State utility regulators agreed Thursday that Mississippi Power Co. needs more money immediately, granting the company an 18 percent rate increase that, while temporary for now, could become permanent by December.
The Mississippi Public Service Commission voted 2-1 Thursday to allow the utility to raise rates starting with bills beginning Aug. 20. A residential customer who uses 1,000 kilowatt hours per month of electricity would see monthly bills rise to $144 from $121, increasing as much as bills fell after a Supreme Court-mandated rate cut last month.
The company argued it was running out of cash, could no longer borrow on its own, and could not count on its parent — Atlanta-based Southern Co. — to bail it out.
“We are in desperate need of financial relief,” Mississippi Power CEO Ed Holland said. “The commission showed leadership today in granting us temporary relief.”
Holland said he believed Southern Co. would now infuse $200 million in equity and Mississippi Power could return to traditional lenders.
Central District Commissioner Lynn Posey, a Union Church Republican, and Southern District Commissioner Steve Renfroe, a Moss Point independent, voted for the increase. It will cost Mississippi Power’s 186,000 customers $159 million a year.
“There is a need for it because of what I call financial crisis within Mississippi Power,” Renfroe said. “Any time you face the possibility of bankruptcy, I don’t see how you can consider it to be any other thing but that.”
Northern District Commissioner Brandon Presley, a Nettleton Democrat, opposed the increase, consistent with his longtime opposition to the Kemper plant. However, Presley said he recognized the company is in financial difficulty.
The commission scheduled a Nov. 10 hearing to examine whether Mississippi Power spent more than $1 billion wisely on natural gas turbines and other the parts of its $6.2 billion Kemper County power plant already generating electricity.
The commission could make the increase permanent in December, or order the company to refund all or part of the money. Mississippi Power is posting a $50 million guarantee against possible refunds.
The rate increase won’t affect $350 million in refunds ordered by the Supreme Court after an earlier 18 percent rate increase was overturned. Customers will get bill credits unless they ask for a check.
Tom Blanton, who won the case overturning the previous increase, said he intends to renew his court fight.
“We’ve already prepared our filing to go to the Supreme Court,” said Blanton, a Hattiesburg oilman and Democratic Southern District PSC candidate.
Blanton argues the PSC has reconstituted the earlier rate increase that the court overturned. He says the equivalent 18 percent amount, Mississippi Power’s plan to spend some of the money to pay for Kemper, and the lack of pre-increase prudency hearings make it illegal.
“Just because someone spends themselves into a hole is not a reason to overthrow the laws and the constitution of our state,” Blanton said.
Michael Kavanaugh, representing seafood and produce companies opposing the increase, said it was “ludicrous” to believe Southern Co. wouldn’t bail out Mississippi Power.
Renfroe said he felt the commission owed Mississippi Power because of promises when Kemper was approved that regulators would allow rate increases during construction. Renfroe said the commission can’t make Southern Co. send more money.
“If the regulatory environment is such here that they don’t feel like anything but bankruptcy is in the future, why would they pour money into that?” he said.
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