Regulators respond to Mississippi Power proposal for deal on Kemper Project rates

September 26, 2017

The Mississippi Public Utilities Staff asked the Public Service Commission Friday to deny Mississippi Power's motion to cut it out of negotiations on the Kemper Project.


Last week, the utility told the PSC that its proposed agreement fulfilled the terms mandated by the commissioners and that the staff had no standing to propose a rate deal it advanced with the backing of several intervenors in the rate case.


One of the biggest differences in the two proposals is over the mitigation of regulatory fees. The staff wanted the fees to be liquidated through present rates charged to customers and then a reduction after five years. 


The staff said in its filing that Mississippi Power is asking customers to pay too much for the parts of Kemper in service (the electricity-generating turbines and other components).


It also said  the plant's gasifier trains — which convert lignite coal mined on site into a natural gas-like substance called synthesis gas while stripping away pollutants — will never meet the "used and useful" legal standard, which means the plant is in operation and generating power for customers.


The utility shut down startup work on the gasifiers in June after years of futile attempts to get the plant into commercial operation.


Since the plant will never be "used and useful," the staff says Mississippi Power's threat to pass on the $6.5 billion in gasifier costs to ratepayers is an empty threat.


Mississippi Power said it needs to maintain its present rates (which add up to $126 million annually) for the next 20 years. Those rates were approved in December 2015 by the outgoing commission.


Capital costs are the other holdup in negotiations, as the two sides are between $150 million and $250 million apart.


Hearings in the case could be pushed back, as the staff also asked the commission for later deadlines on testimony and data requests since some of its witnesses won't be available for questioning until later.


The first deadline was for testimony due by October 9, which the staff wants pushed back to October 30. Under the staff's request, the October 16 deadline for rebuttal testimony would be moved to November 6 and the October 23 cutoff for data requests would instead be on November 13.  





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