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PSC approves multi-year rate plan for Kemper coal plant

March 5th, 2013 No comments

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.”

 

Sierra Club: Poll shows customer opposition to rate hikes via Kemper coal plant

January 30th, 2013 4 comments

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.

Miss. Supreme Court to hear Kemper arguments Jan. 28

January 21st, 2013 No comments

The Mississippi Supreme Court will hear oral argument Jan. 28 related to the Sierra Club’s ongoing legal opposition to Mississippi Power Co.’s Kemper County coal plant.

The hearing, which will start at 1:30, will center on this question: Why should the (MSSC) not reverse the Public Service Commission for its failure to hold the rate case in abeyance until the case of Sierra Club v. Mississippi Public Service Commission currently on appeal in Harrison County Chancery Court is finally decided?

Attorneys for MPC will have six minutes at the beginning to respond to the question. Attorneys for the PSC will have six minutes to do the same immediately afterward.

Attorneys for Thomas Blanton, a Hattiesburg resident who has challenged the constitutionality of the Baseload Act, will then have 20 minutes to make their case against the 2008 legislation that authorized utility companies to pass construction costs on to ratepayers before the generation facilities they were building were operational.

The hearing will conclude with MPC and PSC splitting 20 minutes to respond to Blanton.

The Sierra Club has fought the coal plant from its inception, calling it an expensive and unnecessary environmental hazard. Mississippi Power has said it’s the best way to ensure long-term availability of economical power for its nearly 200,000 ratepayers.

Monitors: Kemper project cost could come in under cap

January 18th, 2013 5 comments

The latest report from the independent monitors the Mississippi Public Service Commission hired to evaluate the Kemper county coal plant shows the project may come in under the $2.88 billion cap.

In its December report, filed with commissioners in early January, URS says Mississippi Power estimates the plant will cost $2.84 billion to build, about $44 million less than the cap the PSC imposed on the project. The filing says the plant is between 70 and 75 percent complete, and that it will, according to MPC, begin commercial operation in May 2014, the original target date.

That lines up with URS’ November report, which estimated there was a 72 percent chance the project would cost $2.88 billion or less.

In its December filing, URS does express concern about different pieces of the construction having to be reworked, due to noncompliance by contractors or design flaws. Monitors also said it was possible the conversion to union labor could increase costs. Union leadership told the Mississippi Business Journal late last year that there would be no significant increase in construction costs due to union workers being hired. The Central Mississippi Building and Construction Trades Council and the Mississippi chapter of the AFL-CIO struck a deal with Southern Co., MPC’s parent, to provide workers for the project.

The cost and timeline estimates in URS’ latest report are different than what was included in the last report filed by monitors hired by the PSC’s Public Utilities Staff. Burns and Roe said in its Nov. 26 filing that there was a 90 percent chance the coal plant’s cost would fall somewhere between $3 billion and $3.15 billion, which has been its estimate for several months. Burns and Roe added that 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.

Mississippi Power spokesperson Jeff Shepard told the MBJ late last year that the company anticipates the plant’s cost coming in at $2.88 billion or under, and that it will start producing electricity on a commercial scale in May 2014.

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 ruled for the project late last year, after the Sierra Club had challenged the validity of the second certificate commissioners had issued it. Lawyers for the environmental advocacy group have already appealed that decision 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.

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.

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.

 

Groups to appeal oil and gas rules for Mississippi Sound

September 25th, 2012 No comments

Mississippi Development Authority executive director Brent Christensen denied Monday an appeal by two environmental groups to reconsider rules governing oil and gas leases, drilling and exploration in the Mississippi Sound.

The Sierra Club and Gulf Restoration Network had asked the agency to rethink its decision to allow those activities in the area south of the Mississippi Barrier Islands. Under the rules, they would be allowed within one mile seaward of the islands.

The two groups announced Tuesday afternoon plans to appeal Christensen’s decision. A press release did not specify in what court that appeal would take place. The Sierra Club and GRN initially appealed the rules to Hinds County Chancery Court, but the MDA was successful in convincing the chancellor that the first appeal had to go through the agency.

GRN Mississippi organizer Raleigh Hoke said the MDA “has completely ignored the negative impacts the drilling and production could have on coastal tourism and other industries.”

The release said the groups are appealing on behalf of the 12 Miles South Coalition, an organization made up of Coast business and community leadership whose goal is to limit drilling and related activities no closer than 12 nautical miles south of the islands. The Coalition says drilling closer would harm the area’s tourism economy.