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Law to bolster utilities’ economic development efforts gets mixed reactions

SENATE-BILL-2093_rgbA bill to bolster electric utilities’ economic development efforts sailed through the Mississippi Legislature and was signed by Gov. Phil Bryant on March 13.

But after-the-fact reaction to the law ranges from suspicion and alarm to a characterization that such an interpretation is merely a tempest in a teapot.

It could put customers of the state’s two investor-owned utilities, Entergy and Mississippi Power Co., on the hook for speculative buildouts of infrastructure, whether or not the industry or business to be served becomes a reality and buys electricity from the utility.

Senate Bill 2093 was approved by the Senate and House with not one dissenting vote.

In one regard, the law is reminiscent of the Baseload Act of 2008, in that it would allow the investor-owned utilities to add to its rate base costs associated with a utility even before it starts producing power, such as Mississippi Power’s Kemper County “clean coal” power plant.

SB 2093 goes further than merely allowing infrastructural expenditures on a speculative basis, according to Thomas Blanton, Democratic candidate for the Public Service Commission seat for south Mississippi.
Blanton called the legislation “pure corporate socialism.”

Under the new law, the investor-owned utilities, Entergy and Mississippi Power, “can go build a shoe factory and put the cost of building a shoe factory in the rate base and never give an electric power customer a pair of shoes,” Blanton said. “It’s the most un-American bill I can imagine.”

Blanton has made a name for himself by successfully suing Mississippi Power Co. over a rate increase associated with its Kemper County “clean-coal” plant even though it has not started producing power.
The state Supreme Court in February overturned the rate increase and ordered a refund, saying that the Public Service Commission had not done its job properly in granting it. The court, however, let stand the Baseload Act. Mississippi Power has appealed the refund ruling.

Meantime, language added to Section 77-5-231 of 1972 reads:

“Any rate-regulated electric public utility . . . may undertake economic development activities, whether directly or indirectly, including . . . providing capital, or investment in or acquisition and development of business or business or industrial sites . . . .”

The change, which also goes into effect July 1, states that such expenditures are “recoverable though the utility’s rates.”

Joey Lee, spokesman for Entergy, said in an email: “This legislation helps the communities we serve be more competitive with other states and entities that have progressive site development programs.

Customers do benefit from our efforts to recruit industries because our costs are then borne by a larger customer base.

“The types of facilities that we would propose under this new authority have long lead times – some as long as 2-3 years.

“This means that, in some cases, facilities may be included in rates before a customer commits to that particular site. But that decision would be made in conjunction with the [Public Service Commission] and local communities.”

Mississippi Power spokesman Bill Snyder said in an email received after the deadline for print edition of this article that the law “enhances our history of economic development support activities for the benefit of our customers, the state and company.”

Forest Thigpen, president of the Mississippi Center for Public Policy,  an independent, nonprofit organization based in Jackson, said in a memo that the new law “will require a diligent PSC.”
Brandon Presley, commissioner for north Mississippi, said that it is a “tool that we will use very judiciously and make sure that we are very careful to protect ratepayer interests.”

Presley, a Democrat, voted against the building of the Kemper County plant — whose initial cost of $2.8 billion has risen to $6.2 billion — and the rate increase that was overturned.

“Anything that goes into the rates has to be approved by the commission,” Presley added. “They can go out and go into the car business, they can go out and sell cars, but if they try to use their captive customers [to pay for it], then we have to vote on that.”

Already, “there’s nothing to preclude a utility from going into some other type of business. The question comes when they come in a try to put that in the rate base.”

Sen. Terry Burton, R-Newton, said that the power associations approached the Legislature followed by the investor-owned utilities.

Burton said that the Legislature decided to help the cooperatives because there are “countless industrial parks that are empty.”

The South Mississippi Electric Electric Power Association, which generates and transmits power, decided about a year ago it needed to provide more support for economic development in its service areas, according to Jim Compton, chief executive of the association.

South Mississippi Electric’s 10 distributors serve 419,000 customers in the western and southern parts of the state from the Tennessee line to the Gulf Coast. It is second in size only to Entergy and has more than twice as many customers as Mississippi Power, Compton said.

It approached the Legislature for help, and got it.

The legislation states that the co-ops “may undertake economic development  . . . including . . . providing capital, or investment in or acquisition and development of business or industrial sites and the necessary infrastructure or services needed to attract new or existing businesses or industry.”

The association has fared well between the recession year of 2008 and 2015, Compton said. “None of our industrial customers have gone out of business.”

Still, he added, the association “has to be vigilant”  so that it doesn’t invest in a “phantom.”

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