After further review of the Mississippi Supreme Court ruling Feb. 12, Mississippi Power will seek a rehearing later this month.
As part of the ruling, the Court concluded that the Mississippi Public Service Commission should have determined the prudency of the Kemper County energy facility costs before approving rate recovery through a March 2013 rate order. The Court instructed the PSC to enter an order refunding monies attributable to the rate increases under that rate order.
“We believe collecting the costs while constructing the Kemper County energy facility helps Mississippi families realize the long-term benefits of this innovative project at the lowest possible cost,” Mississippi Power president and CEO Ed Holland said.
Approving the 18 percent increase in the 2013 rate plan mitigated what otherwise would have been a base rate increase of at least 35 percent, Holland added.
Under the 2013 rate order, Mississippi Power has collected approximately $257 million through Dec. 31, 2014. Of that, approximately $32 million has been recognized in income related directly to the assets at the plant that have already been placed in service, such as the mine, transmission lines and other rate base items. Any required refunds also would include carrying costs accrued since the rate order went into effect.
It is up to the Commission to to determine how and when any required refunds would happen. Once a mandate is issued, Mississippi Power will fully comply with all conditions required by law and Commission ruling.
“Mississippi Power remains committed to acting in the best interests of its customers,” Holland said, adding that the Court’s decision could force Mississippians to pay “significantly more” to realize the same long-term benefits of the plant.
Holland will discuss the Supreme Court ruling on WLOX News This Week which airs Sunday at 8:30 a.m. on WLOX ABC.
Cautionary Note Regarding Forward-Looking Statements
Certain information contained in this communication is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning the projected cost and schedule for the completion of construction and start-up of the integrated coal gasification combined cycle project in Kemper County, Mississippi (the “Kemper IGCC”) and potential changes to customer rates. Mississippi Power cautions that there are certain factors that could cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Mississippi Power; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Mississippi Power’s Annual Report on Form 10-K for the year ended December 31, 2014 and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: changes in tax and other laws and regulations to which Mississippi Power is subject as well as changes in application of existing laws and regulations; ability to control costs and avoid cost overruns during the development and construction of facilities, which include the development and construction of generating facilities with designs that have not been finalized or previously constructed, including changes in labor costs and productivity factors, adverse weather conditions, shortages and inconsistent quality of equipment, materials, and labor, contractor or supplier delay, non-performance under construction or other agreements, operational readiness, including specialized operator training and required site safety programs, unforeseen engineering or design problems, delays associated with start-up activities (including major equipment failure and system integration), and/or operational performance (including additional costs to satisfy any operational parameters ultimately adopted by the Mississippi Public Service Commission (the “Mississippi PSC”)); ability to construct facilities in accordance with the requirements of permits and licenses, to satisfy any environmental performance standards, and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction; advances in technology; actions related to cost recovery for the Kemper IGCC, including actions relating to proposed securitization, Mississippi PSC approval of a rate recovery plan, including the ability to complete the proposed sale of an interest in the Kemper IGCC to South Mississippi Electric Power Association, the ability to utilize bonus depreciation, which currently requires that assets be placed in service in 2015, and satisfaction of requirements to utilize investment tax credits and grants; Mississippi PSC review of the prudence of Kemper IGCC costs; the ultimate outcome and impact of any legal or regulatory proceedings regarding any settlement agreement between Mississippi Power and the Mississippi PSC, the March 2013 rate order regarding retail rate increases, or the State of Mississippi legislation designed to enhance the Mississippi PSC’s authority to facilitate development and construction of baseload generation in the State of Mississippi; and the ability of counterparties of Mississippi Power to make payments as and when due and to perform as required. Mississippi Power expressly disclaims any obligation to update any forward-looking information.