Jackson Free Press

JACKSON, Miss. (AP) — Mississippi Power Company has been ordered to refund its customers for a rate increase put into effect in 2013 to begin paying for Kemper County power plant it is building.

The Mississippi Supreme Court ordered the refund Thursday. In a 5-4 ruling, the Supreme Court said the state Public Service Commission erred in granting the increase.

In March 2013 the PSC approved an immediate 15 percent increase followed by a 3 percent increase in 2014. Atlanta-based Southern Company said it could start paying off debt related to the Kemper plant.

The PSC decision allowed Mississippi Power to collect $125 million for 2013, escalating to $156 million in 2014.

The Kemper project has been plagued with cost overruns. Earlier this month, Southern Co. said it will spend at least another $45 million to finish the power plant, pushing total costs to nearly $6.2 billion.

Opponents said the plant is an expensive mistake that customers shouldn't have to pay for. The plant would take soft lignite coal and turn it into a gas that would be burned to generate power. Along the way, the plant would extract carbon dioxide and other substances from the lignite, selling the byproducts.

Thomas Blanton, a Hattiesburg resident and former PSC candidate, had challenged the constitutionality of rate increases to Mississippi Power.

Presiding Justice Michael Randolph, writing for the court's majority, said the PSC failed to "balance the ratepayers' interests with those of the utility, as our law requires."

"An analysis of these proceedings leads to the inescapable conviction that the Commission failed to fulfill its duties and obligations pursuant to statutory directives and our existing law and that the overwhelming majority of 186,000 ratepayers was not accorded due process from the beginning," Randolph wrote in the decision.

Randolph said the PSC will order refunds paid to Mississippi Power ratepayers. He said the commission in the future will provide notice to the ratepayers in about hearings related to rate base, rates, rate of return and prudency.

Four other justices said state law allows utilities to collect from customers for new plants before they start producing electricity.

Presiding Justice Jess Dickinson, writing for the minority, said law "supports legitimate governmental interests, including the development and use of new technologies to expand energy production within the state."