Mississippi Power explains fuel adjustment request

By Steve Phillips - bio | email

GULFPORT, MS (WLOX) - Mississippi Power company is projecting much higher fuel costs for the new year. And that means customers can expect to pay more in their monthly electric bills.

Company officials made their case for a "fuel adjustment" increase during a public hearing in Gulfport Monday morning.

Higher than expected coal prices and a "volatile" natural gas market are responsible for the expected increase. Mississippi Power customers will pay about 9.2  percent more in their monthly electric bills.

Utility officials explained the increase and the public reacted during a three hour hearing before the Public Service Commission.

"Unfortunately, as we've all seen, fuel prices on a global basis have reached unprecedented levels during the 2008 calendar year," said David Mauffray.

He's the man responsible for buying the coal and natural gas Mississippi Power uses to produce electricity. He projects the utility will spend significantly more on fuel next year.

Mississippi Power will spend $536,000,000 on energy expense this year. In 2009, that figure is expected to reach $658,000,000.

"Fuel commodities for electric generation remain very volatile. They are subject to not only typical domestic supply and demand price impacts, but more than in any other time, they are also subject to global supply and economic factors," Mauffray explained during the public hearing.

State law allows the utility company to recoup "dollar for dollar" what it spends on fuel. The Public Service Commission oversees the fuel cost adjustment.

"Trying to make the best decision that it possibly can in the interest of the rate payer. But also at the same time, we've got to keep the utility companies to where when you flip the light switch on, you want lights," said Public Service Commissioner Leonard Bentz.

The president of Precision Optics in Ocean Springs spoke against the increase. Travis Green says his company's electric bill has doubled in eight years.

"Some of that is indeed increased usage. But I've had single digit sales growth. So, a very large portion of that has resulted from fuel price increases," said Green.

"By the time I pay everything, the only thing I can take an increase out of is food or medicine," said Carol Kirby.

The Gulfport woman said she and others on fixed income are all out of "wiggle room."

"If you're like me, you don't have anyplace else to go for money. You're stuck. You can close off only so many rooms in your house. But you've got to have some heat," she said.

Mississippi Power Company's fuel expenses and projections are audited by the state through the Public Service Commission.

Since state law allows that "dollar for dollar" recovery of fuel costs, the fuel adjustment request will likely be approved.

Customers can expect to see the increase in their monthly bills as early as next month.