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Judge affirms certificate for Kemper County coal plant

December 18th, 2012 No comments

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.

Workers’ rights groups forge deal with Southern Co. for Kemper plant

December 11th, 2012 No comments

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.

Monitors: November 2014 most likely start date for Kemper plant

November 28th, 2012 No comments

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.

 

Massive absorber haul for Kemper County coal plant to start Sunday night

October 26th, 2012 1 comment

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.

 

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.

Kemper county coal plant reaches construction milestone, as court hearing approaches

September 13th, 2012 No comments

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.

Texas-based KBR still involved with Kemper plant, spokesperson says

August 7th, 2012 No comments

Word started circulating Monday that Mississippi Power Co. had ended its relationship with KBR, a Texas-based engineering and construction design/build firm involved in the Kemper County coal plant.

That’s not the case, a KBR spokesperson told the Mississippi Business Journal Tuesday morning.

Marianne Gooch said KBR is winding down its involvement in the construction phase of the plant, but will still provide engineering and start-up services. The plant is scheduled to begin commercial operation in May 2014. Employees in KBR’s construction division will leave the job site by this Thursday, Aug. 9, Gooch said, but will have the opportunity to catch on with other construction companies MPC and its parent Southern Co. are using to build the $2.88 billion plant.

KBR owns a portion of the Transport Integrated Gasification technology that will be used at the Kemper facility.

The coal plant has been the subject of a legal challenge from the Sierra Club, which currently has the issue in Harrison County Chancery Court for a second time. The Mississippi Public Service Commission voted in late June not to take any action on rate increase requests associated with the plant until the litigation concludes. The Mississippi Supreme Court last week denied MPC’s request to institute interim rate increases while the appeals process moved forward.

A MPC spokesperson did not immediately return cell phone and email messages Tuesday morning.

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PSC to look into ROE rates for Entergy, Miss. Power

August 7th, 2012 No comments

The Mississippi Public Service Commission voted 3-0 Tuesday morning to examine the formulas used to calculate return on equity for Mississippi Power Co. and for Entergy Mississippi.

Return on equity (ROE) is the amount of net income returned as a percentage of shareholders equity. It is used to measure a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested in, for example, things like new facilities and new infrastructure.

For utility companies, ROE is set as a percentage. The latest figures the PSC has approved for Entergy’s ROE is 11.63 percent; for MPC that figure is 10.62 percent. That’s about in the middle range for comparably sized utilities in the Southeast.

Each company uses multiple formulas to calculate its ROE, and takes the average of those formulas. For instance, MPC uses three formulas to calculate its ROE. The results generally end with a ROE of somewhere between 9 percent and 11 percent.

Commissioners voted Tuesday to hire consultants and to begin a series of hearings designed to examine the formulas. If the PSC decides it wants to change anything, it will have to be done in an entirely separate docket.

The hearings will likely last several months. It was unclear Tuesday if the first hearing would be a part of the regular meeting scheduled for September 11.

Supreme Court denies Miss. Power’s rate increase (Updated with clarification)

July 31st, 2012 No comments

Mississippi Power is now 0-2 when it comes to collecting money to pay for its Kemper County coal plant.

The Mississippi Public Service Commission in June denied a 13 percent rate increase that would have generated about $58 million. The company quickly appealed to the Mississippi Supreme Court, which affirmed the PSC’s ruling Tuesday afternoon. The court voted 8-0 to deny the rate increase. Chief Justice Bill Waller Jr. did not participate.

Public service commissioners said in their denial that they would take no action on rate increases until litigation surrounding the plant had concluded. The Sierra Club has the  plant — which the group contends is an expensive and  unnecessary environmental hazard — before a Harrison County chancellor. This is the second legal challenge the Sierra Club has mounted against the facility.

CLARIFICATION AND UPDATE: The Court ruled Tuesday that the company could not raise rates while it appeals the PSC’s rate denial. The appeal itself is still pending. Also, Mississippi Power has issued a statement. Here it is, verbatim:

“While we certainly respect the actions of the state Supreme Court, we view their decision on our motion to grant interim rates as a loss for our customers that will result in increased costs related to the Kemper plant,” said spokesperson Jeff Shepard. “We anxiously await the Court’s decision on our appeal. Our goal, as always, is to do what is in the best interest of our customers while maintaining reliable and safe electric service.

 

Moody’s places Miss. Power on review for credit downgrade

July 16th, 2012 No comments

Moody’s Investor Service late last week placed Mississippi Power Co.’s ratings on review for downgrade.

It’s the second rating agency in two weeks to either downgrade the company’s credit rating or consider doing so. On July 3 Fitch Ratings downgraded MCP from “A” to A-.” Fitch also revised the company’s rating outlook from “stable” to “negative.”

Moody’s does not sound prepared to go that far, at least not yet. In a press release, Moody’s said it would keep Southern Co.’s ratings outlook stable, and that the downgrade review would not result in MPC’s rating dropping more than one notch from its current rating of “A2.”

Like Fitch, Moody’s said the company’s credit rating likely would not completely recover until the Kemper County coal plant started commercial operation, which is scheduled for May 2014. Both agencies cited decreased cash flow as one of the main drivers of their decision.

Cash flow, company officials have said, will suffer until cost recovery is allowed for the Kemper facility. On June 22, public service commissioners voted 3-0 not to consider rate increases tied to the coal plant until the Mississippi Supreme Court has its say on the Sierra Club’s latest challenge to it.