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Settlement among Miss. Power, co-ops over electricity costs filed with FERC

September 28th, 2012 No comments

Mississippi Power Co. has submitted for federal approval an agreement it struck with South Mississippi Electric Power Association and East Mississippi Power Association over how much the two cooperatives will pay annually for electricity.

The settlement agreement was filed Thursday with the Federal Energy Regulatory Commission, which must approve it.

In November 2011, MPC filed with FERC a request for $32.6 million in additional revenue from its deals with SMEPA and EMEPA, to cover costs related to the Kemper County coal plant, the purchase of two combined cycle units at the company’s Plant Daniel in Jackson County and the retirement or partial retirement of generating units as more stringent environmental regulations took hold.

Shortly after MPC’s initial filing, SMEPA and EMEPA each filed a motion to intervene and protest. The settlement process started in early 2012. By January 20, a deal had been struck.  The parties filed a settlement agreement with FERC March 13.

The process was thrown a curveball later in March, when the Mississippi Supreme Court ruled that the 2010 Mississippi Public Service Commission order granting a certificate of public convenience and necessity for the Kemper plant did not cite sufficient evidence from the record. Commissioners eventually issued a second certificate.

The original settlement agreement among MPC and the two co-ops held together, with the exception of a few additional clarifications being  inserted.

The result is that MPC will receive $22.5 million – $10.1 million less than the original request — more from SMEPA and EMEPA, based on the revised rates being applied over 12 months. Because the rates would not take effect until after April 1, the actual amount MPC would receive is $16.98 million if FERC approves the deal. The cost of the wholesale electricity the co-ops purchase from MPC would go up an average of 7.1 percent.

Mississippi Public Service commissioners voted over the summer to deny a 13 percent rate hike for the Kemper plant that would have generated about $58 million. The Commission also stipulated that they would not entertain anymore rate increase requests related to the Kemper plant until the Mississippi Supreme Court had ruled on the litigation surrounding the facility. The Sierra Club, which opposes the plant on environmental and financial grounds, is seeking to invalidate the second certificate the PSC issued.

SMEPA plans to purchase a 17.5 percent ownership stake in the $2.88 billion plant. Commercial operation is scheduled to start in May 2014.