PSC approves multi-year rate plan for Kemper coal plant
by Clay Chandler
Published: March 8,2013
Mississippi Public Service commissioners voted 2-1 last Tuesday to approve a multi-year rate plan for Mississippi Power Co.’s Kemper County coal plant.
Terms of the plan call for the utility to receive $99 million in construction-work-in-progress funds for the rest of 2013. That will create a rate increase between 12 and 13 percent for residential customers who use 1,000 kilowatt-hours per month, starting in April. The average residential customer uses about 1,100 kw/h per month, according to PSC figures. Power bills will rise by a little less than $20 per month, according to utility estimates.
In 2014, rates will increase by another 3 percent, bringing the total rate increase associated with CWiP to 15 percent. When Mississippi Power issues bonds to cover costs exceeding $2.4 billion — company CFO Moses Feagin said last Monday that would likely happen in late 2014 — rates will jump again. The cumulative rate impact over the life of the seven-year plan and the bond issuance is expected to peak at 22 percent. Those calculations do not include fuel adjustment costs, which could raise or lower rates, depending on the price of fuel.
Mississippi Power, during a hearing that lasted most of last Monday afternoon, had asked for more revenue, but Southern District Commissioner Leonard Bentz said the $99-million figure was appropriate because “we’re in the middle of people’s budget years. I felt that would be the best amount.”
The multi-year rate plan and the bond issuance were part of a settlement between the PSC and the utility that ended litigation brought when regulators denied last summer a 13 percent rate increase for the project. Gov. Phil Bryant previously signed two pieces of legislation that codified the settlement.
The vote on the rate plan came after a public comment hearing that lasted the bulk of last Monday morning. Of the two dozen or so people who spoke, seven were in favor of the project.
One was David Carr, the mayor of Newton, which sits just southwest of the Kemper County site.
“Mississippi Power is our No. 1 economic booster,” Carr said. “They would not have started this plant if they did not think it was in the best interests of customers.”
Most of the objectors had pointed remarks for Bentz and Central District Commissioner Lynn Posey, who has routinely voted for the project. Northern District Commissioner Brandon Presley has been the lone dissenting vote.
Commenters used a variety of terms to describe Bentz and Posey’s support of the project, suggesting they were subservient to “corporate puppet-masters” and calling the rate increases “corporate fascism.”
After the public comment portion of the hearing, Bentz retaliated.
“It’s very easy to sit back and make accusations that are untrue,” he said to the audience in the PSC’s hearing room. Bentz said a lot of the problems arose from “misinformation” being spread by the media and special interest groups on both sides of the issue.
One of the groups Bentz singled out was the Sierra Club, which has opposed the plant from its inception, calling it expensive and unnecessary.
Louie Miller, executive director of the environmental group’s Mississippi chapter, called the PSC’s approval of the rate plan “shameful” and said it would place an additional burden on Mississippi Power ratepayers who are already struggling financially.
Mississippi Power spokesperson Cindy Duvall called last Tuesday’s vote “a huge step forward.”
“The sooner we can get cost recovery for our facility, the less overall cost impact for our customers,” she said. We’re going to go and review the order in its entirety and we’ll determine next steps from there.”
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