Mississippi Supreme Court upholds ruling that Kemper rate increase is illegal, orders refunds

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JACKSON, Mississippi — The Mississippi Supreme Court is sticking by its original decision finding that rate increases for Mississippi Power Co.'s Kemper County power plant are illegal.

The court refused Thursday to reconsider its February ruling, despite requests from the unit of Atlanta-based Southern Co., regulators and some business groups.

That leaves standing an order to the Public Service Commission to reverse an 18 percent rate increase and refund at least $337 million that's been collected from 186,000 customers since 2013. The revised Thursday order, by the same 5-4 majority as the original decision, instructs the commission to make refunds immediately.

The court found the increase illegal because regulators didn't conduct hearings to ensure Mississippi Power was spending prudently on the $6.2 billion Kemper plant. It also ruled that regulators used an illegal rate structure, didn't notify all ratepayers and broke public meetings law by negotiating a deal in private.

The refusal adds to the financial and political pressure building around the Kemper plant, which is years behind schedule and billions over budget. Mississippi Power, saying it wanted to be prepared if the court refused, filed three rate plans to pay for Kemper on May 15. Spokesman Jeff Shepard said Thursday that the company still plans to use a provision in state law to enact the steepest of those three rate increases 120 days after filing if the commission doesn't act. That deadline will come Sept. 12.

Customers would pay $273 million more in the first year and $395 million in the second year under one scenario. Now, after the earlier 18 percent increase, a residential customer of Mississippi Power who uses 1,000 kilowatt hours of electricity per month pays $144. Such customers could see monthly bills rise to at least $153 and maybe as high as $181.

"While we are certainly disappointed with the decision, we continue to do everything reasonable to protect the interests of our customers and the company," Shepard said in a statement.

South Mississippi Electric Power Association pulled out of a planned $600 million purchase of part of Kemper last month. Mississippi Power must return a $332 million deposit to SMEPA.

Fitch Ratings downgraded Mississippi Power's credit rating by a notch after SMEPA pulled out.

Hattiesburg oilman Thomas Blanton, running for Public Service Commission as a Democrat on an anti-Kemper platform, said that he plans to file with the commission seeking quick refund checks.

"They need to pay the money back pronto, and they need to start following the law, and so does the commission," Blanton said.

Current southern district Commissioner Steve Renfroe of Moss Point, who isn't seeking election, said he expects the commission will discuss refunds at its next meeting.

"I'd like to do something that's fair to the company and least painful to the ratepayers, and the Supreme Court has limited our options, there's no doubt about it," Renfroe said.

Shepard said determining refunds is up to the commission.

"Mississippi Power will fully comply with all conditions required by law and commission ruling."

Follow Jeff Amy at: http://twitter.com/jeffamy

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