WILL MISSISSIPPI POWER RETAIL RATES NOW BE REDUCED 18%?

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The deadline has come and gone…What will happen to the rates?

By Charles Grayson | Bigger Pie Forum | June 2, 2014

The Mississippi Power Company’s (MPC) retail customers Kemper rate increases were approved by the Public Service Commission March 5, 2013.  The increases totaled 18%, 15% in 2013 and 3% in 2014, in a so-called “Mirror” CWIP increase.  According to a filing by MPC, 2013-UN-039 on March 22, 2013, the CWIP increases would end with the last billing cycle of April, 2014, by now.   The PSC Order anticipated that the Kemper Plant would become operational May, 2014 and that another, equal rate increase, the 7 Year Plan or Rate Mitigation Plan, would become effective.  As quoted from their document, “such that customers will not experience a rate change in May 2014.”

However, the 7 Year Plan was defined in an Agreement of January 24, 2013, between the Mississippi Public Utilities Staff (MPUS) and MPC to take place only with operation of the Plant.  (See below).  There is a problem.  The Plant is now scheduled to become operational only in mid 2015.  While MPC does plan to operate the electrical generating unit on natural gas beginning summer 2014, Plant has been consistently defined by PSC, the MPUS and MPC to mean some mined lignite processing, lignite gasification, clean up of the gases, separation and compression of 65% of the carbon dioxide as well as power generation.  What will operate this summer is a very small part of the Plant.

It is unclear under what authorization the 18% total rate increases of 2013-2014 continues after collection of the last billing of April 2014 (likely paid and collected in May, 2014).

From the Mississippi Power filing at PSC, 2013-UN-039 of March 22, 2013.  “Specifically, the Commission reduced the Company’s $172million Mirror CWIP annual revenue request to a maximum of $156 million to be staggered and applied as follows: a) beginning with the first billing cycle of April 2013 and continuing through the last billing cycle of  December 2013, the Company’s annualized Mirror CWIP retail revenue requirement shall be $125million; and b) beginning with the first billing cycle of January 2014 through April 2014, the Company’s annualized Mirror CWIP retail revenue requirement shall be escalated to $156 million. These revenue adjustments represent increases of 15% for 2013 and 3% for 2014.

The proposed modified 7-Year Plan will still be effective beginning in January 2014, but the rate level approved in the March 5* rate Order will be equal to the rate level required under the revised 7-Year Plan presented herein. Therefore, the rate level for 2014 will be the same under both the Mirror CWIP rates approved in Docket No. 2013-UN-014 and under the 7-Year Plan as supplemented and modified herein.2   Beginning with the first billing cycle of May 2014, the Company will no longer be collecting Mirror CWIP and the rates and revenue collection levels prescribed under the 7-Year Plan will continue, such that customers will not experience a rate change in May 2014.”

From the Settlement Agreement filed January 24, 2013 at PSC file 2013-UN-014.“a rate plan designed to govern cost recovery for Kemper Project during the first seven (7) years of operation of the Kemper Project. The proposed plan should be designed to mitigate and stabilize the up-front rate impacts to customers during the ramp up period for the Kemper Plant by locking” (underline added).

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