Kelley Williams, Chair Bigger Pie Forum, February 22, 2015
Jimmy Durante was a popular comedian in the heyday of radio and the early days of TV. He was known for his self deprecating wit, big nose (the Schnoz), and this line when amateurs tried to horn in on his act: “Everybody wants ta get inta da act!”
Now everybody wants in on the technology development act. Including four members of the Mississippi Supreme Court. They dissented to the court’s recent majority decision earlier this month that rescinded and ordered a refund of the 18% rate increase the Public Service Commission approved for Mississippi Power’s experimental Kemper County Lignite Plant.
Dissent. One reason they dissented was the need to support: “…legitimate governmental interests including the development and use of new technologies to expand energy production within the State.” Look out, Mississippi Development Authority. Look out, Governor. Four Supreme Court justices want to horn in on your new technology act.
These justices were not bothered by Mississippi Power’s failure to comply with the Base Load Act under which it has been charging customers construction interest on Kemper before the plant’s completion and operation. The Act was passed in 2008. It is said to be the most heavily lobbied piece of legislation in the state’s history. Hey, give utilities credit. They can lobby even if they can’t build plants. Nobody horns in on their lobbying act.
Logic? The logic behind the Base Load Act is that it saves customers money. The savings is the interest that the utilities would otherwise pay on construction financing and bill to customers later. Say what? Utilities borrow at 5%. Poor customers go to a pay day loan company and borrow at 25% to keep the lights on. They pay 20% more in advance – for something they won’t ever get if the plant doesn’t work or if they move or die in the meantime. Some savings. Grab your wallet when you hear: “I’m from the Legislature or Mississippi Power Company or the Supreme Court. And I’m here to save you money under the Base Load Act.”
But wait. The Act’s logic is even more perverted. It’s supposed to help build base load generating plants. Base load plants are supposed to be plants that customers can depend on. They are supposed to be reliable and economical. They are supposed to be the backbone of the grid. But you think: “Kemper is an experiment. It may never work. It costs six times more than a workable natural gas plant with more output. Its power output is piddling if it does work. It’s too uncertain to rely on. How can it be the backbone of the grid? How does it qualify as a base load plant?”
Good questions. The Public Service Commission should have asked these questions, but didn’t. They could have been raised before the Supreme Court, but weren’t. The court did answer a question about the Base Load Act’s constitutionally. The court said it’s not a tax and therefore not unconstitutional. But that doesn’t mean it’s logical or fair. It’s not fair for customers. But it is good for utilities and their cronies. They are the best lobbyists. So they get the most favorable laws. Hence, the sweetheart Base Load Act. But Mississippi Power and the PSC messed it up. They didn’t follow the Act. Like the gang that couldn’t shoot straight.
A mess. The Supreme Court majority said the PSC failed to comply with the Act (did not determine if Kemper is prudent as required by Act) and exceeded its authority. It said the PSC deprived customers of due process rights when it didn’t make the company tell them about the multibillion dollar plant, its certification and rate proceedings, and resulting rate increases before imposing them. Furthermore, the PSC improperly granted the company request to keep the record of the dealings secret. The PSC also cut a secret “Settlement Agreement” with the company. The court said such ex parte (back room) deals violate PSC statutes.
So the court rescinded and ordered the rate increases to be refunded, tossed the agreement, and remanded the case for the PSC to put regulatory Humpty Dumpty together again. And it said don’t keep secrets. Tell customers what you are doing before you do it this time and from now on. Meantime, the company is still trying to put plant Humpty Dumpty together the first time.
Rehearing. The company wants the court to reconsider. But not to hurry. It asked for a filing delay which the court granted immediately. Its CEO says it may take a year for the court to re-decide it really meant to order refunds and for the company to send checks. Customers pay the higher rates meantime. The company keeps customers’ money ($283 million at the end of February) meantime. Interest on this at pay day loan rates is $200,000 per day meantime. The company may hope to flip one vote meantime. Why not try? Things look pretty bleak now.
Things could get bleaker. How? What if more shady deals, company favors, and customer abuses come to light? What if USM, the community colleges, hospitals, and poultry companies who must buy from Mississippi Power now realize that rate increases are not a done deal and not inevitable. What if they speak up and ask: “Is it fair to make us raise tuition and patients’ bills and prices for everyone to pay for Kemper’s mistakes?” What if the Base Load Act were repealed? What if utilities were on the hook for their mistakes? What if the new commission after the November election decides the $5+ billion experimental gasifier is not prudent? And makes the company pay for it. That’s bleaker.
The Schnoz said: “Be awful nice to ’em goin’ up, because you’re gonna meet ’em all comin’ down.” Mississippi Power may be meeting some customers it hasn’t been awful nice to.