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Mississippi Power Co. has made an abrupt change at the top.

Southern Co.’s board of directors voted Monday to name G. Edison “Ed” Holland the utility’s new leader. Holland replaces Ed Day, who has been president since 2010. Day has spent a total of 30 years with Southern Co.

The change will be effective immediately. Holland will be “responsible for the operations of Mississippi Power, including overseeing the continued construction of the Kemper County energy facility,” said a company press release.

Southern Co. gave no reason for Day’s departure, but it comes about a week after the Mississippi Public Service Commission learned that Day had ordered that documents containing details of when the utility knew about cost overruns at the Kemper County coal plant be withheld from regulators.

The PSC in April 2012 affirmed the project’s certificate of public convenience and necessity, after the Mississippi Supreme Court ruled that the original certificate – issued in 2010 – did not cite sufficient evidence from the record of proceedings.

In May 2012, Mississippi Power revealed that the Kemper facility would cost roughly $300 million more than it had originally estimated.

Southern District Commissioner Leonard Bentz, who counts as his constituents most of Mississippi Power’s 190,000 ratepayers, said in an interview Monday morning that regulators asked about a year ago for information that outlined when the company knew about the overrun, in response to it being revealed right after the PSC reaffirmed the project’s certificate.

Day, Bentz said, ordered that the information be withheld.

“My investigation revealed about a week ago that there was information not being given to us under the direction of Ed Day,” Bentz said. Bentz said regulators received the requested overrun information last week. He added that his office will continue to investigate the matter.

“We’re not done,” he said. “This is an absolutely ridiculous way of doing business. Corporations sometimes hide behind trying to protect the shareholders. If this is what that is, they live in a different society than what’s right. We were not fed and given the proper information. What does that do to the credibility of Mississippi Power moving forward?

“This is a culture that has kind of somewhat become acceptable in the corporate world, to put a spin on everything,” Bentz continued. “Talk straight and give me the truth. A spin is a lie to me. We are not done. We are going to protect the ratepayers. Ed Day’s departure is a direct result of us as regulators doing our jobs and protecting the ratepayers.”

Bentz said Southern Co. CEO Thomas Fanning “has done everything he said he would do” since becoming involved in the matter. “He deserves a lot of credit.”

The Kemper County coal plant is scheduled to begin production in May 2014. Mississippi Power last month revised the project’s cost estimate upward, bumping it to just over $3 billion. Per the terms of a settlement with the Mississippi Public Service Commission, the utility can charge ratepayers only for the first $2.4 billion in construction costs. Lawmakers approved in the session that ended in April up to $1 billion in bonding authority that would cover cost overruns. The bond falls outside PSC jurisdiction.

“They told us they could build this plant for $2.4 billion, and that’s what we expect them to do,” Bentz said.

Mississippi Power Co.’s Kemper County coal plant will cost $3.42 billion to build, the utility announced Tuesday afternoon.

That’s just under $600 million more than the $2.88 billion figure that has been the maximum estimate for several months. In a press release, CEO Ed Day said the utility will not seek to recover the additional costs from ratepayers.

Doing so would have been difficult. A recent settlement that allowed Mississippi Power to ask for cost recovery stipulated that the plant’s rate base – or what costs the utility could recover from its 190,000 ratepayers – be limited to $2.4 billion. The settlement was reached after Mississippi Public Service commissioners denied last summer a cost recovery request pending the outcome of litigation that has circled the facility since before construction started.

“While we are disappointed that costs have increased, we believe we have done the right thing by remaining accountable to our customers,” Day said in the company press release.

The Sierra Club, which opposes the plant, still has litigation active against it. A Hattiesburg resident has also challenged the Baseload Act, the 2008 law that allows utilities to recover constructions costs associated with new facilities as they are being built. The Mississippi Supreme Court heard oral argument related to the Baseload challenge earlier this year, but has not yet ruled.

The palnt is scheduled to begin commercial operation in May 2014.

Mississippi Public Service commissioners voted 2-1 Tuesday to approve a multi-year rate plan for Mississippi Power Co.’s Kemper County coal plant.

Terms of the plan call for the utility to receive $99 million in construction-work-in-progress funds for the rest of 2013. That will create a rate increase between 12 and 13 percent for residential customers who use 1,000 kilowatt-hours per month, starting in April. The average residential customer uses about 1,100 kw/h per month, according to PSC figures. Power bills will rise by a little less than $20 per month, according to utility estimates.

In 2014, rates will increase by another 3 percent, bringing the total rate increase associated with CWiP to 15 percent. When Mississippi Power issues bonds to cover costs exceeding $2.4 billion – company CFO Moses Feagin said Monday that would likely happen in late 2014 – rates will jump again. The cumulative rate impact over the life of the seven-year plan and the bond issuance is expected to peak at 22 percent. Those calculations do not include fuel adjustment costs, which could raise or lower rates, depending on the price of fuel.

Mississippi Power, during a hearing that lasted most of Monday afternoon, had asked for more revenue, but Southern District Commissioner Leonard Bentz said the $99 million figure was appropriate because “we’re in the middle of people’s budget years. I felt that would be the best amount.”

The multi-year rate plan and the bond issuance were part of a settlement between the PSC and the utility that ended litigation brought when regulators denied last summer a 13 percent rate increase for the project. Gov. Phil Bryant signed last week two pieces of legislation that codified the settlement.

The vote on the rate plan came after a public comment hearing that lasted the bulk of Monday morning.  Of the two dozen or so people who spoke, seven were in favor of the project.

One was David Carr, the mayor of Newton, which sits just southwest of the Kemper County site.

“Mississippi Power is our No. 1 economic booster,” Carr said. “They would not have started this plant if they did not think it was in the best interests of customers.”

Most of the objectors had pointed remarks for Bentz and Central District Commissioner Lynn Posey, who has routinely voted for the project. Northern District Commissioner Brandon Presley has been the lone dissenting vote.

Commenters used a variety of terms to describe Bentz and Posey’s support of the project, suggesting they were subservient to “corporate puppet-masters” and calling the rate increases “corporate fascism.”

After the public comment portion of the hearing, Bentz retaliated.

“It’s very easy to sit back and make accusations that are untrue,” he said to the audience in the PSC’s hearing room. Bentz said a lot of the problems arose from “misinformation” being spread by the media and special interest groups on both sides of the issue.

One of the groups Bentz singled out was the Sierra Club, which has opposed the plant from its inception, calling it expensive and unnecessary.

Louie Miller, executive director of the environmental group’s Mississippi chapter, called the PSC’s approval of the rate plan “shameful” and said it would place an additional burden on Mississippi Power ratepayers who are already struggling financially.

Mississippi Power spokesperson Cindy Duvall called Tuesday’s vote “a huge step forward.”

“The sooner we can get cost recovery for our facility, the less overall cost impact for our customers,” she said. We’re going to go and review the order in its entirety and we’ll determine next steps from there.”

The Mississippi Supreme Court asked Thursday afternoon for additional briefs related to a Hattiesburg resident’s constitutional challenge to the Baseload Act.

The ruling comes after a Jan. 28 hearing in which Thomas Blanton’s attorney told seven of the court’s justices that the Act – which was passed in 2008 and allows utilities to charge customers for generation facilities as they are being built – is unconstitutional because it violates the Constitution’s 14th Amendment, which prevents confiscatory taking of property without due process.

Mississippi Power attorneys argued in the same hearing that the law allows for utilities to increase rates for used and useful services, and the facilities the Act is designed to pay for are the benefit customers receive.

The hearing was the result of a rate dispute between the PSC and Mississippi Power related to the Kemper coal plant. The two entities settled that less than a week before the hearing. In Thursday’s order, the high court accepted the settlement and dismissed that case.

The court said the briefs it ordered will have to address five issues:

1. Whether Blanton’s challenge to the Baseload Act is moot.
2. Whether his challenge is ripe for the court to consider
3. Whether the Baseload Act provides for an unconstitutional tax, as Blanton’s lawyer alleged Jan. 28.
4. Whether the Baseload Act is otherwise unconstitutional
5. Whether Blanton was accorded due process

Attorneys for Blanton, Mississippi Power Co. and the Mississippi Public Service Commission have 20 days from Feb. 12 to submit their briefs.

The Mississippi House of Representatives passed Friday morning legislation that would allow Mississippi Power to issue bonds, up to $1 billion, to cover costs over $2.4 billion for the Kemper County coal plant. Representatives also approved a bill that would give the Mississippi Public Service Commission authority to set a multi-year rate recovery plan for the plant once it becomes operational.

The vote on the bond bill was 90-26 after about an hour of discussion. The multi-year rate recovery plan bill passed 100-17 with no discussion. Both were held on a motion to reconsider, a procedural move that usually serves only to temporarily delay legislation’s forward movement.

Both bills were in response to a settlement reached last month between the utility and the PSC that lowered what the company could include in the project’s rate base from $2.88 billion to $2.4 billion. The bonds would cover anything over the cap.

Rep. Sherra Lane, D-Waynesboro, offered several amendments to the bond bill that would have prohibited Mississippi Power from collecting any costs incurred before the passage of the legislation, limited what the company could place into the bonds and changed the procedural mechanisms the bond requests would meet at the PSC. She said any decision about cost overruns should lie with the PSC, not on lawmakers.

“This settlement put the $1 billion fee on the Legislature. If the Public Service Commission wants to do that, they have the power to do that.”

The amendments failed. “The more things the company is willing to put into (the rate recovery bonds), the less they can earn on a rate of return,” House Public Utilities Committee Chairman Charles Jim Beckett, R-Bruce, said in opposing the amendment. “The company doesn’t earn a rate of return on the bonds. Issuing the bonds will cost ratepayers less than including these costs in the rate base.”

Rep. Kevin Horan, D-Grenada, offered an amendment that would have limited to $500,000 attorneys’ fees related to issuing the bonds. It passed.

“This bill is fundamentally unfair to every member of the Legislature,” Horan said, echoing Lane’s assertion that the PSC should grapple with whether to allow cost overruns, not lawmakers. “This is a shame.”

Mississippi Power spokesperson Cindy Duvall said in a statement that Friday’s vote “takes us one step closer to saving Mississippi Power customers $1 billion or more.”

The coal plant is scheduled to begin commercial operation in May 2014.

Four 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.

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.

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 14^th 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.

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.

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.