JACKSON, Miss. (AP) — The state Supreme Court ruled Tuesday Mississippi Power Co. can’t raise its rates while appealing the denial of a price increase by the Public Service Commission.
The court’s ruling was 8-0 against Mississippi Power. Chief Justice Bill Waller Jr. didn’t vote.
The justices also said they would expedite Mississippi Power’s appeal, as required by the state Constitution. In that appeal, the company is seeking a rate increase of more than $55 million. That would cost the average residential customer about $20 more per month.
The higher rates would repay money that the unit of Atlanta-based Southern Co. has borrowed to build a $2.8 billion coal-fired power plant in Kemper County.
“While we certainly respect the actions of the state Supreme Court, we view their decision on our motion to grant interim rates as a loss for our customers that will result in increased costs related to the Kemper plant,” spokesman Jeff Shepard said in a statement. “We anxiously await the court’s decision on our appeal. Our goal, as always, is to do what is in the best interest of our customers while maintaining reliable and safe electric service.”
The PSC voted 3-0 to deny the request, saying it didn’t want customers’ bills to rise while the Sierra Club is still challenging Mississippi Power’s authority to build the power plant.
Southern District Commissioner Leonard Bentz and Northern District Commissioner Brandon Presley said Tuesday that they supported the court’s ruling.
“I think it’s a victory for Mississippi Power’s customers,” said Presley, a Democrat, who has been a consistent opponent of the project.
Bentz is a Republican who voted to approve the plant.
Mississippi Power argues that the PSC’s denial of the rate increase contradicts its previous pledges to allow the utility to collect from its 185,000 customers while it’s building the plant.
Lawyers for the attorney general’s office rebutted claims that the company and its customers are losing a one-time-only opportunity to cut interest costs. Mississippi Power claims that raising rates now would save $500 million to $600 million in interest costs over the life of the plant.
The state has said the PSC is not required to grant the company’s request under the 2008 law that allowed rate increases to pay debt during construction.
Mississippi Power is under pressure from credit rating agencies because of the debt it is piling up to build the plant. The price tag of the plant has risen by $400 million in recent months, nearing the cap imposed by the Public Service Commission.
Fitch Ratings cut Mississippi Power’s rating by a notch, citing its inability to win a rate increase, and warned of more cuts. Moody’s Investor’s Service and Standard & Poor’s, the other largest credit raters, have warned of downgrades but have yet to act.
Mississippi Power, which serves parts of 24 southeastern counties from Meridian to the Gulf Coast, borrows money under its own name even though it’s owned by the much larger Southern Co.
Arguing against allowing the rate increase during the appeal, the state said ratings downgrades do not constitute undue hardship, saying the downgrades stem in part from the cost overruns and the continued litigation.
“They’re in a big bind,” said Louie Miller, the Sierra Club’s state director. “They’ve already been downgraded once and there are a lot of people watching this.”
The Sierra Club opposes the project because it says burning coal would contribute to global warming, even though the plant plans to capture carbon dioxide and pipe it to oilfields to be injected into the ground.
Miller said the case is set for a Sept. 14 trial in Harrison County Chancery Court. Appeals are likely and could run past the plant’s scheduled completion in early 2014.
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Follow Jeff Amy on Twitter: (at)jeffamy
