SOUTH MISSISSIPPI (WLOX) - Mississippi Power customers will likely get a refund soon because of a State Supreme Court decision Thursday. The court rejected the rate increase granted by the Public Service Commission on March 5, 2013.
The decision came as a result of a lawsuit by a Hattiesburg activist who sued Mississippi Power and the commission over how the Kemper County power plant was funded.
At the heart of the issue is what is called the Base Load Act, which is a state law that allows public utilities a new way to finance new power plants.
The Supreme Court ruled that the 15 percent rate increase in 2013 and 3 percent rate increase for 2014 would be reversed, because the Public Service Commission didn't follow proper guidelines.
Thomas Blanton filed the lawsuit.
"The financing mechanism that they put in place called the Base Load Act, passed in 2008, is the root of the problem. It was a new way of financing risky energy projects," Blanton said. "As a result, we have the problem of we are paying for something that we don't own a part of and never have a share of the interest of, and that's not right."
Public Service Commissioner Steve Renfroe said the rate increase money was put into an interest-bearing savings account that was designed to help offset monthly rates once Kemper came online in March 2016.
"I've looked at this, and even though I was not there at the time the decision was made, the concept I think is valid, and the commission was certainly trying to do a good thing here to lower, over time, lower the overall impact," said Renfroe.
Justices have sent the case back to the Public Service Commission and ordered it to fix the rates to what they were on March 5, 2013, and refund all the money collected.
The Kemper price tag has now topped $6.1 billion. The cap for what Mississippi Power can collect from customers to pay for the construction has been set at around $2.8 billion. That cap is still in effect.
Renfroe says whether that $2.8 billion comes from the 2013 and 2014 rate hike or is paid after construction is complete, it will still cost Mississippi Power customers.
"It's not the amount that will be paid, just the timing will be different," said Renfroe.
Renfroe doesn't know yet the amount of money or when it will be refunded. The Public Service Commission meets next in the first week of March.
Mississippi Power issued a statement that echoed the commissioner's sentiment:
As we mentioned earlier, Mississippi Power is reviewing today's ruling by the Mississippi Supreme Court. It's important to note that by approving the 18 percent increase in the 2013 rate plan, the Commission significantly mitigated what would otherwise have been a base rate increase of at least 35 percent. Our focus remains on developing a solution that is in the best interest of our customers.
Progress continues at the Kemper County energy facility with a focus on start-up activities. As you know, we put the combined cycle portion of the project in service using natural gas in Aug. 2014 and it's been running successfully as a part of our fleet's dispatch for the benefit of our customers.