Rate Increase Debate

Business and environmental interests have lined up to oppose Mississippi Power Company's request for a 9.5 annual rate increase. The state Public Service Commission begins a hearing Wednesday on the proposed increase, which would generate some $46 million a year. Michael Callahan, the PSC's southern district commissioner, said the agency will hear testimony, possibly through Friday, and then make a decision by early December.

The new rate would take effect Jan. 1. Gulfport-based Mississippi Power, which has 191,000 customers in 23 southeast Mississippi counties, says the money is needed to pay for two new $400 million generating units in Jackson County, to cover higher maintenance costs and to boost the return for shareholders. Opponents don't buy the company's rationale. They include ChevronTexaco in Pascagoula, the Mississippi Manufacturers Association, coast casinos and the Sierra Club. ChevronTexaco spokesman Steve Renfroe said the Pascagoula refinery could pay an extra $1 million for electricity next year if the increase is approved. ``We're certainly not eager for our electric bill to go up, and we'd like to see Mississippi Power do the best job they can to hold down cost while providing dependable electrical service,'' Renfroe said. ``It's the PSC's job to make sure Mississippi Power does that.''

The Mississippi Manufacturers Association says one of its biggest concerns is the timing of the request. Since January 2000, more than 80 plants in Mississippi have closed, eliminating 11,000 jobs, according to the MMA. ``Manufacturers in southeast Mississippi report they have a good relationship with (Mississippi Power), but a 9.5 percent increase is overly burdensome and could threaten the viability of their companies or plants at this time,'' the association said. Mississippi Power spokesman Kurt Brautigam said the utility has not increased retail electric rates since 1996, when they went up 1 percent. In the past 10 years, he said, the company's customer base has grown 8 percent while use has jumped 37 percent. ``We've had to add new generating capacity to meet the growth,'' Brautigam said. ``And our costs to keep the lights on have continually gone up.'' He said residents paying $80 a month for 1,000 kilowatt-hours would see a $7.50 increase. The company also wants to increase its return on equity for investors from 11.74 percent to 13.25 percent. Return on equity is the amount earned on a company's common stock investment for a given period. ``We live in a much more competitive environment for capturing investment capital,'' Brautigam said. ``We believe we must have an opportunity for more return because the expectation of investment earnings generally is higher.''

Louie Miller, the Sierra Club's state director, said he would prefer that some of the company's additional profits be used to clean up and reduce pollution at Mississippi Power's coal-fired electric plants. Said Brautigam, ``At this point, Mississippi Power complies with all federal and state laws and regulation regarding the environment.''