JACKSON, Miss. (AP) — Lawmakers are advancing a proposal to let Mississippi Power Co. sell bonds to cover expenses above $2.4 billion at the Kemper County power plant the company is building.
They also want to allow the Mississippi Public Service Commission to approve a multi-year rate plan for the company and its 186,000 customers, to prevent a rate spike when the plant begins operation.
The House Public Utilities Committee and Senate Energy Committee each approved a pair of bills Wednesday aimed at supporting the settlement announced last week between Mississippi Power and the PSC. The bills now go to the full House and Senate for debate.
A key feature of the deal says the unit of Atlanta-based Southern Co. can only earn a profit on $2.4 billion in plant construction costs as well as an estimated $377 million for lignite mine and pipeline costs. The company would sell bonds for anything above $2.4 billion. Customers would repay the debt, but Mississippi Power would earn no profit, unlike in a traditional rate structure. The company currently expects the plant to cost $2.88 billion.
"This is one step further in the right direction for our customers, ensuring they pay the lowest possible amount for the Kemper County energy facility," spokeswoman Cindy Duvall said of the committee actions.
House Public Utilities Committee Chairman Jim Beckett, R-Bruce, told members that the bonds would lower customer costs by $1.5 billion over the decades-long life of the plant, and lower the expected rate increase by 6 percent.
Beckett said even though the bill allows for $1 billion in bonds, the company expects to borrow less.
"The only costs that can be put in it are things that the commission determines to be prudent," he said.
Senate Energy Committee Chairman Terry Burton, R-Newton, said he was first approached about the bills about three months ago, though the settlement was announced only last week.
Mississippi Power filed Friday for a 21 percent rate increase with the PSC, which the regulatory body is supposed to vote on within 80 days. The increase would cost the typical residential customer more than $20 a month starting in April, if commissioners approve.
The money would go to start paying off some of the $2 billion that Mississippi Power has already spent on building what it calls Plant Ratcliffe. A soft form of coal called lignite would be mined adjacent to the plant, converted into a gas and burned for energy, stripping out carbon dioxide and other hazardous chemicals. The plant has been burdened by cost overruns, and Mississippi Power has called in additional workers to try to keep construction on target for a 2014 opening date.
The company says it expects another 2 percent to 4 percent rate increase later.
Even if lawmakers pass the bills, there's still legal uncertainty around the bargain. Thomas Blanton, a Hattiesburg oilman and former PSC candidate, argued Monday before the state Supreme Court that the settlement should be thrown out and that it's unconstitutional for Mississippi Power to collect money before the plant begins running. Also, the Sierra Club is appealing the plant's license to the high court.
Louie Miller, the state director of the Sierra Club, said Wednesday that the environmental group is considering challenging Mississippi Power's proposed rate increase.
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