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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.

 

Gill remembered for rural advocacy, kind demeanor

October 19th, 2012 No comments

Among his many passions, there were two of Joel Gill’s that surfaced more often than the others – his love of Mississippi’s rural communities and his desire to help Mississippi cattlemen.

Gill, the Pickens mayor who ran as a Democrat for Congress in 2008 and for agriculture commissioner last year, was killed in a car wreck Thursday evening in Holmes County. Details of the wreck were not available from the Mississippi Highway Patrol Friday morning, but Jackson television station WAPT reported that Gill hit a tree on Highway 17.

Northern District Public Service Commissioner Brandon Presley said Gill was one of the few politicians running for an office that covered a large district (or in the case of ag commissioner, the entire state) who made it a point to visit as many rural communities as he could, and not concentrate on the larger voter clusters.

“One of the things that he always talked about was how small, little rural communities get forgotten about,” Presley said.

Presley said he ran into Gill last year at the volunteer fire department in Cardsville, a tiny spot on the map in Itawamba County. Gill was there asking for votes as part of his run against current ag commissioner Cindy Hyde-Smith, who ended up winning handily.

“You have to admire somebody who would take on running for a statewide office and just get in his vehicle and go out and ask for votes, knowing full well he was up against a wall of money and a wall of advertisements,” Presley said. “He believed doing that was just important as putting an advertisement on TV.

“And what a fine fellow,” Presley continued. “He was a man that was in it for all the right reasons. It wasn’t about Joel Gill, it was about the public. What a great credit for being staunch in his beliefs, but not being offensive about it. He was firm in what he believed was right, but he never tried to hurt anybody with it. Never shied away from being a Democrat, never shied away from being a rural advocate, but he was never in your face. All of us, Brandon Presley included, could learn from that. He was a gentle, kind, Christian man.”

Politics wasn’t all Gill did. He and his brother started running the family cattle business, Mississippi Order Buyers Inc., in the late 1970s. Gill served on the Mississippi Beef Council and was president of the Mississippi Livestock Markets Association.

One of his pet issues was the country of origin labeling law that requires retailers to provide county-of-origin labeling on fresh beef, pork and lamb.

“He worked long and hard on that,” said Sammy Blossom, executive director of the Mississippi Beef Council.

Blossom said Gill almost never missed a meeting of the Beef Council in his 20 years of service to the organization.

“He was so passionate about his beliefs and his philosophy,” Blossom said.

Gill is survived by his wife, two children and four grandchildren. Funeral arrangements had not been finalized Friday morning.

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.

PSC issues record fine against telemarketers

September 11th, 2012 No comments

The Mississippi Public Service Commission voted 3-0 Tuesday morning to levy $5.7 million in fines for four telemarketers for violating the state’s No Call Law.

It’s the largest fine since the law took effect in 2003.

Two companies and an individual, all based in Arizona, were hit with fines totaling $5.7 million. Press releases from Northern District Commissioner Brandon Presley and Southern District Commissioner Leonard Bentz said the telemarketers had been the target of nearly 400 complaints ranging from failing to register with the PSC to calling people on the No Call List to calling outside appointed times.

“I intend to collect this debt by any means possible, whether it is by fines, or by taking any assets,” Bentz said.

Said Presley: “We are serious about enforcing the Mississippi Do-Not-Call law and protecting the people of our state from unwanted telemarketing calls.”

To compare, in May the Commission fined a California man and his companies $945,000 for 189 violations of the No Call Law. Last month, a single violation cost a Nevada company $20,000.

 

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.

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.