Archive for the ‘Mississippi Power Company’ Category

Miss. Power appeals rate increase denial to Miss. Supreme Court

July 9th, 2012 No comments

A few hours after another overrun for its Kemper County coal plant was revealed, Mississippi Power Co. said Monday it was appealing the Public Service Commission’s decision not to act on rate increase requests until the litigation surrounding the facility is finished.

The company appealed the PSC’s order to the Mississippi Supreme Court.

On June 22, commissioners voted 3-0 to deny a 13 percent rate increase the company wanted to employ to help pay for the Kemper plant. The increase would have generated about $58 million. As part of the denial, commissioners said they would not rule on any rate increase requests until the state’s high court had its say on the Sierra Club’s latest legal challenge to the facility. The environmental advocacy organization has opposed the plant from the jump, calling it expensive and unnecessary.

Mississippi Power’s appeal includes a motion for interim rate relief, according to a company release. Company officials have said the PSC’s denial could potentially preclude the recovery of construction costs until after the facility is completed, due to a possibly lengthy litigation timeline.

“The collection of interest costs for the plant during construction will accomplish two important objectives,” Moses Feagin, vice president and chief financial officer, said in the release. “One, to lower the overall cost of the plant for our customers, and two, to reduce the potential rate shock they would have otherwise experienced.”

Last week, Fitch Ratings downgraded MPC’s credit rating from “A” to “A-.” The ratings agency also revised the company’s rating outlook from “stable” to “negative.”

Latest Kemper report: Construction costs creep closer to cap

July 9th, 2012 No comments

The Kemper coal plant’s Independent Monitors’ Report for the period through the end of May shows the project has crept closer to the $2.88 billion cap the Public Service Commission imposed on it.

Mississippi Power Co. now estimates that the cost to build the lignite coal-fired generation facility will reach $2.822 billion. It’s the second report in a row that lists an overrun. The report for the period through the end of April estimated construction costs at $2.76 billion.

MPC officials originally estimated that they could build the plant for $2.4 billion. The latest  report exceeds that figure by $422 million.

In late June, commissioners voted 3-0 to wait until the Mississippi Supreme Court has its final say on litigation related to the project to take any action on proposed rate increases MPC hopes to use to pay for the plant.


Fitch downgrades Miss. Power’s credit rating after rate increase denied

July 3rd, 2012 No comments

Fitch Ratings on Tuesday downgraded Mississippi Power Co.’s Issuer Default  from “A” to A-.”

Fitch also revised the company’s rating outlook from “stable” to “negative.”

The rating agency said the downgrades were in response to the Mississippi Public Service Commission’s order from late June in which commissioners denied a revenue increase the company had requested in connection with the Kemper County coal plant. MPC officials testified at a hearing that in order to raise about $58 million to apply toward the plant, customer rates would need to increase by 13 percent.

In denying the rate increase, commissioners said they would take no action on rate increases associated with the Kemper facility until the Mississippi Supreme Court has its say on litigation surround it. The Sierra Club currently has the issue before a Harrison County chancellor for the second time.

No matter the outcome at the chancery court level, it’s expected to reach the state’s high court again.

Fitch also expressed concern with the 15 percent cost overrun MPC revealed to monitors in May. Currently, the plant’s projected cost sits at $2.76 billion, 15 percent more than the original estimate of $2.4 billion.

“Fitch’s financial analysis indicates that if the project becomes operational within the currently projected capital costs and schedule, and based on the assumption that the MPSC authorizes a timely recovery of both capital and operating costs, Mississippi Power’s credit metrics are expected to revert to Fitch’s guideline ratios of a low risk ‘A-‘ rated utility company by 2015,” Fitch said in a press release. “Until then, however, Fitch expects Mississippi Power’s credit metrics to remain considerably weak.”

Miss. Power: Kemper costs to exceed original estimate by 15 percent

June 8th, 2012 No comments

Mississippi  Power Co. announced late Friday afternoon that the Kemper county coal plant’s costs are close to butting up against the $2.88 billion cap the Public Service Commission imposed on the project.

A company press release says the news was revealed during a meeting with independent monitors. It does not say how far along construction is. It also does not say when the meeting in which the cost information was revealed took place. There was a meeting set for early May between monitors and the company to address the project’s contingency being close to depletion.

The plant’s latest figures would have been included in the independent monitor’s June report. The monthly reports have not been made readily available to the public as far as being posted on the PSC website like the orders and various other filings  associated with the project have been.  The Mississippi Business Journal filed an open records request on June 1 for the June report.

The release also does not say how far along construction is. The PSC voted 2-1 — Northern District Commissioner Brandon Presley was the dissenting vote — April 24 to reissue Kemper’s certificate. Part of the order granting that certificate said that monitors and company officials would meet in early May to discuss the dwindling contingency and other matters.

Here’s the press release, verbatim:

Mississippi Power, in its monthly meeting with the Mississippi Public Service Commission (PSC) Independent Construction Monitors, reports the Kemper plant construction is progressing on schedule and continues to be the best generation option for customers. The plant will be on line May 2014 and immediately begin saving customers on fuel costs.

The construction costs are currently projected to be approximately $2.76 billion or 15 percent above the original construction estimate prepared in 2009. The PSC established a cost cap of $2.88 billion for plant construction.

 Mississippi Power will deliver additional economic value for the Project from increased byproduct sales, such as CO2, and savings from lower financing costs. Because of these benefits to customers, the new estimate will not increase the rate impact of Kemper.

 “We are committed to bringing the Kemper Project on line, within the cost cap, to provide clean, safe and reliable energy to our customers,” said Cindy Duvall, company spokeswoman. “We work every day to find ways to bring value to our customers while preparing to meet their future energy needs.”

 Mississippi Power, a Southern Company subsidiary, serves approximately 188,000 customers in 23 southeast Mississippi counties.


Former Miss. Power CEO Topazi retiring from Southern Company

May 29th, 2012 No comments

Southern Co.’s latest 8k filing with the Securities and Exchange Commission contains news about former Mississippi Power Co. CEO Anthony Topazi.

Topazi, according to documents filed May 25, will retire as Southern Co.’s  executive vice president and COO effective Aug. 1.

Topazi left Mississippi Power in 2010 for its parent company. He was CEO when MPC gained PSC approval for the Kemper County coal plant. The plant is scheduled for completion in 2014, assuming the Sierra Club’s latest legal challenges are unsuccessful.

Southern Co. documents spell out a consulting agreement the company reached with Topazi. After his Aug. 1 retirement, Topazi will earn $1.7 million for consulting services rendered between then and Dec. 31, 2013, when the agreement expires.

To view the six-page filing click here.

Indiana coal plant’s rate impact will be smaller than Kemper’s

May 2nd, 2012 No comments

Mississippi Power Co.’s Kemper County plant isn’t the only coal-fired generation facility the Sierra Club has fought recently.

In Indiana, Duke Energy is building an integrated gasification combined cycle plant that will use bituminous coal, which sits a little deeper in the ground than lignite, which is abundant in East Mississippi and will serve as the main fuel source for the Kemper plant.

The company is catching it from a number of consumer groups, to go with the Sierra Club.

Duke Energy recently settled a round of litigation sparked by who would pay for the plant, the company or its ratepayers. Much of the hand-wringing had to do with who would foot the bill for $920 million in cost overruns on the roughly $3 billion project.

The settlement terms spelled out the rate impact for Duke customers: Electricity bills would go up 14.5 percent as the plant’s costs (at least some of them) were passed through. Various media reports in Indiana said that without the settlement, ratepayers’ bills would go up 22 percent.

Why that’s interesting is lignite coal is cheaper to recover, because its beds are generally closer to the surface than those of traditional coals like bituminous, making it easier to mine. The Kemper plant will use lignite, and like the Indiana plant, its costs — up to $2.88 billion — will be passed through to Mississippi Power ratepayers. It’s worth noting, though, that the ratepayer cost cap for the Indiana plant is $2.59 billion, about $300 million less than the Kemper facility. A really good overview of the plant’s finances can be found here.

The April 24 order the Mississippi Public Service Commission issued granting a new certificate of public convenience and necessity for the Kemper plant said rate increases would peak at 30 percent in 2014, when the facility is scheduled to start commercial operation, before declining as Mississippi Power pays off the plant’s debt. That figure was arrived at after months of proceedings before the plant was approved, litigated and approved again last week.

The 30 percent number differs from documents MPC filed with the PSC in 2009, in response to a set of data requests from Florida-based Entegra, which wanted to know how the plant would affect power bills in South Mississippi. Mississippi Power filed the information confidentially, but the Mississippi Business Journal obtained it via an open records request in 2010.

The rate impact data MPC filed then said hikes would be a touch more than 45 percent. That number has been disputed recently, most vehemently by Southern District Commissioner Leonard Bentz, whose territory includes the vast majority of Mississippi Power’s 186,000 customers.

PSC votes 2-1 to reissue Kemper certificate

April 24th, 2012 No comments

The Mississippi Public Service Commission voted 2-1 Tuesday morning to reissue the certificate of public convenience and necessity for Mississippi Power’s coal-fired plant in Kemper County.

Northern District Commissioner Brandon Presley was the dissenting vote.

The Mississippi Supreme Court ruled in March that the PSC failed to cite sufficient evidence from the record in granting the first certificate. The court’s 9-0 ruling kicked proceedings back to the PSC. Preserved in the latest certificate is the $2.88 billion cap on construction costs MPC can pass to its ratepayers. Any cost overrun above $2.4 billion still must be approved by the PSC. Also, any construction costs above $2.4 billion cannot be recovered until the plant is in commercial operation.

MPC spokesman Jeff Shepard said after Tuesday’s hearing the plant would begin full-scale commercial activity in May 2014.

Louie Miller, executive of the Mississippi chapter of the Sierra Club, said after the meeting his organization would file for a stay on Tuesday’s ruling by the end of the day. It was unclear whether that filing would be made in Harrison County Chancery Court or with the Mississippi Supreme Court.

In latest filing, Miss. Power seeks permission — with conditions — to exceed Kemper cost cap

April 23rd, 2012 No comments

Mississippi Power Co. is asking the Public Service Commission to allow it to exceed the $2.88 billion cost cap on its Kemper County coal plant, under certain conditions.

Those are claims the Sierra Club, an opponent of the plant, made in a conference call Monday.

The company filed April 12 a revision to its proposed final order (which it filed April 2) that essentially seeks permission to go beyond the cost cap as long as it:

* Produces what the company calls “efficiencies” that are netural or favorable to the ratepayer. In other words, as long as it doesn’t cost the ratepayers any more money, or it saves ratapayers money over the life of the plant.

* The proposed cost increase is accompanied by an equal or greater revenue requirement decrease  associated with one or more of the other estimates (like operational performance or sales of byproducts) in the company’s original proposal.

* The cost increase is caused by a natural disaster, terrorist strike, change in utility law, some sort of sabotage or a related event.

* To the extent the PSC does not allow 100 percent construction work in progress (CWIP), which MPC assumed when it made the $2.4 billion cost estimate, it will allow an increase in that figure to reflect the allowable funds used during construction (AFUDC) that CWIP would have obviated.

Mississippi Sierra Club’s Louie Miller said what MPC is asking for amounts to the company “reneging on everything they’ve agreed to.”

“We’re going from a mandatory-type environment to a permissive environment. This is what we’ve been concerned about all along.”

Commissioners have called a special meeting for Tuesday morning, where they will take up the Kemper project.

UPDATE: MPC spokesperson Jeff Shepard said after Tuesday’s hearing that the company was not trying to exceed the outer hard cap of $2.88 billion, but trying to “supplement the record” with more information.

Kemper coal plant on agenda for special PSC meeting Tuesday

April 19th, 2012 No comments

The Mississippi Public Service Commission will hold a special meeting Tuesday, and only two items are on the agenda.

One of those is Mississippi Power Company’s Kemper County coal plant. The other has to do with Willmut Gas and Oil Company and EnergySouth seeking approval of a transfer of control. Obviously, one will get a lot more attention than the other.

Commissioners have had a couple weeks to review the three proposed final orders they received related to Kemper. The Sierra Club and Entegra Power Group, a Florida-based company that operates and markets electric power from natural gas-fueled power plants to wholesale customers, each proposed that the PSC reopen the Kemper docket with the aim of exploring options to include natural gas instead of lignite coal as the plant’s main fuel source.

Mississippi Power proposed an order that the PSC re-issue the certificate of public convenience and necessity for the plant. Commissioners can adopt one of the three orders, or issue their own.

Central District Commissioner Lynn Posey told the Mississippi Business Journal in early April that it’s almost certain Commissioners will issue their own order. He added that it would probably contain parts of each of the three proposed orders, but wouldn’t go into detail beyond that.

Tuesday’s agenda says there will be discussion “and possible action” on the two agenda items. So it’s no guarantee the PSC will do anything definitive. Like every other Kemper hearing, though, Tuesday’s should be a show.

Bentz: MBJ’s Kemper coverage inaccurate

April 3rd, 2012 1 comment

The Mississippi Public Service Commission held its regularly scheduled meeting Tuesday morning, and it was more noteworthy for what happened afterward than what happened during it.

The good news: Southern District Commissioner Leonard Bentz finally spoke with a reporter about Mississippi Power’s lignite coal-fired generation plant in Kemper County. The bad news: It was a brief conversation.

“Y’all haven’t printed one thing that’s accurate,” Bentz said, referring to the Mississippi Business Journal’s coverage of Kemper from the PSC’s 2010 approval of the $2.8 billion plant to the Mississippi Supreme Court’s recent ruling that the Commission’s decision to grant a certificate of public necessity and convenience was not based on “substantial evidence presented.”

Bentz wouldn’t say what he felt was inaccurate. “Just quote that,” he said, walking away and pointing his finger at a reporter. “Quote that.”

Bentz joined Central District Commissioner Lynn Posey in 2010 in granting the certificate for the Kemper plant. Northern District Transportation Commissioner Brandon Presley dissented.

The Mississippi Chapter of the Sierra Club challenged the project in Harrison County Chancery Court, which ruled in favor of MPC. After the Sierra Club appealed, the state’s high court ruled 9-0 that the PSC would have to revisit the facts that led to it approving the project. Last Friday, the PSC voted — with the same split – in a 45-second hearing to temporarily authorize MPC to continue construction on the project.

Posey has not spoken with the media since the court’s decision, either.

Presley has said repeatedly that while he’s not against the use of coal to generate energy, he would rather MPC pay for the project itself, rather than passing the cost through to its ratepayers via increased power bills.

An MPC spokesperson said after last week’s hearing that the company has spent $1.1 billion on the project, most of that paying for the installation of underground utilities.