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Archive for January, 2013

Parent company reduces Viking workforce by 20 percent (Updated)

January 31st, 2013 1 comment

Middleby Corp. confirmed Thursday afternoon that it had laid off earlier in the day 20 percent of Viking Range’s 700 employees.

Middleby spokesperson Darcy Bretz said in an email to the Mississippi Business Journal that the cuts were made “from different job classifications across the Viking enterprise.” She said half the layoffs were employees in Greenwood, where Viking maintains its headquarters.

Calls to Viking officials in Greenwood were not immediately returned.

Illinois-based commercial cooking equipment maker Middleby announced the $380 million Viking acquisition on New Year’s Eve last year. Viking founder Fred Carl Jr. told the Greenwood Commonwealth newspaper shortly afterward that he would remain as CEO for the next several years, and that the company would maintain a substantive presence in Greenwood. Viking’s hospitality subsidiaries, including the cooking schools and The Alluvian Hotel, were part of the sale.

>> Read related post: Viking sale leaves Greenwood hanging

About two weeks ago, the Jackson advertising and brand management firm that counts Viking as a client confirmed that it had reduced its workforce while Middleby focused the range maker’s marketing efforts in-house as it examined the overall marketing budget.

The Ramey Agency president Jack Garner said then the firm would still perform external marketing functions for Viking, including a large project in Canada.

Update: Bretz confirmed Thursday night that Carl has resigned, effective immediately.

Kemper rate mitigation bill similar to 2009 Georgia law

January 31st, 2013 No comments

Kemper-Update-Logo_rgb-300x244Four years ago, lawmakers in Georgia’s General Assembly approved a bill designed to lessen the rate shock for Georgia Power Co. customers related to the utility’s construction of nuclear power units.

Mississippi lawmakers are considering a similar bill for Mississippi Power Co.’s Kemper County coal plant.

The Georgia legislation, which former Gov. Sonny Perdue signed in 2009, allowed Georgia Power  – which, like Mississippi Power, is a subsidiary of Southern Co. – to pass to ratepayers financing costs incurred to build two additional nuclear units at an existing generation plant in the southeastern part of the state.

Starting in January 2011, the law gave Georgia Power five years after the Georgia Public Service Commission approved the project to recover the costs. The law established the financing recovery schedule  separately from the rate base that collected construction work in progress funds. In Georgia, the recovery of CWIP is mandatory.

Georgia Co. officials said while the bill made its way through the statehouse in 2009 that paying financing costs for the $14 billion project as they were accrued would save customers in the long run. The two new units are scheduled to begin producing electricity by 2017, according to recent company projections.

A couple things separate the Georgia law and the proposed legislation here. Georgia’s rate mitigation statute established a five-year recovery window. The Mississippi plan creates a 10-year window, and prohibits the utility from filing to activate the plan until 12 months prior to the calendar year in which the qualifying facility is scheduled to begin operation.

The Kemper plant is supposed to come online in May 2014. That means Mississippi Power can request the plan if and when the law clears the Capitol and is signed by Gov. Phil Bryant.

The Georgia law established a rate schedule specifically for the recovery of financing costs, since the recovery of CWIP was already mandated. The legislation that has cleared the Mississippi Senate’s Energy and Finance committees does not restrict CWIP or financing costs from being included.

The hard cap on the Kemper costs Mississippi Power can recover through ratemaking proceedings at the Mississippi Public Service Commmission was lowered last week from $2.88 billion to $2.4 billion, as part of a rate settlement between commissioners and the utility. A bill that would permit Mississippi Power to issue bonds for overruns – up to $1 billion – sits in the Senate Energy and Finance committees.

Sierra Club: Poll shows customer opposition to rate hikes via Kemper coal plant

January 30th, 2013 4 comments

The Sierra Club was supposed to release last Thursday the results of a poll meant to gauge Mississippi Power Co. ratepayers’ attitudes toward the Kemper County coal plant.

The environmental group delayed the results because of a hearing in which the Mississippi Public Service Commission reached a rate case settlement with the utility.

The delay ended Wednesday morning. The poll, conducted by Fondren Strategies, surveyed by landline and mobile telephone 400 respondents that a press release says were certified to be Mississippi Power customers.

The results say 65 percent of those polled said the possibility of their electricity rates going up approximately 33 percent once the plant is finished erodes their support of the project. About 75 percent of respondents say cost overruns should be paid by utility shareholders.

The poll’s margin for error is 4.9 percent.

Mississippi Power has already filed to recover $172 million in financing costs associated with the project. The filing came one day after last week’s settlement, which lowered the maximum cost recoverable via PSC ratemaking proceedings from $2.88 billion to $2.4 billion.

If the PSC grants the $172 million recovery request, Mississippi Power says rates will go up an average of 21 percent, starting in April and lasting through 2013, for customers who use an average of 1,000 kWh per month.

The project’s overall rate impact, the company said on an analyst call Friday, will hover around 25 percent.

The Sierra Club has opposed the plant since its inception in 2009, calling it an expensive and unnecessary environmental hazard. The club has called for the plant to be converted to a natural gas-fired facility, which it says is cleaner than the lignite coal the plant will eventually use.

The project is on time for a May 2014 completion, Mississippi Power said recently.

The Sierra Club’s entire poll can be seen here.

Data: Raising accelerated tax threshold would have little financial impact on state

January 29th, 2013 No comments

The latest issue of the Mississippi Business Journal has a story about the push to raise the liability threshold that requires small businesses to participate in the accelerated tax payment system.

Simply put, small businesses with a monthly average of at least $20,000 in tax liability have to pay a portion of June sales and use taxes no later than June 25.

Normally, those tax payments are due on the 20th of the next month. For example, April taxes are due no later than May 20. The accelerated system forces small businesses that qualify to pay two months’ (May and June) worth of taxes on one day.

Ron Aldridge of the Mississippi NFIB, which is advocating the proposal to raise the threshold from $20,000 to $50,000, provided some data from the Department of Revenue that sheds light on how many small businesses are triggered by the $20,000 threshold, and how many would be triggered by the $50,000 threshold. The data arrived after the MBJ’s press deadline last week, and did not make the print version.

As of Oct. 26 2012, 2,623 businesses qualified under the $20,000 threshold, and paid $157.9 million in sales and use taxes. Of those businesses, 853 would still have to pay accelerated sales and use taxes if the threshold increased to $50,000. Of the $157.9 million total, those businesses paid $123.1 million, about 67 percent of the total.

The NFIB, in a press release that accompanied the data, said the state having to wait a month for $34.8 million is not enough to justify keeping the threshold at $20,000.

Four bills that address the issue have been filed and sit either in the House Ways and Means Committee or in the Senate Finance Committee. Gov. Phil Bryant made raising the threshold part of his executive budget recommendation late last year, so it’s likely at least one will be sent to the floor for debate before the first committee deadline Feb. 5.

Whether CWIP constitutes a tax takes up most of Kemper hearing

January 28th, 2013 No comments

Most of Monday’s hour-long Kemper coal plant hearing at the Mississippi Supreme Court centered on two questions:

If the Mississippi Public Service Commission allows Mississippi Power Co. to charge its ratepayers for the facility’s construction, will it constitute a tax, or will it simply be a rate assessment?

If it is a tax, does it render the Baseload Act unconstitutional?

Mike Adelman, an attorney who represents Thomas Blanton, says the Baseload Act – a 2008 law that authorized utilities, with PSC permission, to collect construction-work-in-progress funds from ratepayers – is unconstitutional because it violates the Constitution’s 14th Amendment, which prevents confiscatory taking of property without due process.

“It’s a tax on electricity that has not yet been provided,” said Adelman, whose client is a Hattiesburg resident and one of Mississippi Power’s roughly 186,000 ratepayers.

Blanton’s claim was originally part of the rate dispute between commissioners and Mississippi Power. The dispute arose over the summer when commissioners denied a 13 percent rate increase that would have generated about $58 million to put toward the coal plant’s construction. Commissioners said then they would not entertain anymore rate increase requests related to the plant until the Mississippi Supreme Court had ruled on litigation brought against the plant by the Mississippi Sierra Club. That litigation is separate from Monday’s proceedings.

The PSC’s stance changed last week, when commissioners and Mississippi Power Co. agreed to a settlement whose terms will allow the utility to ask for CWIP recovery in exchange for the hard cap on the project being lowered from $2.88 billion to $2.4 billion, and ratepayers being granted an ownership share in the plant’s TRIG technology.

Adelman, in his argument against the Baseload Act, equated CWIP with a tax, something he said the PSC does not have authority to levy. Even if lawmakers intended to convey that authority in the Baseload Act, Adelman said, the language in the law does not do that.

The law essentially forces Mississippi Power customers to become investors in the project, Adelman said.

“There is a recognized constitutional right – a right that is recognized by this court – that rates cannot be assessed for power that is not being delivered,” Adelman told the seven justices. Chief Justice Bill Waller Jr. and Associate Justice Leslie King were not in attendance.

Mississippi Power attorney Ricky Cox said that law allows for utilities to increase rates for “used and useful” services. “And CWIP is a used and useful service,” he told the court.

“These facilities (which are eligible for CWIP funds) have unique characteristics,” Cox said. “They run 24 hours a day and provide dependable power. That’s the benefit customers are getting.”

Blanton’s argument that the Baseload Act is unconstitutional is moot and should be dismissed, Cox said, because the Baseload Act has not been applied.

Justin Matheny, representing the PSC, echoed Cox’s assertion that ratepayers do receive a tangible benefit in exchange for paying CWIP.

“In this case, they’re helping to build a new plant and helping to continue to provide electricity into the future.”

The small amount of back and forth between justices and lawyers related to the original rate dispute centered on whether the settlement was final, and rendered the case closed.

Presiding Justice Jess Dickinson during the hearing expressed skepticism that it was, since the settlement kicked proceedings back to the PSC. Any dispute arising out of the new proceedings, Dickenson said , would likely land back before the high court.

Justices will issue a written decision, something Dickinson told lawyers he hoped would happen soon.

Miss. Power, new settlement in hand, files for recovery of $172 million in Kemper costs

January 25th, 2013 4 comments

Thirty hours after it reached a rate settlement with the Mississippi Public Service Commission, Mississippi Power Co. announced it has filed to recover $172 million in financing costs for its Kemper County coal plant.

The $172 million was the maximum allowed for 2013 under the terms of the agreement, which solved a dispute that started when commissioners denied over the summer a 13 percent rate increase that would have generated roughly $58 million. Commissioners said then they would not consider any Kemper-related rate increase requests until the Mississippi Supreme Court has ruled on the litigation surround the project.

Should the PSC grant the recovery – and the terms of Thursday’s settlement said there was no guarantee that would happen – electricity rates for Mississippi Power’s 186,000 customers would go up an average of 21 percent. The company said in a press release that would represent an increase of less than $1 per day for the rest of 2013 for customers who use an average of 1,000 kWh per month.

With the new settlement in place, Mississippi Power anticipates the overall rate impact for the plant to hover around 25 percent.

“This is well under the increase we had anticipated and significantly lower than what opponents to the project claimed,” company CEO Ed Day said in the release, issued just after 6 Friday evening.

In a 2009 filing with the PSC, Mississippi Power said the rate increases associated with the plant would peak at 45 percent. In last spring’s PSC order granting the plant a certificate of public convenience and necessity, rate increases were expected to peak at just more than 30 percent in 2014, when the plant is scheduled to begin commercial operation, before falling.

According to the company, the plant is nearly 75 percent finished. If commissioners approve Friday’s filing for cost recovery, the rate increases would take effect in April.

Despite Thursday’s agreement between the utility and commissioners, the Mississippi Supreme Court ruled Friday afternoon that the oral argument related to the original rate dispute would proceed as scheduled Monday at 1:30 p.m.

Baseload Act challenger hopes high court hearing moves forward in wake of settlement

January 25th, 2013 No comments

Thomas Blanton’s lawyer hopes Thursday’s Kemper rate case settlement between Mississippi Power Co. and the Mississippi Public Service Commission does not kill his client’s opportunity to air his grievances against the Baseload Act before the Mississippi Supreme Court.

The high court had scheduled oral argument for Monday to hear a dispute between MPC and the PSC over rates for the project. The two entities settled that dispute Thursday, in an agreement that lowered the amount the utility can charge its ratepayers for the project from $2.88 billion to $2.4 billion. The disagreement arose over the summer, when commissioners denied a 13 percent rate increase that would have generated about $58 million. Commissioners also said then they would not entertain any more rate increase requests related to construction-work-in-progress money for the coal plant until the Mississippi Supreme Court had ruled on the litigation surrounding it.

The agreement, which allows MPC to ask anew for CWIP funds, still must gain supreme court approval. Justices could still force the parties to appear Monday, or they could cancel the hearing.

Blanton, a Hattiesburg resident, has challenged the constitutionality of the Baseload Act, the 2008 law that granted utilities the authority to ask for CWIP funds. His attorney said Friday morning that he hopes to still be able to argue that point Monday.

“If anything, it strengthens my client’s argument,” Adelman said, referring to Thursday’s settlement. ”It’s based on a statute that’s unconstitutional. I don’t understand what basis there is for the commission to change their position, when they said specifically they were going to deny the rate increase until there was a decision by the Mississippi Supreme Court.”

Attorneys for the PSC and MPC on Friday morning filed motions with the supreme court asking justices to dismiss the rate dispute and Blanton’s claim. Adelman filed a motion to oppose the dismissal. The court had not decided as of early Friday afternoon whether to proceed with Monday’s hearing, which was still scheduled to begin at 1:30 p.m.

Rate case settlement lowers Kemper cost cap (Updated with rate info)

January 24th, 2013 No comments

Mississippi Power Co. and the Mississippi Public Service Commission have come to an agreement that allows the utility to ask for construction-work-in-progress funds for the Kemper County Coal plant.

MPC had appealed to the Mississippi Supreme Court over the summer after commissioners denied a request for a 13 percent rate increase that would have generated about $58 million in CWIP money. Commissioners said then they would not entertain anymore rate increases related to the plant until the state’s high court had ruled on the litigation surrounding the project.

In the settlement, commissioners made no promise that they would approve CWIP. Settlement terms also lowered the hard cap of the plant from $2.88 billion to $2.4 billion and provided ratepayers a 10 percent royalty share in the plant’s TRIG technology. It also stipulated that, in the event commissioners grant CWIP, that money would essentially be held in escrow, and would only flow to the company if the supreme court clears the way for the project to proceed. If that court strikes down the plant, the CWIP money would return to MPC’s 186,000 ratepayers.

Mississippi Power has 30 days to ask for revenue recovery, the amount of which cannot exceed $172 million.

Southern District Commissioner Leonard Bentz and Central District Commissioner Lynn Posey voted to approve the settlement. Northern District Commissioner Brandon Presley voted against it.

“I’ve stuck to my guns on $2.4 billion from the very beginning,” said Bentz, whose district includes the vast majority of MPC ratepayers. “Short of the sky falling, they won’t get one penny over $2.4 billion.”

Presley expressed concern that the settlement would still force ratepayers to pay for the plant before it was operational. MPC expects the plant to start generation in May 2014.

“It’s the same scenario I’ve had concerns over,” he said. “Ratepayers shouldn’t have to pay for something until it’s useful to them.”

Supreme court justices had scheduled for Monday afternoon a hearing on the dispute between MCP and the PSC. Even though Thursday’s settlement technically ends any disagreement between the two, justices could still decide to move forward with Monday’s oral argument. It was unclear if Thomas Blanton, a MPC ratepayer from Hattiesburg who has challenged the constitutionality of the 2008 law that authorized CWIP, would still get to argue that point Monday.

The head of the Mississippi Sierra Club, which has long opposed the plant and still has active litigation against it, said Thursday afternoon that the settlement does nothing to protect ratepayers.

“If the TRIG technology turns out to be useless, that’s not much of a deal,” said Louie Miller, referring to the ratepayers receiving 10 percent of TIRG royalties over 30 years. “Even Mississippi Power has said they’re not 100 percent certain that the plant’s technology will work on the first day of operation.”

Bentz said Thursday’s settlement could potentially lower the rate impact of the plant. He has said through the process that he expects rate increases to peak between 20 and 28 percent before falling.

“I think this will at least put rate increases at the lower end of that, possibly even lower,” Bentz said.

Mississippi Power filed documents with the PSC in 2009 that said rate impacts would peak at 45 percent. The PSC order granting the plant’s certificate of public convenience and necessity said rate increases would peak at a touch over 30 percent before falling.

Mississippi Power’s most recent rate impact estimates have fallen below that, with the company saying sales of the plant’s by-products have come in higher than originally thought. [Editor’s note: Southern Co. officials said on an analyst call Friday morning that if the PSC grants the full $172 million in CWIP funds, it would raise MPC customer rates 21 percent.]

The settlement includes a phased-in rate plan that would run the first seven years the plant was in operation.  Common methods of rate recovery allow utilities to recover the bulk of costs up front. Spreading that out over seven years, Bentz said, would minimize the impact to ratepayers.

There was some question Thursday whether current statute allowed a phased-in rate plan, or if legislation would be required to authorize it.

The utility can opt out of the settlement if it is determined the PSC does not have the legal authority to implement a phased-in rate plan. If it’s determined there is a need for legislation to establish that authority, and the legislation fails to become law, the utility can opt out of the settlement.

The company can also opt out if it is unable to secure alternative financing for any project costs not otherwise recoverable by ratemaking proceedings.

MPC CEO Ed Day said in a press release that the settlement was “a win for both this state and our customers.”

BIPEC rankings released, contain few surprises

January 23rd, 2013 No comments

The Business and Industry Political Education Committee’s annual Jobs Report Card for lawmakers, released Wednesday, contains few surprises.

For the most part, Republicans did better than Democrats. On the A-F grading scale, only two members of the GOP – Rep. Mark Baker from Brandon, and Sen. Briggs Hopson from Vicksburg – scored lower than an ‘A.’ Baker got a ‘C,’ and Hopson was given a ‘B.’

A handful of Democrats scored either ‘A’ or ‘B.’ Most, though, scored ‘C’ or worse. Baker getting a ‘C,’ which denotes average business support, could be an issue in determining if he runs against Attorney General Jim Hood in 2015. Baker, chairman of the House Judiciary A Committee, hasn’t confirmed or denied that he’ll seek the AG’s post in two years, but is one of perhaps a half-dozen Republicans considered likely challengers.

BIPEC graded lawmakers according to their votes on nine bills, all of which passed and were signed by Gov. Phil Bryant, during the 2012 legislative session. The selected legislation dealt with workers’ compensation reform, tax and insurance issues, establishing medical zones and the like.

To see the list of bills and how each lawmaker scored, click here.

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Ramey cuts workforce while new Viking owner examines marketing budget

January 21st, 2013 No comments

A decision by Middleby Corp., the Illinois-based parent company of Viking Range, to curtail the marketing budget for the high-end kitchen appliance maker has led to a Jackson ad agency reducing its number of employees.

Jack Garner, president of The Ramey Agency, said Monday afternoon that the firm specializing in brand strategy and marketing communications had recently “eliminated a number of positions,” but did not say exactly how many. Ramey’s website lists 39 employees between its Jackson headquarters and its media office in Memphis. Garner said the positions eliminated were all in the Jackson office.

Garner said Middleby told Ramey shortly after the acquisition in December that it would focus its marketing efforts in-house and limit outside expenses for Viking while its overall promotional budget was being evaluated.

“Any outside marketing for Viking will continue to come through Ramey,” Garner said in a phone interview, noting his agency was still working on a large project in Canada for the range maker.

At full strength, Viking was a substantial account, Garner said, but it was only a minority of the firm’s work. “More than 80 percent of our work is non-Viking clients,” he said. Among the clients listed on Ramey’s website are BankPlus, Entergy, University of Mississippi Medical Center and the Mississippi Development Authority.

“We are really fortunate to have a significant number of blue-chip clients. We’ve been able to enjoy steady and solid growth because of that. Dealing effectively with a cycle of changes is normal for any agency. We’ve done our best to stay nimble and ready to do whatever is needed. We are considering all opportunities for business expansion, which is an ongoing commitment, and also looking to control expenses.”

Middleby officials had not responded to phone and email messages by mid-afternoon Monday.