Posted on February 17, 2015 by Opinionin
The little guy has won a slobber-knocker in Mississippi. Whether it’s good policy or not remains to be seen, but five members of the Mississippi Supreme Court say the state Public Service Commission ran roughshod over customers – and Mississippi Power Company has to give back lots of money.
“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.”
So wrote Justice Michael Randolph in the majority opinion for the court, which divided 5-4 on the decision made public last week. Not a lot of wiggle room. Here’s the background.
• Private utilities may be monopolies only because that works best for the public. A company is granted exclusive right to sell electricity, water or sewer services in an area in order to promote efficiency. In Mississippi, three commissioners are elected to oversee utilities. They have two jobs: (1) Assure the utility remains reasonably profitable so the people will continue to receive essential services, and (2) Block any attempt to overcharge or gouge.
• What had been the most expensive utility construction project in the state was Grand Gulf Nuclear Station. It took about a dozen years before the plant sold its first watt of electricity in 1985.
• A large part of Grand Gulf’s debt was interest on the billions borrowed for construction. Mississippi did not authorize “front-loading” capital outlays. Plant cost could only be recovered once it was in service.
• In 2005, Grand Gulf got a federal permit to add another generating unit. It has since shelved that idea, but in 2008, the Legislature passed the Base Load Act, which allowed major utilities to front-load some capital costs. The PSC and its statutorily powerful staff were to told to manage this.
• In 2010, Mississippi Power and South Mississippi Electric Power Association, which serve large areas of lower Mississippi, started the Kemper County Project, an advanced lignite-burning coal gasification plant that was to cost $2.2 billion and is now expected to cost $6.1 billion by the time it can start selling “juice” next year.
• It made good accounting sense to go to the PSC for permission to require customers to start paying for the plant, which was done. A pay-some-now approach would keep customers from having to pay-all-later as Grand Gulf customers have been doing for 30 years. But it didn’t sell well to the man on the street, including Thomas A. Blanton, who asserted his rights as a customer were ignored. And he won.
The two members of the PSC who approved 15 percent and 3 percent rate increases for Mississippi power in 2013 and 2014 did not follow the law, the court said. (Northern District Commissioner Brandon Presley objected to what his colleagues were doing, but was outvoted.)
Be clear: The Supreme Court did not find the Base Load Act unconstitutional or anything. The majority just said the PSC was too cozy in accommodating the utility while it collected about $278 million in “advances” from customers. The PSC had failed in more than one way to make a record showing the increases they approved were “prudent.” The Legislature said the commissioners needed to be open and above board about everything. They weren’t.