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Supreme Court says PSC blew it on Kemper power plant, orders refund

Kemper-Update-Logo_rgbJACKSON — One thing is certain following Thursday’s state Supreme Court ruling — Mississippi Power Co.’s customers will be getting back the $200 million-plus they’ve paid so far for the coal-fueled power plant that the company is building in Kemper County.

But what happens after that is anybody’s guess, as the court threw the problem back into the lap of the Public Service Commission, saying the regulatory body exceeded its authority, didn’t provide enough notice to customers and improperly conducted business in secret.

» RELATED STORY: DAVID DALLAS — The dirt on Kemper Coal

The 5-4 ruling again scrambled the long-running saga of the plant, designed to burn soft lignite coal while emitting less carbon dioxide. The unit of Atlanta-based Southern Co. had already become mired in round after round of schedule and cost delays, with the price tag of what the company calls Plant Ratcliffe ballooning from an original budget of about $2.8 billion to nearly $6.2 billion. Until Thursday, ratepayers were on the hook for $2.88 billion through regular rates, with an 18 percent rate increase already enacted to pay for it. Those rate increases may be rolled back.

The company had also planned an additional 4 percent rate increase to pay off $1 billion in bonds that it planned to issue outside the normal rate structure.

The ruling was a big win for Hattiesburg oilman and former Public Service Commission candidate Tommy Blanton, who had soldiered through a years-long legal challenge to the plant, becoming the only challenger after the Sierra Club settled with Mississippi Power and dropped out.

“I was very wishful that they order the repayment of the money,” Blanton said in a telephone interview.

But it wasn’t an absolute victory. The high court let stand Mississippi’s Baseload Act, which allows power companies to collect for plants before they begin operating, disappointing Blanton.

“I don’t believe it’s right to take someone’s money and give them nothing in return, which is what the Baseload Act does,” Blanton said.

Instead the court ruled that the Public Service Commission should have held hearings on whether Mississippi Power had spent prudently before enacting any rate increase. It also ruled that the mechanism the commission used, putting the money in a special account the company can’t spend until the plant is completed, isn’t allowed under state law.

“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,'” Presiding Justice Michael Randolph wrote for the court.

The commission had promised quick prudency hearings in the 2013 settlement allowing rate increases. But commissioners later delayed prudency hearings until after the entire plant is completed, now projected for later this year.

The court lambasted that settlement, saying the commission improperly made a deal behind closed doors.

“The private meetings clearly violate the statutes governing the commission,” Randolph wrote. “The public has a right to see and hear its business being conducted.”

The court also agreed with Blanton that ratepayers should be notified of potential rate increases in time to contest them, and said the commission wrongly sealed company projections of long-term rate impacts.

The ruling left Mississippi Power and the commission trying to figure out what comes next. A spokeswoman said the company is still evaluating the ruling. Northern District Public Service Commissioner Brandon Presley, who has opposed Kemper, said he was consulting with lawyers as well.

The court, though, outlined one possibility.

“The decision of this court does not foreclose (Mississippi Power Company) from seeking recovery of its financing costs through a rate increase, as long as the laws of our state are adhered to by the commission,” Randolph wrote.

 

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