Jackson Free Press

JACKSON, Miss. (AP) — A state commission voted Tuesday to allow Mississippi Power Co. to start billing customers to pay for the Kemper County power plant it's building, but not as much as the company wanted.

The Public Service Commission voted 2-1 to approve a 15 percent increase this year, followed by a 3 percent increase in 2014. It would allow the unit of Atlanta-based Southern Co. to start paying off debt related to what it calls Plant Ratcliffe even before it begins operations, scheduled for next year.

Southern District Commissioner Leonard Bentz and Central District Commissioner Lynn Posey, both Republicans, voted for the increase. Northern District Commissioner Brandon Presley, a Democrat, voted against it.

Mississippi Power had requested a 21 percent rate increase so it could start paying off more financing costs now.

Earlier Tuesday, the PSC approved other changes that reduced Mississippi Power rates by 2.7 percent, making the net increase 12.3 percent.

Commission staffers say a residential customer who uses 1,000 kilowatt hours per month will pay $16.50 to $17.50 more, after decreases are considered. The average Mississippi Power customer uses more electricity than 1,000 kwh per month.

Company spokeswoman Cindy Duvall said Mississippi Power is "comfortable" that it can operate with a 15 percent increase. The commission order said that it adds up to $99 million for the remainder of 2013. More money would have aided the company's credit rating, which was battered after the PSC rejected a 2012 attempt to collect money during construction.

"We think this is a huge step forward for the customers and our facility because the sooner we begin cost recovery on the facility, the lower the cost impact on our customers," Duvall said.

Louie Miller, the state director for the Sierra Club, said Bentz and Posey were ignoring how a rate increase would harm consumers.

"Once again, the two commissioners obviously care more about the welfare of Mississippi Power than they care about the welfare of their constituents," Miller said.

Bentz said he thought the rate increase balanced keeping rates low with ensuring the state has a reliable energy supply. He says burning lignite protects against future increases in natural gas prices.

"We wake up figuring out how we can keep people's rates low," Bentz said. "We don't think up how we can raise people's rates."

Opponents pointed out Tuesday that it would be much cheaper for the company to build a conventional natural gas plant.

"We are getting royally shafted," said Marie Walden of Ocean Springs.

The 3 percent rate increase for 2014 would allow Mississippi Power to collect $156 million a year to pay for Kemper. The commission will consider a plan later this year to lock in Kemper-related rates at that level through 2020. The seven-year plan is one feature of a settlement of Mississippi Power's lawsuit against the PSC that followed the 2012 rejection.

Under another part settlement, Mississippi Power is likely in 2014 to seek an additional increase of at least 4 percent over 20 years to pay off a bond issue to cover plant costs above $2.4 billion. Chief Financial Officer Moses Feagin repeated the company's position Tuesday that it plans to borrow $700 to $800 million through bonds, covering $388 million in construction costs, plus additional interest charges on money it's already borrowed.

The settlement divides the money that Mississippi Power will recoup into two pots. It would earn a profit on $2.4 billion in plant costs, as well as a projected $377 million it will spend on a lignite mine and a carbon dioxide pipeline. It wouldn't profit from bonded costs, only collecting enough to repay the bonds.

Though the bond issue was contemplated in a lawsuit settlement that Bentz voted for, he opposes it. "The stockholders of Southern Co. ought to pick up the tab over $2.4 billion," Bentz told reporters Tuesday.

Bentz and the company say otherwise, but Miller said Tuesday's action and the projected rate increase for the bond issue won't be enough to pay for the plant. "It's still the tip of the iceberg on what these rates are going to be once it's done," he said.

Mississippi Power has 186,000 customers in 23 counties from Meridian to the Gulf Coast.