Mississippi Power, regulators, ask Kemper decision rehearing

Kemper-Update-Logo_rgbJACKSON — The Mississippi Power Co. and the Public Service Commission are asking the state’s highest court to reconsider its ruling overturning rate increases to fund the company’s Kemper County power plant and ordering $200 million in refunds.

In separate court filings Thursday, the unit of Atlanta-based Southern Co. and the regulatory body argued the high court’s 5-4 decision misreads the law and erects impractical hurdles for future utility regulation. The Feb. 12 ruling found the commission exceeded its legal authority, didn’t provide enough notice to customers and improperly conducted business in secret.

The decision scrambled the regulatory framework for what the company calls Plant Ratcliffe, which is now slated to cost $6.2 billion after more than $3 billion in cost overruns and delays.

Both the company and the commission emphasized that although the 18 percent rate increases currently being collected are accounted for separately, the money isn’t sitting in a special account somewhere.

“The company is free to use, and in fact, has used, the cash collected … to fund day-to-day operations, including, primarily, the construction of Kemper,” Mississippi Power wrote.

Since the ruling, Mississippi Power has repeatedly warned that if it can’t collect money in advance, customers might see rate increases of as much as 40 percent for Kemper to pay for higher borrowing costs. Under the previous framework, total rate increases of 22 percent to 24 percent were projected.

“If the Supreme Court ruling stands, our customers will see a substantial increase in rates,” Mississippi Power CEO Ed Holland said in a statement. “We do not believe that was the court’s intent.”

Hattiesburg oilman and Democratic Public Service Commission candidate Thomas Blanton, who won the case, said that such warnings of “rate shock” are unfair, because customers could be investing the money themselves instead of giving it to the company.

“There’s a cost of capital for the consumer just like there’s a cost of capital for Mississippi Power,” Blanton said Thursday, declining further comment because he hadn’t read the filings.

The company and commission attacked one of Blanton’s central contentions, that Mississippi Power is unconstitutionally taking his money for nothing in return because Kemper is not yet complete.

“Mississippi ratepayers do not have a constitutionally protected property interest in given utility rates charged by a privately-owned utility,” the commission wrote. “This court settled that issue more than 30 years ago.”

Both parties also disputed the court’s finding that Mississippi Power had to provide individual notice to each of its 186,000 customers before raising rates for Kemper. The commission said newspaper legal notices are all that’s required unless the company is pursuing a general rate case, as opposed to seeking reimbursement for a new facility.

The regulators also disputed the court’s ruling that they had acted improperly by engaging in private settlement talks with Mississippi Power.

“Settlement negotiations do not take place in a courtroom or open meeting and the general public does not have a right to participate,” the commission wrote.


Report: Florida bans ‘climate change’ from use by state agencies

Add “climate change” and “global warming” to terms that can get Florida government officials into hot water, the Miami Herald reports.

At least that’s what former officials of the Florida Department of Environmental Protection say Gov. Rick Scott has set as official state policy. Scott, in an interview with the Miami Herald late Monday afternoon, denied he has forbidden use of the terms. However, he still won’t say whether he thinks climate change is real.

The Herald published a story Sunday by the Florida Center for Investigative Reporting citing former DEP officials who said they had been told verbally to avoid the phrases. The department and Scott’s office had said no such policy existed.

The Florida Department of Environmental Protection is the state agency on the front lines of studying and planning for such climate-change-related catastrophes as a rising sea-level projected to threaten 30 percent of the state’s beaches over the next 85 years.

DEP officials have been ordered not to use the term “climate change” or “global warming” in any official communications, emails, or reports, according to former DEP employees, consultants, volunteers and records obtained by the Florida Center for Investigative Reporting.

Here’s the latest from the Herald on the reported word ban.

Fed’s Beige Book shows sustained rise in economic activity

Reports from the 12 Federal Reserve Districts indicate that economic activity continued to expand across most regions and sectors from early January through mid-February.

Central and South Mississippi are part of the Fed’s Atlanta District while North Mississippi is in the St. Louis District. The Beige Book, last published on Jan., details economic assessments from the various districts.

The new Beige Book reports that economic activity in the St. St. Louis region has increased at a moderate pace since the previous Beige Book. Recent reports of planned activity in manufacturing and services have been positive on net. Reports from retail contacts have also been positive.

Overall residential real estate market conditions have improved in the St. Louis District, while commercial and industrial real estate markets and construction have been mixed. Lending activity during the past three months has increased at a sample of District banks. Over the past three months, compared with the same period a year ago, wages have grown moderately while employment and prices charged to consumers have grown modestly.

The Atlanta District’s economy continued to grow at a moderate pace from January to early February. The majority of contacts are optimistic and expect near-term growth to be sustained at, or slightly above, current rates. Overall, District retail reports were positive over the reporting period. Motor vehicle dealer contacts indicated lower gas prices helped spur an increase in light truck sales.

The District’s tourism industry remained a bright spot with reports of increased activity in the business and convention segments. Residential real estate reports on home sales were mixed; however, both brokers and builders continued to witness modest home price appreciation. Commercial real estate markets continued to see improvements in demand and nonresidential construction was ahead of year-ago levels.

Manufacturers reported increases in new orders and production. Bankers indicated that loan demand was strong for most business lines.

On balance, the District’s labor force continued to grow. Firms continued to cite nominal wage increases for most jobs and other input costs remained subdued. Consumer Spending and Tourism. After experiencing a moderate 2014 holiday season, District merchants appeared optimistic during the early months of 2015. Recreation-and-vacationcentric retailers experienced solid overall growth last year, and expect a similar trend for the first half of 2015. Casual dining establishments saw an uptick in volume as consumers seem to be trading up from fast food options.

Manufacturers reported increases in new orders and production. Bankers indicated that loan demand was strong for most business lines. On balance, the District’s labor force continued to grow. Firms continued to cite nominal wage increases for most jobs and other input costs remained subdued. Consumer Spending and Tourism. After experiencing a moderate 2014 holiday season, District merchants appeared optimistic during the early months of 2015. Recreation-and-vacationcentric retailers experienced solid overall growth last year, and expect a similar trend for the first half of 2015. Casual dining establishments saw an uptick in volume as consumers seem to be trading up from fast food options. Many contacts cited evidence, such as a noticeable increase in purchases of light trucks that lower gasoline prices had led to increased spending on other goods and services.

On the real estate and construction front, District brokers’ reports on home sales activity improved a bit. Most contacts reported that home sales were flat to up slightly compared with the year earlier level. Brokers continued to report modest home price appreciation. The majority of brokers indicated that inventory levels either remained flat or had fallen from the prior year’s level and noted that buyer traffic was flat to slightly up compared with a year ago. Brokers noted that they expect home sales activity to increase over the next three months. Incoming signals from District builders have dampened a bit since the last report. Builders characterized construction activity and new home sales activity as flat to down slightly from the year earlier level. Many builders indicated that their inventory of unsold homes was flat to slightly up from a year ago, and noted that buyer traffic was flat to slightly down compared with the year-ago level.

However, most builders continued to report some degree of home price appreciation. The outlook among builders for new home sales and construction activity over the next three months was fairly positive, with most indicating that they expect activity to increase modestly.

Commercial real estate brokers around the District continued to report improving demand, though they cautioned that the rate of improvement varied by metropolitan area, submarket, and property type. Commercial contractors indicated that nonresidential construction activity had increased from the year-ago level across the District and noted the strength in apartment construction has persisted. Most contacts reported a backlog that was greater than their year earlier level. T

For manufacturing and transportation, District contacts indicated that manufacturing activity rebounded during the current reporting period that began Jan. 15, following a modest slowdown in December. Increases in new orders and production were notable, and factory employment continued to increase. Supplier delivery times slowed slightly, while contacts reported a moderate rise in finished inventory levels. With over half of contacts expecting production levels to increase over the next three to six months, optimism remained consistent with the previous reporting period. Transportation contacts reported an expansion of activity from January to early February. Trucking companies cited steady freight volume and notable year-over-year increases in tonnage. District ports reported significant increases in bulk cargo, container traffic, and shipments of autos from year-ago levels.

The banking and finance sector reported credit conditions were largely unchanged from the previous reporting period. Overall, credit remained readily available and small businesses reported more access to credit. Loan demand was strong among most lines of business, particularly commercial and mortgage lending.

Bankers noted increased lending to businesses such as hotels and restaurants. Loan pricing and structure remained competitive. Banking contacts indicated their lending standards remained fairly conservative.

On the jobs front, businesses overall indicated that they continued to add to payrolls. However, contacts continued to report difficulty filling skilled positions in the information technology, finance, construction, and manufacturing industries. In addition, a number of contacts noted that retail and other service-based entry-level positions were becoming more difficult to fill.

Some firms engaged in energy exploration and production and oilfield service providers reported layoffs resulting from declines in energy prices. Input cost pressures remained subdued for most firms.

The Atlanta Fed’s poll of business contacts in January indicated that, on average, firms anticipate unit costs to rise 1.7 percent over the coming 12 months, down two-tenths of a percentage point from the December reading. The decline in fuel prices was overwhelmingly seen as an opportunity to improve margins rather than lower prices.

Meanwhile, crude oil storage continued to expand onshore and off, which contributed to high crude oil inventory levels across the Gulf Coast. Impacts of declining energy prices have been mixed. Petrochemical, industrial power, transportation, and manufacturing contacts with business dealings in the energy sector described positive outcomes, such as improved profit margins from lower fuel and feedstock costs, as well as steady project bookings through 2015. However, firms engaged in exploration and production and oilfield service providers began to report negative effects to business activity, including employee layoffs.

On the agricultural front, the most recent 2015 domestic production forecasts for rice, soybeans, peanuts, and cotton were unchanged from a month ago while beef, pork, and broilers production projections were up from the prior month.

The St. Louis District report notes that plans for manufacturing activity since the previous Beige Book have been positive on net. Producers in the apparel, automobile, aerospace, and chemical manufacturing industries announced plans to hire additional employees and expand operations in the District. In contrast, firms that manufacture electronic equipment and primary metals announced plans to lay-off workers or close facilities.

Hiring reports from food manufacturers were mixed. A recent survey of manufacturers VIII-2 indicated that most firms increased employment during the past three months, and average wages per employee also increased for the majority of firms surveyed. Reports of plans in the District’s service sector have been positive since the previous report. Firms that provide business support, air and truck transportation, recreation, and health care and social assistance services reported new hiring and expansion plans.

Home sales increased in the St. Louis District on a year-over-year basis. Compared with the same period in 2013, December 2014 monthly home sales were up 5 percent in Louisville, 11 percent in Little Rock, and 29 percent in St. Louis; home sales remained the same in Memphis.

Commercial and industrial real estate market conditions were mixed throughout most of the District. Contacts in northwest Kentucky reported that a limited supply of commercial real estate is resulting in upward pressure on prices and declining vacancy rates across most property types. Contacts in Memphis reported low industrial vacancy rates. Contacts in Little Rock reported low asking rents in the commercial market.

Commercial and industrial construction activity was mixed throughout most of the District. Contacts in northwest Kentucky noted that financing and regulatory constraints are increasing the costs of new commercial construction projects. A contact in Memphis reported improvements in the lending environment for commercial construction projects.


Mississippi Power’s conversion of plant nearly complete

GULFPORT — The last load of coal has arrived by barge at Plant Watson as Mississippi Power prepares to convert the plant to using strictly natural gas.

Mississippi Power had already started using natural gas and announced in August it would convert units 4 and 5 from coal to natural gas to most economically comply with new federal environmental regulations.

The company said the process would be complete by April 16.

The Sun Herald reports Plant Watson in Gulfport was the first Mississippi Power plant to use coal as a fuel source.

Company officials say the conversion to natural gas avoids the expense of environmental controls to meet new Environmental Protection Agency requirements.

Mississippi man loses appeal of fraud conviction

JACKSON — A federal appeals court has upheld the conviction of a Mississippi man for fraud involving debris removal following Hurricane Katrina in 2005.

Aubrey Brant Sturdivant of Waynesboro is serving a 41-month prison sentence for a 2013 conviction in federal court in Jackson for conspiracy to defraud the government.

A three-judge panel of the 5th U.S. Circuit Court of Appeals on Wednesday dismissed Sturdivant’s challenges to the evidence in the case.

Prosecutors say Sturdivant had a contract for debris removal in Wayne County that paid him specified amounts based on the diameter of that tree or limb brought in.

Prosecutors say a county inspector would prepare a debris-removal ticket that tallied the work.

Prosecutors say Sturdivant submitted inflated debris removal tickets resulting in increased compensation under the contract.