Ellington

Mississippi Power Co. is taking its battle to raise customers' electric bills to the Mississippi State Supreme Court.

On July 19, the utility filed a lawsuit asking justices to overturn the Mississippi Public Service Commission's recent refusal to let MPC raise rates to pay down interest on the 586-megawatt Integrated Gasification Combined Cycle plant it is now building in eastern Mississippi.

"The commission's arbitrary denial of MPC's Kemper rate increase violates the commission's previous commitments to grant financing cost recovery," MPC states in its complaint, which asks for a temporary rate increase.

In late June, the three-member PSC rejected the power company's request to charge customers $20 per month on average to pay $58.6 million in construction-related debt on its $2.76 billion plant.

Despite two of the PSC's three members having been staunch backers of the Kemper County plant, those commissioners, Lynn Posey of the Central District and Leonard Bentz of the Southern District, joined Northern District Commissioner Brandon Presley in denying MPC's request.

The commission's consensus was that they should hold off on letting MPC raise peoples' bills until the courts resolve pending litigation between the utility and the Sierra Club of Mississippi.

Louie Miller, the Sierra Club's state director, calls MPC's latest lawsuit a desperate move by a desperate company that's made a poor business decision in sticking with costly and experimental IGCC technology that burns low-energy-value lignite coal.

Sierra Club attorney Robert Wiygul asserts that Kemper has been a bad deal for Mississippi since it broke ground was broken when natural gas prices were trending downward. He notes that dozens other utility's are switching to cleaner, cheaper equally abundant natural gas and away from coal.

In May, Omaha, Neb.-based Tenaska Inc., jettisoned plans for a planned IGCC plant in Taylorville, Illinois, and announced it would pursue a natural gas-fired plant instead.

Miller said there's nothing stopping Mississippi Power from doing the same thing.

"The Public Service Commission needs to call a special meeting and revoke the (construction) certificate," Miller said. "It's beyond reasonable what they're trying to do here, which is salvage their stockholders and sacrifice ratepayers

Furthermore, the PSC's hike denial prompted global credit-rating firm Fitch Ratings to downgrade Mississippi Power's credit rating to "A-" from "A" and change the company's rating outlook from stable to negative on July 3.

Fitch cited the plant's riskiness in its assessment: "Kemper IGCC is a relatively large and complex project for a utility of Mississippi Power's size, and the delay in recovery of financing costs has already caused significant stress," states a Fitch press release on the credit downgrade. "Fitch is also concerned with the escalation in capital costs of the Kemper IGCC project."

Mississippi Power is approaching the $2.88 billion projected spending limit that could be passed on to ratepayers that the PSC set on the plant. The utility's shareholders would have to absorb anything the company spends above this so-called "hard cap."

Miller believes the mounting financial troubles portend doom for the Kemper County project.

"They're on a collision course in a number of ways," Miller said. "They need to pull the plug on this project."

This story has been updated.