construct the plant.
I hesitated to come forward because I am a member of the Mississippi Power Company board of directors, but I now feel this gives me a unique view of the matter. I also feel my experience as president and chief executive officer of Hancock Bank allows me to speak from an important point of view — as a lender. While there are several reasons in the Commission’s decision that would make it impossible for Mississippi Power to finance and build the plant, I will only comment on the most important one.
Several years ago, the Mississippi Legislature recognized it would be essential for utilities to build new, large and very costly baseload generating units to serve our state. To encourage this construction, the Legislature allowed rates to be collected during the construction period. This would allow the utility sufficient cash flow during construction to obtain financing. As a lender, I can assure you this cash flow is a requirement in order to obtain financing. Just as important, this method would save the customers 20 to 25 percent on their rates over the long run.
Similar rate provisions have been implemented in many other states, most recently in Georgia. All of these jurisdictions have correctly assessed the realities that exist in today’s credit markets and provided the measures which are necessary to ensure adequate power is available in the future. I hope Mississippi can do the same.
Mississippi Power Company cannot afford to finance or build this Kemper plant without using this legislatively approved method, and customers will not get the benefits of the savings from the plant without it. These are principles of finance which apply equally in almost every large financial transaction, not just electric power plants.
I hope that this explanation helps everyone, including the Public Service Commissioners, understand this important issue; and I urge the Commission to reconsider their order.
Carl J. Chaney
President & CEO, Hancock Holding Company & Hancock Bank
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