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Fitch cuts Mississippi Power credit rating on Kemper issues

Kemper-Update-Logo_rgb-300x244JACKSON — Fitch Ratings lowered its credit rating for Mississippi Power by one notch from A- to BBB+ Friday, saying there remain “elevated risks” of financial, regulatory and construction trouble at the $6.2 billion Kemper County power plant.

The rating agency, which had warned of the action, said its outlook for Mississippi Power is still negative, raising the risk of a second downgrade later.

Fitch left parent Southern Co. rated at A, but issued a negative outlook. The agency said the Atlanta-based utility giant is being dragged down both by Kemper problems and by issues at two additional nuclear reactors it is building at Plant Vogtle in eastern Georgia.

Mississippi Power still has an investment-grade rating, but lenders can charge higher interest rates for lower ratings. The move reflects the uncertainty swirling around Kemper, which is meant gasify soft coal and remove carbon dioxide from the emissions. The plant is a key bid to maintain the viability of burning coal to generate electricity, but has more than doubled in cost and is running behind schedule, in part because construction started before much design was complete.

“Strong credit ratings directly benefit our customers,” Mississippi Power spokesman Jeff Shepard wrote in an email, repeating an earlier statement on the subject word-for-word. “The company has been, and will continue to, take important steps toward long-term rate recovery and low-cost financing for the project for the benefit of our customers.”

The Mississippi Supreme Court recently voided the financing plan for Kemper, ordered $337 million that had been collected to be repaid, and ordered the Public Service Commission to roll back an 18 percent rate increase. Fitch said it was concerned about whether Mississippi Power could work out a settlement with regulators, especially in light of elections this year where some Public Service Commission candidates are running on explicit anti-Kemper platforms.

The company has filed three rate-increase plans, all of which would require customers to pay more.

The downgrade was sparked when South Mississippi Electric Power Association pulled out of a planned $600 million purchase of a share of the Kemper plant, leaving Mississippi Power with extra generation capacity that it could have to sell on the less-lucrative wholesale power market. The company also must return a $332 million deposit.

Fitch said that it wasn’t sure Southern Co. would keep selling stock to bail out Mississippi Power, saying such support “will be measured and could be withheld in the absence of a constructive regulatory outcome of Mississippi Power’s recent rate filings.”

It also expressed concern over the new Vogtle reactors, 46 percent-owned by Georgia Power Co. That company, Southern’s largest unit, has seen its share of construction costs rise from $6.1 billion to $7.5 billion. Georgia regulators predict costs will creep to $8.2 billion or more.

Like Kemper, Vogtle is a bid by Southern to keep using fuel sources other than natural gas. The company argues both Kemper and Vogtle will shield customers from volatile fossil fuel prices.

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One comment

  1. Makes that whole beef plant scam look like jaywalking. Hope this busted white elephant of a power plant can be converted to natural gas for less than two billion. No way an administration 10 years from now is going to let you run coal for cheap. Natural gas is dirt cheap. Would have been cheaper to buy a few billion dollars worth to insulated from price increases and a normal plant rather than something the brightest minds at the Southern Company don’t understand.

    Also didn’t understand you cannot raise peoples’ cost to pay it forward. Wal-mart or Toyota don’t charge a consumer fee ahead of time to build “their plant” or stores. What wrong with you people and where’s your profits for investing in your own companies? Not a surprise with the way some corporations now seem to think things work cause they say so. Think they are the government due to having the PSC on-board. Got something called courts and an AG. Go outside the law cost more than doing it right. Next time don’t make deals with the public service commission. Him telling the people MS Power reluctantly agreed to 18% instead of 33 or more was a joke. Throw out a high number and then make us a sweetheart increase deal that was the deal all along. Car dealer tricks.

    In the end does Mississippi even need this power? Economy has been shot here longer than this plant has been someone’s bad dream. And if we don’t need it, is that power going to be sold for cheap to Alabama or Tenn. while we pay the 18 or 50 something percent increases. The way Southern Company has botched this says somethings are worse than government or at least as bad, If it keeps up, the plant should be taken over and given to a corporation with a track record of understanding their own business beyond charging more and randomly guessing something is the future of energy.

    I can say the governor’s silence on this mess is going to have me staying home on election day or writing in Mickey Mouse. Personally I like him ok but he’s not showing leadership which is again why we are in this situation.

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