Some regulators want changes to 2008 Baseload Act that helped hatch Kemper
Two of the three members of the Mississippi Public Service Commission agree that changes need to be made to a 2008 law that opened the door for Mississippi Power to build the Kemper Project.
The paradoxically named Mississippi Public Utility Rate Mitigation and Reduction Act, which was signed into law by then-Gov. Haley Barbour, allowed Mississippi's two investor-owned utilities — Mississippi Power and Entergy — to charge customers before new power plants were finished.
Senate Bill 2793 was aimed at both of the state's utilities. Mississippi Power would use the Base Load Act to help the Southern Company subsidiary build the clean coal power plant known as Kemper. Costs ballooned on Kemper to $7.5 billion as the company was never able to get it fully operational.
The new law also would've helped Entergy, which had planned to add another nuclear generation unit to its Grand Gulf facility near Port Gibson. This project was later cancelled.
Passage of SB 2793, also known as the Base Load Act, set the stage for Mississippi Power to get an 18 percent rate increase — 15 percent in 2013 and 3 percent in 2014 — approved by the Public Service Commission before Kemper came online.
When asked if the law should be repealed, Mississippi PSC Chairman and Northern District Commissioner Brandon Presley said unambiguously yes. He also said Mississippi's law had a key component that wasn't a part of similar laws in other states.
"The Base Load Act was simply a tool out there that could be taken, or not, by the Commission," Presley said. "We're not bound, like other states, and this is one of the key things we lobbied for in 2008 to make sure that was the case that it was an option and not a mandate."
Central District Commissioner Cecil Brown said he really didn't have an opinion about it. Brown, when he was in the Mississippi House before being elected to the PSC, voted for the measure.
"There were states around the country adopting the Base Load Act and it seemed to be working okay," Brown said. "It didn't work well here. Certainly the Commission should be very careful authorizing use of the Base Load Act. The Base Load Act didn't cause the problem with Kemper. What happened was the company made a mistake in design, the company made a mistake in funding and kept making mistake after mistake after mistake."
Southern District Commissioner Sam Britton said that there are parts of it that should be removed, including the one that could possibly force ratepayers to pay for a plant that would never become operational, barring a decision by the Commission. He said a review of the law needs to happen and that not all of it was bad for ratepayers.
Mississippi Power has written off more than $6.4 billion in costs on Kemper, which will be utilized as a natural gas plant instead of being powered by synthesis gas made from lignite coal mined on site.
The validity of the Base Load Act was challenged by Hattiesburg businessman Thomas Blanton in a 2014 lawsuit that ended with a 2015 state Supreme Court decision that forced the utility to refund more than $281 million to its customers in 23 south Mississippi counties. While the court didn't overturn the law, it also said that Mississippi Power had "exceeded its authority granted by the act."