Court orders Mississippi Power to refund Kemper-related rate increase

By Steve Wilson | Mississippi Watchdog

The Mississippi Supreme Court has struck down a Mississippi Power rate increase enacted in 2013 to cover the construction of Kemper Project integrated gasification plant and has told the company to provide refunds for more than 186,000 ratepayers.

In an opinion Thursday, the court ruled the company could not use construction work-in-progress money – $125 million in 2013 and $156 million earned from a 15 percent rate increase in 2013 and a 3 percent increase in 2014 – because the Mississippi Public Service Commission hasn’t ruled on the prudency of the plant’s cost.

The justices said the PSC must order Mississippi Power to refund the rate increases and provide notice to MPC ratepayers when rate increases are on the agenda.

It was a stunning victory for Hattiesburg business owner Thomas Blanton, who sued Mississippi Power in 2012 over the company’s Kemper-related rate increases under the Baseload Act signed by then-Gov. Haley Barbour in 2008. The Baseload Act allowed utilities to recover costs for “prudently incurred pre-construction, construction, operating and related costs.”

In the majority opinion, presiding justice Mike Randolph, wrote, “The record is devoid
of a ‘finding of prudency’ or that MPC’s expenditures were ‘prudently incurred,’ and for
good reason – no prudency hearings have been held. In the absence of prudency hearings, we fail to discern how a rate can be arbitrarily declared as ‘fair, just, and reasonable.'”

Company spokesman Bill Synder told Mississippi Watchdog “Mississippi Power is currently reviewing today’s ruling by the Mississippi Supreme Court to determine the company’s options,” and a further statement is forthcoming.

Costs on the oft-delayed plant increased another $45 million in the last quarter of 2014, bringing the cost of the Kemper Project to $6.172 billion. The plant is scheduled to open in March 2016, two years behind schedule. Mississippi Power’s parent company, the Southern Company, took a $868 million loss on Kemper in 2014.   READ MORE HERE

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