Reuters: Regulatory News: UPDATE 1-Southern's Mississippi unit in pact over Kemper rates

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UPDATE 1-Southern's Mississippi unit in pact over Kemper rates Jan 24th 2013, 20:54 Thu Jan 24, 2013 3:54pm EST * Utility to refile request for higher rates tied to Kemper * Settlement calls for future royalty payments to customers Jan 24 (Reuters) - The Mississippi Public Service Commission on Thursday approved a settlement with Southern Co's Mississippi utility over ongoing litigation that has prevented the company from charging customers for costs tied to a $3 billion coal-gasification power plant under construction in Kemper County. Mississippi Power Co is building a 582-megawatt, integrated gasification combined-cycle (IGCC) plant scheduled to begin operating in May 2014. Thursday's settlement will allow Mississippi Power Co to file a new plan within 30 days to recover up to $172 million in revenue from customers this year. It calls for the commission to act on the request within 50 days of the request. The settlement also sets up a framework to establish cost-recovery for the Kemper plant over the first seven years of its operation. In return, customers of Mississippi Power will receive a credit for 10 percent of any royalties Southern derives from the sale of the gasification technology being used at Kemper. In a special meeting called only a day earlier, commissioners voted 2-1 to approve the Mississippi Power settlement after holding an executive session which was closed to the public. The utility is Southern Co's smallest with just 185,000 customers, so the rate impact of the costly plant is of concern to consumer groups in the state. Under the Mississippi Baseload Act, the utility planned to begin charging customers for certain costs related to Kemper while the plant was under construction, but its efforts had been blocked by the state's highest court. Thursday's special meeting precedes scheduled oral arguments at the supreme court on Monday related not only to the commission rate action but to the question of the constitutionality of the state law Mississippi Power relied on to ask to raise customer rates for power plants ahead of commercial operation. The settlement keeps intact the commission's $2.4 billion approved cost for the plant which is running over a $2.88 billion "hard" cap. Additional costs related to the plant, including $240 million for a nearby mine to supply lignite to the plant and a $140 million pipeline to transport carbon dioxide emissions from the plant, will push the total Kemper price tag above $3 billion. In the settlement, the commission acknowledged "a high likelihood" that the Kemper County IGCC certificate will withstand the ongoing court appeal and that uncertainty over the rate issue has hurt the utility's credit rating. Link this Share this Digg this Email Reprints

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