Legal & Regulatory

Regulator Orders Mississippi Power to Issue Kemper IGCC Rebates

Mississippi Power must rebate $281 million in funds collected since 2013 for rate increases related to the lignite-fired power plant under construction in Kemper County, the Mississippi Public Service Commission (MPSC) ordered on Tuesday. 

The state regulatory body also ordered the company and its parent company Southern Co. to stop collecting Kemper’s rate on customer bills beginning with the August billing cycle.

The order complies with the Mississippi Supreme Court’s February ruling, which found that the MPSC erred in granting plant owner Mississippi Power rate increases in 2013 and 2014, and ordered that the increases be refunded to the utility’s ratepayers.

The MPSC allowed Mississippi Power to recover $125 million in “construction work in progress” funds in 2013 and $156 million in 2014. Retail electricity rates increased 15% in 2013 and another 3% the following year.

“Mississippi Power is committed to working closely with the PSC to comply with its requirements and do what’s in the best interest of all our customers,” the company said in a statement on July 8.

According to recent investor briefing documents, Southern Co. expects the $6.22 billion project—the nation’s first carbon capture and storage coal-fired project—to come online in the first half of 2016.

The project lags two years behind schedule and has seen steep cost increases. It is unclear how the rebates will affect Mississippi Power’s bottom line.

This May, South Mississippi Electric, an electric cooperative that has been Mississippi Power’s long-time backer in the development of the Kemper energy facility, pulled out of the project, citing delays in project schedule and increased participation costs as reasons for its withdrawal. Mississippi Power repaid the cooperative $275 million plus interest on June 3.

The company is now looking at a new, potentially disruptive hurdle. Two contracts from enhanced oil recovery firms Denbury Onshore and Treetop Services LLC to purchase carbon dioxide from the plant’s gas stream may soon expire.

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)

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