Miss. Power, regulators reach agreement on Kemper plant

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Mississippi Power

A photo, taken in September, 2016, shows Mississippi Power Co.'s Kemper County plant, located about 20 miles north of Meridian.

State utility regulators have reached an agreement with Mississippi Power Co. and other involved parties over what costs the company can recover from the fallout of its $7.5 billion-plus Kemper County energy facility project, officials said.

Virden Jones, executive director of the Mississippi Public Utilities Staff, said the staff has agreed to an updated version of an agreement Mississippi Power Co. and other parties submitted with the Mississippi Public Service Commission last week.

A sticking point was a $250 million difference between what regulators thought Mississippi Power should recover and what the utility believed it should be able to charge customers.

The U.S. Department of Energy provided $407 million in financing for the Kemper plant.

The final stipulation document filed with the commission Friday says that staff, Mississippi Power, Chevron Products Co., The Chemours Co. and others conclude the unit of Atlanta-based Southern Co. should collect an estimated $112.6 million annually – or around $900.8 million total – in rates over a period of eight years starting Jan. 2018  – for its in-service assets and liabilities.

They also agreed on annual budgeted operations and maintenance costs of $25.5 million, which could be reconsidered annually.

The recovery amount is less than what is listed in the original stipulation document filed with the commission Nov. 22. Mississippi Power proposed that it collect an estimated $117.78 million annually – or around $942 million total – in rates over a period of eight years starting Jan. 2018  – for its in-service assets and liabilities.

In previous filings, Mississippi Power said the agreement amounts to less than they wanted to recover for the project. Mississippi Power proposed a lower plant average rate base value last week at $907 million compared to an August filing when Mississippi Power suggested the value of the plant was worth almost $1.1 billion.

Through Sept. 30, the company had already written off about $6 billion in project costs.

Mississippi Today reached out to Mississippi Power for comment Friday afternoon, but did not receive an immediate reply.

The agreement also complies with the commission’s request in July that the company propose a settlement removing responsibility from ratepayers for the plant’s lignite coal technology and related assets; that did not have a rate increase to Mississippi Power Company customers, potentially lowering the rates of residential customers; and that revised the plant’s operating license to only allow for operation of a natural gas facility at the Kemper County project’s location, the company said in the filing.

The Mississippi Public Service Commission is next in line to sign off on the document, which Jones expected to happen soon.

‘We’re close to the end,” Jones said. “What will probably happen is they will issue this order today, and probably establish a 45-day comment period. Then they’ll take up whether to approve or deny the stipulation in January.”

The utilities staff now anticipates that the commission will cancel next week’s hearing and provide a new schedule for when the matter will be heard.

That multi-day hearing would have kicked off Dec. 4 and involved testimony and evidence for and against the Kemper plant as part of the settlement process that began in June.

On Tuesday, the commission published a filing on the hearing process stating it did not intend to set the final recovery rates customers would end up paying by the time the hearing process concluded around January, as expected.

Rates would only be determined by a settlement between the parties, the commission says. It declared the testimony and evidence gathered during the hearing process was to be “used as tools for the parties to review each other’s respective settlement positions.”

While the commission’s approval of a finalized settlement would solidify those recovery rates for Mississippi Power Co.’s customers, Jones said the process is not over yet.

He said the commission’s Tuesday filing “spurred both the company and the staff to take another look at it (Mississippi Power’s most recent settlement proposal.)”

He expects the settlement to be appealed by outside intervenors and critics of the plant who have followed the project closely.

“It’s gone on for long time,” Jones said. “I think we’re all ready to move on to other things. We feel like we got the best deal that we could that would balance the interest of the ratepayers and the company … I’m sure there will be critics, but also people who think we did a good job, so we’ll just let those opinions fall where they may.”