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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.

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.”

The Mississippi Supreme Court will hear oral argument Jan. 28 related to the Sierra Club’s ongoing legal opposition to Mississippi Power Co.’s Kemper County coal plant.

The hearing, which will start at 1:30, will center on this question: Why should the (MSSC) not reverse the Public Service Commission for its failure to hold the rate case in abeyance until the case of Sierra Club v. Mississippi Public Service Commission currently on appeal in Harrison County Chancery Court is finally decided?

Attorneys for MPC will have six minutes at the beginning to respond to the question. Attorneys for the PSC will have six minutes to do the same immediately afterward.

Attorneys for Thomas Blanton, a Hattiesburg resident who has challenged the constitutionality of the Baseload Act, will then have 20 minutes to make their case against the 2008 legislation that authorized utility companies to pass construction costs on to ratepayers before the generation facilities they were building were operational.

The hearing will conclude with MPC and PSC splitting 20 minutes to respond to Blanton.

The Sierra Club has fought the coal plant from its inception, calling it an expensive and unnecessary environmental hazard. Mississippi Power has said it’s the best way to ensure long-term availability of economical power for its nearly 200,000 ratepayers.

The latest report from the independent monitors the Mississippi Public Service Commission hired to evaluate the Kemper county coal plant shows the project may come in under the $2.88 billion cap.

In its December report, filed with commissioners in early January, URS says Mississippi Power estimates the plant will cost $2.84 billion to build, about $44 million less than the cap the PSC imposed on the project. The filing says the plant is between 70 and 75 percent complete, and that it will, according to MPC, begin commercial operation in May 2014, the original target date.

That lines up with URS’ November report, which estimated there was a 72 percent chance the project would cost $2.88 billion or less.

In its December filing, URS does express concern about different pieces of the construction having to be reworked, due to noncompliance by contractors or design flaws. Monitors also said it was possible the conversion to union labor could increase costs. Union leadership told the Mississippi Business Journal late last year that there would be no significant increase in construction costs due to union workers being hired. The Central Mississippi Building and Construction Trades Council and the Mississippi chapter of the AFL-CIO struck a deal with Southern Co., MPC’s parent, to provide workers for the project.

The cost and timeline estimates in URS’ latest report are different than what was included in the last report filed by monitors hired by the PSC’s Public Utilities Staff. Burns and Roe said in its Nov. 26 filing that there was a 90 percent chance the coal plant’s cost would fall somewhere between $3 billion and $3.15 billion, which has been its estimate for several months. Burns and Roe added that there was an 80 percent chance the plant would begin operation on or before Dec. 20, 2014; a 50 percent chance it starts on or before Nov. 29, 2014; and a 20 percent chance the same happens by Nov. 6, 2014.

Mississippi Power spokesperson Jeff Shepard told the MBJ late last year that the company anticipates the plant’s cost coming in at $2.88 billion or under, and that it will start producing electricity on a commercial scale in May 2014.

The Kemper facility is still the subject of litigation between Mississippi Power and the Sierra Club, which opposes the project. A Harrison County chancery judge ruled for the project late last year, after the Sierra Club had challenged the validity of the second certificate commissioners had issued it. Lawyers for the environmental advocacy group have already appealed that decision to the Mississippi Supreme Court.

Commissioners ruled over the summer that they would not entertain any rate increase requests related to the project until the state’s high court had its say on the matter. That decision came after Mississippi Power had asked for a 13 percent rate increase that would have generated about $58 million.

A chancery judge in Harrison County has affirmed that the certificate of public convenience and necessity for the Kemper County coal plant is valid.

The Sierra Club had argued that it was not, and that the Mississippi Public Service Commission should conduct a full round of evidentiary hearings before deciding whether to issue another one. The Sierra Club’s action was in response to the Mississippi Supreme Court’s kicking the issue back to the PSC earlier this year because justices said the original certificate, issued in 2010, did not cite sufficient evidence from the record of proceedings.

Commissioners issued a second certificate over the summer. Construction on the plant, which began in 2010, has continued while the litigation unfolded.

“Mississippi Power customers are the ones who will benefit from this important decision,” Ed Day, president and CEO of Mississippi Power, said in a statement Tuesday morning.

The Sierra Club will appeal Monday’s ruling, state director of the Mississippi chapter Louie Miller said. “We’ll probably ask for an expedited appeal,” Miller said in a phone interview, referring to the possibility that the appeal could languish at the supreme court for several months.

Public service commissioners ruled over the summer that they would not entertain any rate increases associated with the plant until the Mississippi Supreme Court had ruled on the latest round of litigation surrounding it. That ruling came after a hearing in which Mississippi Power asked for a 13 percent rate increase that would have generated about $58 million. Monday’s chancery court ruling now opens the door for the litigation to proceed to the high court.

Rate increase estimates attached to the plant have varied. Documents Mississippi Power filed with the commission in 2009 said rates would go up an average of 45 percent. In the order granting the second certificate, commissioners said rate increases would peak at 33 percent before going back down.

Day said earlier this year that the sale of the plant’s by-products would generate more revenue than originally anticipated, keeping rate increases under 30 percent.

The $2.88 billion plant is scheduled to begin operation in May 2014.

The Mississippi AFL-CIO and the Central Mississippi Building and Construction Trade Council have forged an agreement with Southern Co. that will have members from both organizations working on the Kemper County coal plant.

Mississippi Power Co., a subsidiary of Southern Co., is building the plant.

Neither the AFL-CIO’s Robert Shaffer nor the CMBCTC’s David Newell would give many details about the deal. Newell said the agreement is “to finish the project.”

They both urged the Sierra Club to drop their opposition to the project. The environmental advocacy group has long fought the coal plant, calling it dirty, expensive and unnecessary.

Tuesday morning’s announcement contrasts sharply with what Newell told the Mississippi Business Journal earlier this year. Newell said during the summer that Southern Co. had reneged on a similar deal, and that the plant was likely to be poorly built and well over budget because the company was not using his membership. Philadelphia-based Yates Construction Co. and Texas-based KBR, who were the project’s original contractors, took exception to that. Each said its history of delivering quality work on time and on budget was proof that it could do the same with the Kemper plant.

“I don’t know” what made Southern Co. reverse its position on dealing with the two organizations, Newell said. “Maybe they need our skills now more than ever.” Newell said the current deal had been in the works about three months.

Shaffer said the AFL-CIO had been in negotiations with Southern Co. since construction started on the plant in 2010. “You never know why corporations do certain things, because you’re dealing with so many different people, you never really know who’s pulling the strings,” he said.

Workers from both organizations are already on site. Shaffer said the number of workers would likely “start to build up pretty rapidly after the first of the year.” Newell said whether existing workers will have to join either the AFL-CIO or the CMBCTC “has not been decided yet.” It was also unclear how forcing them to would violate Mississippi’s right-to-work statute.

Independent monitors hired by the Mississippi Public Service Commission and the Public Utilities Staff have issued different estimates recently that put the cost of building the plant between $2.88 billion and $3.15 billion. A Mississippi Power spokesperson said last month that the company still expects the project to cost $2.88 billion or less. Public service commissioners have capped at $2.88 billion the costs Mississippi Power can pass to its ratepayers. Any pass-through costs above $2.4 billion must meet prudency requirements before commissioners will approve them.

Commissioners over the summer denied Mississippi Power’s request to raise rates about 13 percent to generate $58 million for the plant. Commissioners said then they would not consider anymore rate increase requests related to Kemper until the Mississippi Supreme Court had ruled on the latest round of litigation involving the company and the Sierra Club. A Harrison County chancellor is currently considering the issue. Whoever is on the losing end of that ruling will almost certainly appeal to the state’s high court.

The plant is scheduled to begin commercial operation in 2014.

In its latest report, the independent monitors hired by the Mississippi Public Service Commission’s Public Utilities Staff say the most likely date Mississippi Power Co.’s Kemper County coal plant will start commercial operation is November 2014.

That’s six months later than MPC had originally said the plant would start producing electricity.

In its analysis, Burns and Roe Engineering Inc. estimated there was an 80 percent chance the plant would begin operation on or before Dec. 20, 2014; a 50 percent chance it starts on or before Nov. 29, 2014; and a 20 percent chance the same happens by Nov. 6, 2014.

That’s the only new revelation made in the report, filed with the PUS Nov. 26. Monitors said there was a 90 percent chance the plant’s final cost would be between $3 billion and $3.15 billion, which has been their estimate for several months. Mississippi Power said last month it can complete the plant for $2.88 billion, which is the hard cost cap commissioners imposed on the project. The company also said in October that the target date for commercial operation to start was still May 2014.

Mississippi Power spokesman Jeff Shepard reiterated the cost and timeline Wednesday in an email to the Mississippi Business Journal. Shepard noted that monitors hired by the PSC said in their latest report that there is a 72 percent chance the project’s cost will come in at or under $2.88 billion.

“As the project nears completion, the company will continue to assess both costs and schedule and will continue to submit monthly reports to the Commission and Public Utilities Staff reflecting any adjustments as warranted,” Shepard wrote.

The Kemper facility is still the subject of litigation between Mississippi Power and the Sierra Club, which opposes the project. A Harrison County chancery judge has yet to rule on the environmental group’s latest challenge to the plant, though a decision is expected by the end of 2012 or in early 2013. Whoever the chancellor rules against will almost certainly appeal to the Mississippi Supreme Court. Commissioners ruled over the summer that they would not entertain any rate increase requests related to the project until the state’s high court had its say on the matter. That decision came after Mississippi Power had asked for a 13 percent rate increase that would have generated about $58 million.

Those on both sides of Mississippi Power’s Kemper County coal plant have agreed that it’s a massive construction project.

A perfect illustration of that will slowly roll down East Mississippi highways starting Sunday night.

Columbus-based Burkhalter Rigging will transport two hydrogen sulfide absorbers from Bigbee Valley, a Noxubee County outpost 30 miles south of Columbus, to the Kemper site.

The 76-mile trip will take a week to complete, and the sheer numbers of the move are staggering.

Each of the absorbers is 238 feet long, 21 feet wide, 21 feet high and weighs 1.4 million pounds, according to a Burkhalter press release. Each will be carried on trucks and trailers that have a combined 160 axles, with center dollies and wing dollies to be used at bridge crossings to distribute the weight evenly across the span.

This is one of the hydrogen sulfide absorbers Burkhalter Rigging will begin transporting Sunday night to the Kemper County coal plant’s construction site.

Each 732-wheel transport rig will be 28 feet tall, 22 feet wide, 346 feet long and weigh just shy of 2.5 million pounds. When the wing dollies are deployed to get the transporters across the Noxubee River bridge, the rig will grow to a width of 40 feet and roll on 796 tires.

The convoy, which will include all manner of pilot cars and law enforcement vehicles serving as escorts, will leave Tenn-Tom One Stop at 8 p.m. Sunday and travel down Highway 388 to Highway 45, traveling south in the northbound lane to Scooba. From there, it will head west on Highway 16 through DeKalb before turning south on Highway 493, which will drop it off at the Kemper site.

The convoy will only roll at night. Road closure information can be found on the Mississippi Department of Transportation’s website, www.gomdot.com.

The absorbers were built in Korea and shipped to Alabama’s Port of Mobile. When they arrived, Burkhalter crews put them on barges and floated them up the Tennessee Tombigbee Waterway to Bigbee Valley.

Daily updates and photos of the haul will be available on Burkhalter’s Facebook page at www.facebook.com/burkhalterrigging.

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.

Mississippi Power Co. announced a construction milestone for its Kemper County coal plant Thursday, one day before opponents have another day in court as part of their challenge to it.

A section of the facility’s gasifier – the piece of equipment that will covert lignite coal into the synthesis gas that will be used to produce electricity – has been installed. According to a MPC press release, construction on the project is nearing the halfway point. Commercial operation is scheduled to start in May 2014.

Friday morning in Gulfport, lawyers for the Sierra Club will appear in front of a Harrison County chancellor to argue that the second certificate the Mississippi Public Service Commission issued for the plant is invalid. The environmental group challenged the reissued certificate almost immediately after it was issued in April.

A new certificate for the plant became necessary March 15, when the Mississippi Supreme Court ruled the first certificate did not cite sufficient evidence from the record of proceedings.

The Sierra Club has long opposed the $2.88 billion Kemper facility, calling it an expensive and unnecessary hazard to the environment.

It’s possible that at the conclusion of Friday’s hearing, the presiding judge will issue a ruling. It’s more likely, though, that a written ruling will be handed down a few weeks or a couple months afterward. It’s almost a guarantee that whoever the judge rules against – either MPC or the Sierra Club – will appeal to the state supreme court.

Whenever that court has its say on the matter is when the PSC will again entertain rate increase requests related to the plant. Earlier this summer, commissioners ruled 3-0 to deny a proposed 13 percent rate hike that would have generated about $58 million. Commissioners said then that they would not hear any requests for rate increases until the supreme court had ruled on the pending litigation.