Jackson Free Press

Mississippi Power Company is denying the Mississippi Sierra Club's Miller's interpretation of the PSC decision against hiking electricity bills to pay for pre-construction costs of a planned $1.8 billion experimental lignite coal plant in Kemper County. The power company called Miller's characterization of the decision "misleading."

"Mississippi Power requested that the Commission make several determinations earlier than they had previously scheduled. The Commission determined that it would stay on the present schedule and consider all of the requests of Mississippi Power on its previously issued schedule. No costs or other matters were denied," the company wrote in a statement Sunday.

Mississippi Sierra Club spokesman Louie Miller is pleased that the proposed Kemper County IGCC Lignite Coal plant will not get what he calls "a blank check" from the ratepayers, as the Mississippi Power Company wanted.

"MPCO was vying heavily for the ratepayers to pick up the tab for $60 plus million in pre-planning costs the company has incurred to date on the proposed project, which has not even received approval by the MPSC," Miller wrote in a June 19 letter.

Mississippi Power Company attorney Ben Stone wrote a June 10 letter to the Public Service Commission arguing that the PSC's two-year deliberation over the construction of the plant "does not include a schedule for the review and determination of prudence by the commission of the company's already incurred and reported generation screening and evaluation costs."

Stone pointed out that "additional preconstruction costs must be incurred" by Mississippi Power "in order to maintain the proposed construction schedule" for the plant. And that without a prudent review prior to the currently scheduled certification date of May 1, 2010, the company "believes that the total costs at risk will rise to a level that will require MPCC to slow or stop spending on the project."

Mississippi Power asked that the PSC add to its ongoing review over the necessity of the plant a "review and determination of prudence" of the company's preconstruction costs incurred through March 31, 2009, to be completed by Dec. 31, 2009.

The Public Service Commission, consisting of two Democrats and a Republican, voted unanimously to refuse the request for an approval of preconstruction costs, arguing that the PSC must first "evaluate the company's decisions leading to these costs"—the purpose of the PSC's two-year deliberations—which includes multiple hearings and investigations.

"To separate the pre-March 31 costs from this full context would be arbitrary because the prudence of those costs depends on the prudence of the entire effort," the commission wrote.

The commission also unanimously agreed that the company's references to its belief about a "level" of costs at "risk" are insufficiently defined to constitute an evidentiary basis for commission decision.

"Requests for a commission decision must have the support of on-the-record facts, through documents or through witnesses under oath," the commission responded in its letter.

Miller described the commission's decision as a strong diversion from the type of decisions the commission would have reached under earlier commissions.

"We … applaud the action of the MPSC commissioners" Miller wrote. "The MPSC has once again proven that there is a new sheriff in town, and it is not business as usual. The commissioners take very seriously their role in protecting the public's pocketbook."

So far, the Mississippi Public Service Commission has been slow to accommodate a new state law allowing power companies to charge customers for future power plant construction.

Legislators approved a law allowing power companies to pre-charge customers for planned power plants—the Baseload Act of 2008—after a contentious battle between power industry lobbyists and representatives of senior citizens with fixed incomes, who argue seniors can't afford rate increases to fund new plants.

The industry, even though it is regulated by the state, donates heavily to legislators' campaigns.

The Baseload Act of 2008 passed both the House and Senate, but not without AARP and Mississippi Sierra Club advocates pushing legislators to frame the law to put final approval of Baseload act requests from power companies before commissioners.