With rare exceptions, session that just wrapped unkind to tax credits

May 4th, 2012 No comments

Each session, Secretary of State Delbert Hosemann submits a bundle of legislative proposals that seek to reform one way or another the state’s business laws.

The session that ended Thursday was no exception. Hosemann had some success — bills that would do everything from change the valuation process for public improvement districts to creating a single entity to govern registered agents were signed by Gov. Phil Bryant – but what didn’t pass is probably more notable.

Every single piece of legislation Hosemann proposed that offered a tax credit that was not already on the books failed. Perished bills would have offered tax credits to businesses either relocating their headquarters here or expanding existing headquarters; they would have offered a 7 percent credit to businesses that enter into a written research agreement with a Mississippi university; and they would have offered businesses the option of passing through a job-creation tax credit rarely used by start-ups to employees.

Each died in the Senate, which is important to note. All session, it was known around the Capitol that any kind of tax credits would have a hard time in the upper chamber. One very large exception to that was the passage of the inventory tax rebate system, which will phase out the unpopular tax over the next five years. Groups like the Mississippi Manufacturers Association had pushed for the phase-out for what seemed like forever.

Moving forward, tax credits might meet equal resistance in the House, based on what Appropriations Chairman Herb Frierson, R-Poplarville, told the Stennis Capitol Press Corps April 23.

Frierson said lawmakers will have to make themselves “reign in” their instinct to pass every business-related tax credit in future sessions.  The state’s budget, which still hasn’t fully recovered from the worst of times in 2008 and 2009 and will have enormous holes to fill with the loss of various sources of federal money, demands that happen, he added.

“There’s going to be a great debate over this,” Frierson said. He was quick to point out that no reasonable person could oppose a tax credit if it was proven on the front end that it would eventually create the kind of economic development that could replace the lost revenue.

The vetting process for those kinds of things, though, will only get more rigorous.

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.

Trade organization: U.S. craft beer exports soared in 2011

April 27th, 2012 No comments

Numbers from the Boulder, Colo.-based Brewers Association show that American craft beer exports nearly doubled from 2010 to 2011.

Last year, craft beer makers in the U.S. exported  more than 110,000 barrels, up 86 percent from 2010.

Exports have gone up all nine years the BA has collected data.

That’s important to Mississippi, what with our new raised alcohol-by-weight law taking effect July 1. (Legislation Gov. Phil Bryant signed in early April will raise the cap from 5 percent ABW to 8 percent ABW.) The state’s lone existing brewery, Lazy Magnolia in Hancock County, told the Mississippi Business Journal last year an 8 percent ABW law would bump their revenues an estimated 25 percent annually.

And in the Jackson area, the folks at Lucky Town Brewery have just completed gathering seed money to begin brewing their beer on a small scale with the hopes of eventually opening a full-blown brewery. The hope is that microbreweries will begin to take hold in some of the state’s more touristy areas — the Coast, the Delta and the college towns.

This is a good example of a small business-driven market that has a lot of growing left to do. Mississippi seems to have jumped into the game in the nick of time.

For the full report from the BA, click here.

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.

Quarles out of Supreme Court race

April 18th, 2012 No comments

Starkville attorney Lydia Quarles has dropped out of the race to replace George Carlson on the Mississippi Supreme Court.

Quarles, who is also a senior policy analyst with Mississippi State’s Stennis Institute of Government, filed withdrawal papers with Secretary of State Delbert Hosemann’s office April 4, according to records there.

Quarles’ withdrawal leaves Batesville lawyer Flip Phillips and Oxford lawyer Josiah Coleman as the two remaining candidates. I have a message in to Quarles at her office. If and when she returns it, I’ll post what she says.

Categories: Mississippi Supreme Court Tags:

Court strikes Pascagoula school revenue-distribution law

April 12th, 2012 No comments

In a decision split a couple ways, the Mississippi Supreme Court has struck down a law that requires the city of Pascagoula to distribute tax revenue collected from liquified natural gas terminals and crude oil refineries to all school districts within Jackson County.

Chevron has an oil refinery in Pascagoula, and Gulf LNG has a terminal there.

The city had sued to prevent the all-inclusive distribution shortly after the law was passed in 2007, essentially saying that ad valorem tax revenue collected within the Pascagoula School District should benefit that district alone.

Justice Ann Lamar, writing for the majority, said the law the Legislature passed did not meet the constitutional mandate that a school district’s taxes be collected to maintain “its schools.”

The high court remanded the case back to Jackson County Chancery court. It’s a fairly complicated opinion, with partial concurrences and dissents. Instead of trying to explain it all, I’ll link to it. View the entire thing here.

Obviously, though, this is a big victory for the City of Pascagoula and its school district.

Highway funds bill dies while tax credit measures live on, for now

April 11th, 2012 No comments

Catching up on a few things …

House Bill 791, which would have for all intents and purposes precluded state Highway 9 north of Blue Springs from ever having extensive improvements made to it, did not survive the deadline for committees to report bills that originated in the opposite chamber. Its life officially ended April 3.

Gary Chandler, head of Corinth’s Alliance, who opposed the bill along with officials from Tishomingo and Prentiss counties, said he hopes the issue is dead for the session.

“You never say never,” he said in an interview Friday. “We are monitoring the situation. This was awfully damaging to our efforts to make 9 north a supplier route for Toyota.” There remains the possibility that the bill could be revived as an amendment to another bill that deals with the same section of law.

Also dying was one of Secretary of State Delbert Hosemann’s business law proposals that would have allowed for a “pass-through” from employers to employees of a tax credit normally reserved for creating new jobs. Sharing that fate was another of Hosemann’s proposals to offer a 7 percent tax credit to companies who enter into a technology-based agreement with any of Mississippi’s research universities.

Two of Hosemann’s proposals remain alive, each of them a tax credit of some kind. One is a 50 percent tax credit for companies who relocate their headquarters here; another is a 50 percent tax credit for companies already headquartered here that choose to expand. Each sits in the Senate Finance Committee and faces an April 17 deadline to pass the Senate. Otherwise, they’ll die, too.

Bryant signs beer ABW bill (Updated)

April 9th, 2012 No comments

Gov. Phil Bryant has signed Senate Bill 2878, which raises the alcohol content in beer from 5 percent to 8 percent alcohol by weight.

According to the Legislature’s website, Bryant signed the bill April 5, which was last Thursday. Monday was the day Bryant had to either sign it or veto it before it automatically became law.

On July 1, when the law takes effect, Mississippi’s beer options will grow. Raise Your Pints and all the lawmakers — especially Rep. David Baria, D-Bay St. Louis, Sen. John Horhn, D-Jackson, and Rep Hank Zuber, R-Ocean Springs — deserve a massive amount of credit for being persistent and pushing this issue as one that had to do with economic development and tourism, and not alcohol.

UPDATE: Raise Your Pints president Butch Bailey, as you might imagine is having a pretty good Monday.

“We’re thrilled,” he said. “And, we’re thankful that Gov. Bryant recognizes that this will help our small businesses and it will promote the production and sale of Mississippi-made products.”

Bailey said his organization is planning a couple celebratory events. One is tonight in Hattiesburg at the Keg and Barrel. There will also be one in Jackson, either tonight or tomorrow.

Best I can tell, Bryant signed the bill late Thursday. Because lawmakers and Capitol clerks weren’t around Friday because of the Easter holiday, the signed bill didn’t get filed until this morning. That explains the delay between the listed signing date and it not appearing on the legislative website until Monday morning.