Mississippi Power today filed a fourth Kemper-related rate option with the Mississippi Public Service Commission that would allow for cost recovery of portions of the Kemper project already operating and providing reliable electric service to customers.
In the wake of the PSC’s July 7 action to stop the collection of the Kemper-related rates, the company is asking the Commission to take immediate action to implement interim rates that reflect the new “In-Service Asset” option. The company is asking for a replacement of the 18-percent rate increase the Commission repealed based on the recent ruling by the Mississippi Supreme Court.
“As we have throughout this process, Mississippi Power remains committed to delivering the lowest-cost solution for the customers we are so privileged to serve,” said Mississippi Power President and CEO Ed Holland. “This filing will not affect the Kemper-related refunds customers are expected to receive per Commission requirement, and will not increase customer rates from their current level.”
The interim rates would be subject to refund, until the PSC can review the option, hold hearings and make a final decision on the rate plan. The new option outlines cost recovery of currently operating assets including the Kemper project’s combined cycle unit, electric transmission lines, water lines and storage pond, natural gas pipeline and regulatory assets. If approved, the interim rates would be effective with the first billing cycle of August which begins July 20, 2015.
The decision to make the new filing was based on several factors including the recent decisions by the PSC, the Mississippi Supreme Court, the decision by SMEPA to withdraw from the project, and lack of PSC approval of a permanent Kemper rate plan.
“Unfortunately, recent legal and regulatory decisions involving Kemper have greatly impacted and weakened the credit quality of Mississippi Power,” Holland said. “The longer we are without permanent rate recovery for the project, the more it jeopardizes the company’s ability to access the funds needed for continued business operations and for completion of Kemper. This new option will provide us with the minimum financial support we need to begin the process to improve the company’s financial strength.”
Mississippi Power, a subsidiary of Southern Company (NYSE: SO), produces safe, reliable and environmentally responsible energy for more than 186,000 customers in 23 southeast Mississippi counties. Mississippi Power has been recognized throughout the utility industry for excellence in storm restoration and recovery efforts and as a leader in safety. Visit our websites at mississippipower.com and mississippipowernews.com, like us on Facebook, follow us on Twitter, LinkedIn, Google+ and YouTube.
Cautionary Note Regarding Forward-Looking Statements
Certain information contained in this release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning Mississippi Power’s filing with the Mississippi PSC regarding retail base rates relating to the recovery of costs for the Kemper IGCC and Mississippi Power’s future financial condition. 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 fiscal 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: state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to the Mississippi PSC’s review of Mississippi Power’s filing regarding retail base rates; 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; the 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, 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, 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 (“PSC”)); the 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 integrated coal gasification combined cycle project in Kemper County, Mississippi (the “Kemper IGCC”), including actions relating to proposed securitization, Mississippi PSC approval of a rate recovery plan, 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; the ultimate impact of the termination of the proposed sale of an interest in the Kemper IGCC to South Mississippi Electric Power Association; Mississippi PSC review of the prudence of Kemper IGCC costs; the ultimate impact of the 2015 decision of the Mississippi Supreme Court, the Mississippi PSC’s order implementing such decision and any further legal or regulatory proceedings regarding any settlement agreement between Mississippi Power and the Mississippi PSC, or the March 2013 rate order regarding retail rate increases; 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.