South MS Electric backs out of Kemper partnership

South MS Electric backs out of Kemper partnership

SOUTH MISSISSIPPI (WLOX) - A decision by South Mississippi Electric adds even more financial instability to the cloud hanging over Mississippi Power's Kemper County lignite plant. Board members with South Mississippi Electric's 11 cooperatives no longer have an interest in purchasing a 15 percent stake in the Kemper County facility.

Their reason for breaking off those talks had everything to do with money.

“It would have led to higher rates for us,” South Mississippi Electric CEO Jim Compton told WLOX News, noting the deal would have cost the 11 cooperatives $620 million. “We determined it wasn't something we could afford in rates.”

Coast Electric and Singing River Electric are two of the 11 cooperatives that make up South Mississippi Electric.

Board members for the cooperatives and Mississippi Power first agreed to the partnership in 2010, but a news release from South Mississippi Electric cites construction delays and changing needs as two reasons why the board of directors voted to end its pursuit of the Kemper plant.

“We will, at some point, have to buy something else,” Compton said. “We determined Kemper was not that something else.”

"Mississippi Power was disappointed to learn of South Mississippi Electric board of directors' decision to end their pursuit of an ownership interest in the Kemper County energy facility," responded Mississippi Power spokesperson Jeff Shepard. In a statement Thursday morning, he went on to say, "SMEPA has been a long-time partner of Mississippi Power, and despite their decision on Kemper, we anticipate serving South Mississippi together for many years."

The question Mississippi Public Service Commissioners can't answer yet is whether this announcement could lead to even higher rates for Mississippi Power customers.

“This throws another variable in the mix,” Southern District Public Service Commissioner Steve Renfroe told WLOX News. “We don't know how it might impact Mississippi Power ratepayers.”

Shepard also addressed the rate variable in Thursday's statement, saying "SMEPA's 15-percent portion of the project as of March 2016 was projected to be approximately $600 million in fixed asset costs. SMEPA's investment and related costs associated with the proposed ownership interest were excluded from Mississippi Power's May 15 retail rate filings."

Mississippi Power just sent letters to its customers, explaining three rate hike proposals the company submitted to the PSC. Those rate options are contingent on what the Mississippi Supreme Court decides to do with a Mississippi Power rehearing request.

The power company believes the Supreme Court erred when it said rates approved in 2013 had to be rebated to customers.

“Mississippi Power does not believe the Court's ruling was in the best interest of customers,” a company news release said.

If that ruling stands, Mississippi Power says it will be forced to raise power bills by as much as 40 percent to recoup the Kemper County construction costs it can charge its customers.

Renfroe says he's concerned, “mostly from the ratepayer's standpoint.” He has staff attorneys investigating whether Mississippi Power can request a rate increase to absorb the financial setback created by South Mississippi Electric breaking off purchase talks.

“I don't know how it's going to play out,” said Renfroe.

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