Despite Speculation, Funding for Kemper Plant Likely

As the current membership of the Mississippi Public Service Commission nears a decision on the initial rate hike requested by Mississippi Power Company for its Kemper power plant, speculation runs rampant on what the new membership will do on next year’s full funding request.

Speculation spiked last week when Moody’s downgraded the company’s credit rating and, prematurely, cited the election results as the reason.

“The election of two new commissioners increases regulatory uncertainty and heightens the risk that the utility will not obtain full and timely rate recovery,” Michael Haggarty, an associate managing director at Moody’s, said in a statement reported by the Associated Press.

Newly elected Jackson Democrat Cecil Brown joins incumbent Brandon Presley giving Democrats a two to one majority. Newly elected Sam Britton of Laurel will be the lone Republican.

The Associated Press story said: “Brown’s election makes it likely that returning commissioner Brandon Presley, a Nettleton Democrat, will become the commission’s president. Presley has been a consistent critic of the Kemper plant.”

Despite the speculation, all is not doom and gloom for Mississippi Power Company.

Last week, the Public Utilities Staff, which operates independently from the commission, announced it reached an agreement with the company to cut its pending rate increase request from 18% to 15%. “Staff recommendations are highly influential,” outgoing Commissioner Steve Renfroe told the Associated Press.

And, Commissioner Presley seems to have toned down his utter opposition to the plant.

He told The Meridian Star in late October that the plant has become a reality. “To stick our heads in the sand and make it go away is not going to happen,” Presley said. “The commission has got to deal with it.”

“I’m not going to jeopardize electric service to the coast and our huge economic engine to say, ‘I told you so.’

“My view now is customers of Mississippi Power Company deserve protections,” said Presley, a view also expressed by Brown and Britton. “They need to know what they are going to pay, and only pay for things that they are going to get a benefit from.”

“I felt we, as the PSC, have gotten better answers from the company since Ed Holland has been the CEO than we had in the past,” he added. “There has been more transparency. We’ve been able to get better answers in a more timely fashion. We’ve gotten a clearer picture of where things are going.”

The compromise with the utilities staff along with Presley’s comments suggests a way will be found to provide adequate funding for the plant after it comes online next spring.

Meanwhile, the Kemper plant continues to progress toward full operation. It has been producing power using natural gas August 2014 (the basis for its initial rate request). In late October, it successfully tested the first of its two coal gasification units, or gasifiers, that will turn locally mined lignite coal into syngas.

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