Ellington

JACKSON, Miss. (AP) — Mississippi Power Co. said Tuesday it will accept a smaller rate increase for part of the $6.4 billion Kemper County power plant it's building.

The Public Utilities Staff announced it has reached an agreement with the company to cut the increase to 15 percent. For a residential customer who uses 1,000 kilowatt hours per month, rates would fall from $144 a month to about $138, according to preliminary calculations.

The Public Service Commission awarded the company an 18 percent emergency rate increase in August. Before then, a typical residential customer paid $121 a month.

The company also agreed that if the Public Service Commission approves the proposal, it will issue one-time bill credits to customers, of roughly $20, about 90 days after the rate change goes into effect.

That's on top of the $377 million the unit of Atlanta-based Southern Co. is already giving back to its 186,000 customers after the Mississippi Supreme Court voided a previous rate increase.

The commission is separate from the staff, and its three members could do something different. Staff recommendations are highly influential, though, said Southern District Commissioner Steve Renfroe of Moss Point.

Renfroe said he expected the commission to vote on a plan at its Dec. 3 meeting. He and Central District Commissioner Lynn Posey, a Union Church Republican, are leaving the commission at year's end.

The announcement came at a hearing on whether the company has spent prudently on $1.1 billion in assets already generating power at Kemper.

Mississippi Power agreed to defer decisions on reimbursement for many items until the plant is finished. The company also agreed to recover some expenses over 10 years or seven years, not the two years it had proposed. Also, the Southern Co. agreed to invest the remaining $125 million in Mississippi Power that it had promised.

Those decisions mean Mississippi Power would only collect $128 million a year, not the $159 million it sought.

"We felt like it was a reasonable deal because it gave some of what the company wanted but not all," said Virden Jones, the staff's executive director.

Other groups that have intervened in the case want the company to recover even less money. An expert witness for some opponents testified that Mississippi Power should only get $49 million a year. They also want to delay a decision on prudence on as much of the project as possible, instead arguing over the whole plant later.

Jones said the agreement, if approved, would last only until the commission decides on a permanent rate covering all of Kemper.

"It may not last that long," Jones said. "The new commission may come in here and open this back up."

Mississippi Power had said that even with an 18 percent increase, it would run out of cash by February or March. Company spokesman Jeff Shepard told reporters Tuesday the company didn't know how long cash from 15 percent increase would last.

Shepard said Mississippi Power would accept the deal because it would receive money for Kemper for the first time, reversing uncertainty that has led to a string of credit downgrades. Mississippi Power has said it can't borrow money on its own, instead relying on its parent company.

"It lays out regulatory certainty and a prudency determination that begins to help rebuild the financial status of the company," Shepard told reporters.