Mississippi Power Co. has filed three rate proposals with the Public Service Commission to pay for its Kemper County plant that is under construction.

    All three proposals call for a rate increase to pay for construction of the $6.2 billion plant.

    Mississippi Power CEO Ed Holland said in an interview at The Meridian Star the preferred option would be to keep rates at their current level until next year when the plant is expected to be fully operationally, with a monthly increase after that of $6 to $9 for most customers.

    That plan calls for the issuance of low-interest bonds to pay for a portion of Kemper project costs and includes the use of funds already collected from customers since 2013.

    “If this goes into effect, by mid-2016 to early (20)17, half of the increases would go to capital costs and the other half to financing costs,” Holland said. “This is what we prefer. It is the lower cost option. It gets confusing when we have to go to the other options. The other two result in a 37 percent increase over a two-year period. If they don’t approve it, under state law, in the traditional case they have 120 days to approve or disapprove, the rates go into effect at 37 percent or a $37 increase per month for two years.”

    Holland said he doesn’t expect the PSC to wait 120 days to call a vote.

    “The more certainty for our customers, the better,” Holland said. “To maintain the financial viability of Mississippi Power Company we need rate mitigation.”

    A residential customer of Mississippi Power who uses 1,000 kilowatt hours of electricity per month pays $143.89. Mississippi’s other private power company, Entergy Corp., charges $110.02 per month to a residential customer for the same amount of power, the Associated Press reports.

    Under the first proposal, Mississippi Power rates would climb to $153 a month in 2016 for 1,000 kilowatt hours of electricity per month.

     “We have no incentives to raise rates above what is necessary to cover the costs of the plants and its operational costs,” Holland said.

    The move by Mississippi Power comes after the Mississippi Supreme Court in February overturned an 18 percent rate increase approved by the PSC to the fund the Kemper Plant. The Supreme Court ordered the PSC to have Mississippi Power issue refunds of $337 million.

    In its ruling, a majority of the court said the PSC failed to conduct hearings to determine if construction costs were prudently incurred and that the PSC had overstepped its authority in approving the rate increases.

    Stephen Renfroe, the Southern District commissioner for the PSC, said he disagrees with the court’s ruling.

    “We hope they reconsider and change their ruling. At it stands, they have ordered a refund,” Renfroe said. “This is the opposite of what we intended because Mississippi Power would have to refund the ratepayers but we would be left with the same amount as before.”

    Mississippi Power has asked for a rehearing. If the rehearing is granted, the court will likely set a rescheduling order and may require additional filings or oral arguments. If the Supreme Court denies the motion for a rehearing, the PSC will determine the form in which a refund is provided.

    The second plan filed with the PSC would go up $5 a month this year and $29 a month next year, for a cost of $177 per 1,000 kilowatt hours, with a request for another increase likely later.

    The third plan would increase rates by $17 this year and another $20 in 2016, for a total of $180 a month, The Associated Press reports.

    Neither the second nor the third plan would use the bonds, which means they would cost ratepayers more. The company would refund money collected up to now in two years under the second and third plans.

    The proposed rate increases are what the company will need to recoup the cost of construction for the plant if the Mississippi Supreme Court does not grant a rehearing. The company has maintained that the court’s action could result in rate increases between 35 percent to 40 percent.

    Members of a group called the Bigger Pie Forum have been among the most vocal opponents to Mississippi Power’s  construction of the Kemper County plant. Jackson City Council member Ashby Foote is a member of the group.    

    “This comes across as a hostage negotiation where Mississippi Power avoids any responsibility for bad business decisions or poor management of the biggest construction project in the history of the state,” Foote said of the power plant. “The citizens deserve accountability from Mississippi Power and their regulators in this matter, the Public Service Commission. Basically they are short on revenue and asking the rate payers to pay for it.”

    Foote wanted to know about Mississippi Power’s debt to equity ratio. When asked, Holland said it was 48 to 52 percent, but added that the company would check those numbers.

    Holland said Mississippi Power is in good standing on all of its bond covenants and that all payments to Kemper vendors are up to date. He denied rumors that some vendor payments were at least six months in arrears.

    The Associated Press reports that a group of electrical cooperatives are pulling out of a planned purchase of 15 percent of the Kemper County power plant, which could mean a credit downgrade for Mississippi Power Co.

     South Mississippi Electric Power Association is pulling out of a planned $600 million purchase of a share of the $6.2 billion plant that Mississippi Power is building in Kemper County, according to the AP report.

    Directors made the move after a SMEPA study found the increasing price of the plant had made it uncompetitive with other sources of power. The association’s contract allowed it to pull out if the plant was delayed and recoup the $275 million in deposits it has paid with interest. SMEPA’s 2014 financial statement said the amount had grown to $332 million.

    The Associated Press contributed to this report.