Judge: Kemper appeal decision in 2 weeks

February 14, 2011

Energy

By Amy McCullough

GULFPORT – While lawyers prepared for the hearing upstairs, more than 20 Gulf Coast residents rallied in the lobby of the Harrison County Chancery Court on Feb. 14, as Mississippi Sierra Club director Louie Miller explained a lawsuit with a pair of flip flops.

Miller held up a pair of the popular beach sandals with the names “Bentz” and “Posey” written on the bottoms.

Sierra Club says two Mississippi Public Service Commissioners, Leonard Bentz and Lynn Posey, issued a decision essentially denying the construction of the $2.4 billion Kemper County clean coal plant last April, only to “flip flop” and approve the plan in May without sufficient reason. Hence, Sierra’s lawsuit against the Public Service Commission and Mississippi Power Company claiming that the decision was arbitrary and capricious.

After three and a half hours of oral arguments, Judge Jim Persons said he would try to make a ruling within two weeks.

The Kemper facility, recently named Plant Ratcliffe, is being built between Mississippi 493 and Mississippi 495 near the Liberty community. It will use a process that converts lignite coal into a synthesis gas that can generate electricity. The plant will produce 582 megawatts of usable generation and will also be the first commercial-scale plant in the nation to capture its carbon dioxide emissions.

Sierra attorney Robert Wiygul said the Commission’s April 2010 order said Mississippi Power would be held to a $2.4 billion cost cap, instead of granting the company its requested cost overrun allowance that would make the project cost $3.2 billion. Then in May, the Commission said the company would be allowed to request cost overruns up to $2.88 billion. This, along with other changes, allowed Mississippi Power to finance the plant and begin construction.

“The record contains no alternate evidence to accept a higher number,” Wiygul said.

Wiygul also said that according to documents within the record, rate impacts to customers would be around 45 percent.

Mississippi Power Company attorney Ben Stone said that under the Mississippi Public Utility Act, the Commission is charged with determining whether a power plant is needed and approving or disapproving its construction cost estimate. It is not within the Commission’s jurisdiction to direct a utility regarding what type of plant ought to be built.

Stone said Kemper, which will be fueled by lignite coal, was key to Mississippi Power’s generation mix, so that the utility would not be overly dependent on natural gas.

Judge Persons interrupted Stone’s argument and said he had concerns regarding risk and rate impact to customers.

“My issues are raised from the orders of the Commission … unprecedented risk, unprecedented cost,” he said. “I don’t find where the Commission has addressed the rate impact of Kemper. … The orders we have here – frankly, I don’t think are well done.”

The Mississippi Public Utilities Staff allowed Mississippi Power to file rate impacts to customers confidentially in 2009. After a public records request, the Mississippi Business Journal published those rate impacts in the August 22, 2010 story, “‘About a third’ is really closer to about a half.” Mississippi Power said publicly that customer rate increases would be around 30 percent, but the company never submitted that figure in sworn testimony to the Commission.

Judge Persons said the Commission expressed concern over numerous risks to customers in its April order, which would not have allowed plant construction. But in its May order, the Commission eased the financial restrictions on Mississippi Power without addressing how the new conditions protected the public interest.

“Even if a 45 percent increase is reasonable under the (Baseload) Act … what if they can’t afford it? … And if you look at parts of the Commission’s orders, it would scare you to death,” he said.

Stone said “We’re not talking about a rate case here” and stressed that the Commission has the authority to disallow any costs it deems to be imprudent.

Stone did not contest Judge Person’s use of the 45 percent figure.

On behalf of the Attorney General’s office and in defense of the Public Service Commission, Christopher Lomax repeatedly reminded Judge Persons of the separation of powers within government. Lomax said that even if the judge disagreed with the Commission’s policies, the judge did not have constitutional authority to make policy decisions.

The decision could only be overturned if it were arbitrary and capricious, which means done with whimsy, and there were more than 30,000 pages in the record, Lomax said.

“Are you telling me we might as well have not come here today?” the judge asked jokingly.

Lomax said no.

Judge Persons said the Commission’s order was not clear as to the meaning of “stable, low-cost electricity.”
Wiygul closed on behalf of the Sierra Club, saying the decision should be remanded back to the Public Service Commission.

If the decision is reversed by Judge Persons and is appealed, the case would go to the state Supreme Court.
Sierra Club filed its appeal in Harrison County Chancery Court in June and also at the Mississippi Supreme Court because the law was unclear regarding jurisdiction. Mississippi Power made a motion to keep the decision at the state Supreme Court. But in October the Court sent the suit back to Harrison County.

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