PSC votes 2-1 to reissue Kemper certificate
by Clay Chandler
Published: April 29,2012
In what amounted to a procedural meeting, the Mississippi Public Service Commission voted 2-1 last week to reissue the certificate of public convenience and necessity for Mississippi Power Co.’s Kemper County coal plant.
Northern District Commissioner Brandon Presley was the lone dissenting vote.
The order granting the certificate is a lot like the 2010 order. There’s a preliminary cost cap of $2.4 billion. There’s a hard cap of $2.88 billion, the amount MPC has to gain PSC approval to recover from ratepayers only after the plant is in commercial operation. And there will be regular evaluation of the project’s economics by independent monitors.
The similarity of the orders is by design, said Central District Commissioner Lynn Posey.
“It’s basically the same order, it just outlines why we did what we did,” Posey said in an interview after last week’s hearing.
The hearing became a necessity March 15, when the Mississippi Supreme Court said in a 9-0 ruling that the original order did not cite sufficient evidence from the record in granting MPC’s certificate. The court’s ruling was in response to a legal challenge to the plant by the Mississippi chapter of the Sierra Club, an environmental advocacy group that has long opposed the Kemper County plant, calling its use of coal as a main ingredient in the electricity-producing mixture an expensive and unnecessary hazard to the environment.
Posey said he was “hopeful” this order would withstand scrutiny from the supreme court, should that body be asked to rule on the matter again. “I think there’s clearly enough justification for us to do what we did.”
Presley reiterated his stance in an interview that he believes the plant is too big a risk for ratepayers, and bemoaned the fact the PSC did not reopen the docket for more evidentiary hearings, which was an option.
“Same song, second verse,” he said of last week’s 133-page order. “It’s just a dressed-up version of the first order. I respect my colleagues and their opinion, but this is a bad deal for ratepayers. It doesn’t matter if you use 500 pages. This still equates to the largest expenditure by a public utility in the history of this state, and the ratepayers are picking up the tab.”
Last week’s order said the rate increase MPC customers could expect when the plant comes online would peak at 30 percent in 2014, when commercial operation is scheduled to start, before beginning to decline.
Southern District Commissioner Leonard Bentz, whose district includes the vast majority of MPC’s 186,000 ratepayers, had taken exception to a 45 percent rate increase claimed by the Sierra Club and reported by media outlets, including the Mississippi Business Journal.
That 45 percent figure, which represents a roughly $60 monthly increase in one power bill, comes from a confidential MPC rate impact filing from 2009 that was released to the MBJ via an open records request in August 2010. In a press release issued by his office and attributed to him, Bentz said he would not approve of the plant if there was a 45 percent rate increase attached to it, and that those who report that figure are “playing with the facts.”
Bentz would not comment when a reporter reached him on his cell phone last week.
The Sierra Club and Entegra, a Florida-based company that markets and sells natural gas-fired energy to wholesale customers, had asked commissioners to reopen the Kemper docket and incorporate historically low natural gas prices into the fact-finding process, and to explore fixed-price natural gas options for the plant’s fuel mixture.
“No party to the proceedings was willing to fix the price of natural gas themselves, making their claims that a ‘fixed price’ gas deal could be done mere speculation,” the order reads. “Once the fixed gas deals are removed from consideration, the overwhelming weight of economic evidence in the record supports a finding that the Kemper Project is the most economic resource available.”
Jeff Shepard, MPC spokesperson, said after last week’s hearing that the company had spent $1.1 billion on the plant, and had committed so far to spend $1.5 billion. He said February’s report to the PSC showed that the project was currently about $30 million over budget, mainly due to increased construction costs. He disputed the Sierra Club’s assertion that the project is already over $100 million over budget. “We’re not even close to that,” Shepard said. “We’re pleased the process gets to continue.”
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