Sierra Club says Kemper deal voids PSC approval

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JACKSON, Miss. (AP) — The Sierra Club has asked the Mississippi Supreme Court to order the Public Service Commission to again reconsider its approval of the $4.3 billion coal-fired power plant Mississippi Power Co. is building in Kemper County.

In legal papers filed Thursday, the environmental group says that a January settlement so changes the permission that the PSC gave Mississippi Power in 2012 that the utility regulator should be forced to look again at its analysis. Mississippi Power said it would respond in court, but had no immediate comment.

The unit of Atlanta-based Southern Co. announced last month that what it calls Plant Ratcliffe was another $540 million over budget. The company said that it expected Southern shareholders would absorb those costs. The parent company announced it would amend its financial reports to record some of the loss in the last three months of 2012 and the rest in this year's.

Mississippi Power confirmed Thursday that it no longer employs Tommy Anderson, the former vice president of generation development for the company. Mississippi Power spokeswoman Amoi Geter would not say whether Anderson, who was in charge of the Kemper construction project, was fired.

"It's been a long time coming on Tommy Anderson, and I think it was the right thing to do," said Public Service Commissioner Leonard Bentz, a Republican who represents the Southern District. "Obviously he was not able to deliver like he was supposed to."

Before the announcement of further overruns, the PSC and Mississippi Power agreed to a settlement in January, ending the company's challenge to the PSC's decision to deny it a rate increase to start paying for the plant before it began operation.

The Legislature, which generally governs PSC operations, approved two laws to ratify the settlement. One allows Mississippi Power to sell up to $1 billion in bonds to pay for Kemper construction and financing costs over $2.4 billion, though the company wouldn't earn a profit on that money. It would only collect from customers to repay the debt and interest. The other law allows the PSC to approve a seven-year rate plan for the plant, smoothing out rate increases. Subsequently, the PSC approved a 15 percent rate increase, to be followed by a 3 percent increase in 2014. The company also expects to raise rates another 2 percent to 4 percent later to pay off the bonds.

Sierra Club state director Louie Miller said that although the Legislature was involved, responsibility ultimately rests with the PSC.

The Supreme Court already overturned the first certificate issued to Mississippi Power on a Sierra Club challenge, saying the PSC didn't adequately explain reasons for raising a cost cap on the plant. The PSC quickly issued a second certificate, which the Sierra Club again challenged in Harrison County Chancery Court. The chancery judge ruled against the challenge, sparking a second appeal to the high court.

Amending that second appeal, Sierra Club attorney Robert Wiygul wrote that the laws changed the terms of the certificate to make them "directly contrary" to previous PSC decisions, which had included provisions saying the company could be penalized if the plant didn't work as planned.

The Public Service Commission must still agree that Mississippi Power has spent money prudently before costs can be passed to customers. Bentz said he intended to do everything he could to hold down costs at Kemper, but criticized the Sierra Club, saying that ratepayers ultimately pay for money that Mississippi Power spends on lawyers.

"You can rest assured that the commission will hold Mississippi Power Co. accountable," Bentz said. "The legal maneuvers by the Sierra Club are nothing but tactics that are costing the citizens of the state of Mississippi more money."

Geter noted that the PSC would have to approve "every dollar" that Mississippi Power would recover through regular rates and bonds.

The laws, though, force the PSC to approve the spending on a shortened timetable and make it extremely difficult for anyone but Mississippi Power to challenge regulators' decisions.

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