JACKSON, Miss. — Mississippi Power Co. on Tuesday made a new proposal in conjunction with its largest customer on how much ratepayers should pay for a power plant, but a state regulator is still holding out for less.
The unit of Atlanta-based Southern Co. proposes to collect less revenue than it previously wanted for its $7.5 billion Kemper County power plant, but won’t have to write off any more than the $6 billion it’s already lost.
The state Public Service Commission must ultimately approve any rate plan. It is scheduled to make a decision in January, after a week of hearings in early December.
Mississippi Power signed the Tuesday agreement with Chevron Corp., Chemours Co. and some federal government agencies. Chevron’s Pascagoula oil refinery is the utility’s largest customer.
Customers would have to pay $118 million for the plant in the first year, down from the company’s lowest previous offer of $123 million. The company would agree to pay off some costs related to regulation over eight years instead of 20, meaning rates would decline faster in later years. Mississippi Power would absorb about $50 million in other regulatory-related costs. Finally, the utility would agree to a lower rate of return on the money it has invested.
Mississippi Power President Anthony Wilson called the agreement a compromise.
“I think it’s a good agreement,” Wilson said by telephone. “There are some things in it that I wish were different.”
Mississippi Power spokesman Jeff Shepard said rates would fall about 25 cents a month for a yardstick residential customer. Wilson said commissioners could apportion the savings differently across residential, industrial and commercial users if they chose.
However, the company and the Chevron parties didn’t agree to lower the cost of the portion of the power plant that customers would have to pay for. The company says it’s writing off all its spending on the portion of the power plant related to attempts to gasify coal. But the Public Utilities Staff, a separate agency that advises commissioners, argues that costs of the remaining natural-gas fueled portion are inflated by spending related to the gasifier. The amount in dispute is between $125 million and $175 million, and Mississippi Power has drawn a hard line against further losses.
“What I can’t do is write more money off,” Wilson said.
Staff Executive Director Virden Jones said he’s studying the latest offer.
The Chevron parties have until now been opposed to Mississippi Power. The staff and some other groups remain opposed to Mississippi Power, while other groups had supported the utility’s previous proposal.