JACKSON, Miss. (AP) — Gov. Phil Bryant signed two bills into law Tuesday, codifying a settlement between the Public Service Commission and Mississippi Power Co. over the company's Kemper County power plant.
Mississippi Power, a unit of Atlanta-based Southern Co., filed for a 7-year-rate plan as contemplated under one of the laws less than two hours after Bryant approved the measures. The other law that Bryant approved allows Mississippi Power to sell up to $1 billion in bonds to pay Kemper costs over $2.4 billion.
Tuesday was the last day for Bryant to act before the bills became law without his signature. He repeated his support for the plant in an interview with The Associated Press. Bryant has previously said the plant, with its plan to gasify soft coal mined nearby, is an important element of an energy policy for the state
"I think we've gotten a strong show of support from the Legislature, but the most important point to me is carrying through with our responsibility to the people who work there," Bryant said. "Hopefully, this will keep the cost of energy low in the future."
The company says the measures will cut the projected rate increase for the plant from 33 percent to 21 percent or less.
A residential customer who uses 1,000 kilowatt hours of electricity per month would see their bill rise $25 to $27 a month starting in April, the company says. But Mississippi Power homes used an average of 1,186 kwh each month in 2011 according to federal statistics. Higher usage means the monthly increase could run $29 to $32 a month for households, if commissioners approve the increase. They could act as early as March 5 to approve the surcharge to start paying interest on debt that Mississippi Power has already accumulated.
"We applaud Governor Bryant for his leadership and for recognizing the importance of this legislation to our customers," Mississippi Power President Ed Day said in a statement. "The bills will save Mississippi Power customers more than $1 billion over the life of the facility."
But opponents of the plant say it will lead to crushing rate increases for Mississippi Power's 186,000 customers scattered from Meridian to the Gulf Coast.
"I think the most important thing is to think about the harm to the local economy," said Richard Sun, a Jackson investor and business advisor who's spoken out against the plant. "It's like money that's going overseas. It might as well be going to Saudi Arabia."
The settlement says Mississippi Power can earn profit on $2.4 billion in plant costs as well as $377 million in lignite mine and pipeline costs. Customers would repay up to $1 billion in bonds issued by a company subsidiary to cover plant costs above $2.4 billion, but Mississippi Power would earn no profit.
The Sierra Club, which is the main opponent of the plant, has derided that ability to issue bonds as a "blank check" for more cost overruns. Kemper County's cost has risen from $2.4 billion to $2.88 billion, and could rise more by the time it goes into commercial operation, projected to be in April 2014.
The Sierra Club also objects to a provision of the bond law that says anyone except Mississippi Power who wants to appeal a PSC decision on debt has to post enough money before an appeal to cover the amount that the PSC finds bonding will save customers. Mississippi Power says the plan will save customers $1 billion.
The Sierra Club has said it's mulling a legal challenge to the laws.
The 7-year rate plan projects that the base power charge, separated from what the company will collect for the debt surcharge and fuel costs, will fall 2 percent in January 14. The company claimed in a statement Tuesday that will lower the overall rate impact on customers to an average of 20 percent.
The rate plan locks in charges without the chance to change them if Kemper's operating costs turn out to be higher or lower than projected. The company projects steadily falling operating costs, which could portend a rate cut after 2020. If it costs more to operate Kemper, the PSC could allow Mississippi Power to collect additional money after 2020. If it costs less, rate decreases could be greater.
House Bill 1134: http://bit.ly/Z0t10p
House Bill 894: http://bit.ly/YKQ5fU
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