Mississippi utility inks deal on troubled $7.5B power plant

Regulators have reached a settlement with Mississippi Power Co. on how much customers should pay for a troubled $7.5 billion power plant once touted as a model for the future of coal.

Posted: Dec 1, 2017 7:01 PM

JACKSON, Miss. (AP) — Regulators have reached a settlement with Mississippi Power Co. on how much customers should pay for a troubled $7.5 billion power plant once touted as a model for the future of coal. The unit of Atlanta-based Southern Co. is agreeing to lower the price tag on its Kemper County power plant by $85 million, its second round of concessions in the last two weeks, after shareholders earlier absorbed $6 billion in losses.

Virden Jones, executive director of the state Public Utilities Staff, said the final parties signed the deal Friday. It was hammered out at the last minute before rate hearings were scheduled to begin Monday. Those hearings will now be postponed to allow people to comment on the plan, with the Public Service Commission likely to decide on the new plan in January.

"I think it's going to save everyone a lot of time and money and give the company a chance to move on," said Commissioner Cecil Brown, a Democrat representing the central third of the state.

The move means residential customers could soon pay about $1 less per month than they're currently paying for the part of the power plant that burns natural gas.

The $85 million cut in the plant's price tag, to $853 million, will push down the amount of money the company collects from retail customers next year to $112.6 million.

"This agreement represents significant compromise from all parties involved, but is an important step to settle all costs remaining on the Kemper project," Mississippi Power President Anthony Wilson said in a statement.

Customers will eventually see their payments for Kemper fall even more, as Mississippi Power had already agreed late last month in a deal with Chevron Corp. and other large customers to pay off some costs over eight years, instead of stretching them out over 20. Cutting that payoff period is worth tens of millions of dollars to customers over time. The company also agreed in that earlier deal to forgo more than $50 million in other costs.

The agreement will likely cap a project that one of the nation's largest utilities launched with the much-hyped promise of burning coal more cleanly while capturing climate-warming carbon dioxide. But Kemper's price ballooned from $2.9 billion originally. The project was dogged by delays and court challenges, and the company never made the first-of-its-kind technology run reliably. Ultimately, political support for Kemper failed, after elections produced a three-member Mississippi Public Service Commission which united in May to tell the company to pull the plug on coal gasification.

Instead, Kemper will keep making electricity by burning natural gas and its 189,000 customers from Meridian to the Gulf Coast aren't supposed to pay for the gasifier's costs.

Mississippi Power had once warned of a total rate increase of up to 40 percent, and customers have been paying 15 percent higher rates since 2015 for the part of the plant that burns natural gas, plus associated infrastructure. Friday's settlement, if approved, would mean a slight monthly decrease in those rates.

"It's a direct result of commission leadership," Public Service Commission Chairman Brandon Presley, a Democrat representing the northern third of the state. "A year ago, I don't think anyone would have talked about stable rates or a rate decrease when you're mentioning Kemper."

The announcement comes after the commission said Tuesday that for legal reasons it would delay a final decision for months more if the company couldn't reach a deal with the staff, a separate agency which advises commissioners. With debt rating agencies calling for certainty, that further delay ratcheted up the pressure on Mississippi Power.

Mississippi Power had faced opponents who wanted it to get even less than it will collect, estimating a built-from-scratch natural-gas plant would cost less than $600 million.

They note that Mississippi Power's rates are still high compared to neighboring utilities. Last year, Mississippi Power charged residential customers 50 percent more for electricity than Entergy Mississippi, the state's other privately-owned electric supplier, according to U.S. Energy Department data.

Also Friday, Southern said the U.S. Securities and Exchange Commission has ended its securities fraud investigation into whether the utility misled investors about progress at Kemper and won't recommend any enforcement action. The company still faces lawsuits from shareholders, a former employee and a former business partner over claims that Southern lied about problems at the plant, concealing delays and overruns.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 514171

Reported Deaths: 10285
CountyCasesDeaths
Harrison34920557
DeSoto33270432
Hinds32652642
Jackson24876391
Rankin22516404
Lee16366245
Madison14932283
Jones14129247
Forrest13785260
Lauderdale12279324
Lowndes11314193
Lamar10663140
Pearl River9720244
Lafayette8855143
Hancock7839132
Washington7553169
Oktibbeha7216138
Monroe7036179
Pontotoc7003109
Warren6872178
Panola6768135
Neshoba6732210
Marshall6686142
Bolivar6451151
Union640898
Pike5933156
Alcorn5887107
Lincoln5533136
George510380
Prentiss505385
Tippah492783
Itawamba4857107
Scott478199
Adams4771125
Tate4765117
Leflore4736144
Copiah457095
Yazoo456692
Simpson4554117
Wayne443172
Covington434695
Sunflower4315106
Marion4279112
Coahoma4238109
Leake414090
Newton395782
Tishomingo384894
Grenada3777109
Stone365766
Jasper340866
Attala338790
Winston317892
Chickasaw316167
Clay312578
Clarke301295
Calhoun285949
Holmes271889
Smith269452
Yalobusha244247
Tallahatchie232053
Greene224749
Walthall221866
Lawrence219141
Perry213456
Amite209857
Webster206248
Noxubee188743
Montgomery181857
Carroll174941
Jefferson Davis173843
Tunica163339
Benton153139
Kemper145041
Choctaw136727
Claiborne134439
Humphreys132139
Franklin126029
Quitman107628
Wilkinson106139
Jefferson96934
Sharkey65321
Issaquena1957
Unassigned00

Alabama Coronavirus Cases

Cases: 845761

Reported Deaths: 16119
CountyCasesDeaths
Jefferson1161862004
Mobile742411381
Madison53315732
Shelby38351369
Baldwin38104589
Tuscaloosa36052641
Montgomery34492781
Lee25590263
Calhoun22598518
Morgan22459406
Etowah20026518
Marshall18790316
Houston17741425
St. Clair16904358
Limestone16153219
Cullman16067303
Elmore15912294
Lauderdale14991306
Talladega14209299
DeKalb12985269
Walker12067380
Blount10729192
Autauga10526157
Jackson10170194
Coffee9425192
Colbert9341208
Dale9024192
Tallapoosa7273201
Russell708865
Chilton7042170
Escambia6956143
Covington6943195
Franklin6338108
Chambers5785142
Marion5413130
Dallas5295209
Pike5123109
Clarke484886
Lawrence4831129
Winston4780110
Geneva4643136
Bibb434594
Barbour369980
Butler3439100
Marengo342393
Monroe337466
Randolph334867
Pickens333988
Fayette330085
Henry320766
Hale318489
Cherokee318363
Crenshaw260777
Washington256952
Cleburne254560
Lamar251953
Clay251169
Macon245064
Conecuh193162
Coosa185547
Lowndes178268
Wilcox177638
Bullock152545
Perry141840
Sumter139241
Greene130245
Choctaw93228
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