A bond rating agency downgraded Mississippi Power Co.’s debt to the lowest investment-grade level, saying the election of two new members of the state Public Service Commission “increases regulatory uncertainty.”
Moody’s Investors Service cut the debt rating Thursday on the unit of Atlanta-based Southern Co., its second downgrade in two months. Another downgrade would push the utility’s debt into “junk” status. That means buyers limited to investment-grade securities couldn’t buy its bonds, raising borrowing costs.
The move comes before Tuesday’s hearing by current commissioners on whether Mississippi Power spent prudently on $1.1 billion in equipment at its $6.4 billion Kemper County Power plant. That includes turbines that have been generating power since last year using natural gas. Mississippi Power wants commissioners to make permanent an 18-percent emergency rate increase.
Moody’s said it’s concerned that Democrat Cecil Brown of Jackson and Republican Sam Britton of Laurel could be less supportive of the Kemper plant than outgoing commissioners Lynn Posey of Union Church and Steve Renfroe of Moss Point. Brown’s election makes it likely that returning commissioner Brandon Presley, a Nettleton Democrat, will become the commission’s president. Presley has been a consistent critic of the Kemper plant.
Current commissioners plan to vote on the 18 percent rate increase in December. Ratepayers could eventually be on the hook for as much at $4.2 billion of what Mississippi Power has spent on what it calls Plant Ratcliffe in Kemper County.
The plant is designed to gasify lignite coal, burn the gas to generate electricity and strip out byproducts including carbon dioxide. It’s a key bet by Southern Co. on the future of burning coal as the federal government seeks to cut carbon dioxide emissions to combat global warming.
The plant’s cost has ballooned, with its completion date pushed back repeatedly. Mississippi Power has had to borrow money from its parent company to stay afloat, and won an emergency $159 million rate increase from the commission.
The Public Utilities Staff has filed testimony questioning whether the company should be able to collect for everything it is asking. Various other opponents are also expected to question company witnesses and put on their own testimony including Hattiesburg oilman Tom Blanton, a Democrat who lost the race for the commission’s Southern District seat to Britton.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info