Mississippi Power files Kemper cost recovery proposals with Public Service Commission, offers solution to help keep customers’ bills low

Mississippi Power today filed proposals with the Mississippi Public Service Commission to recover eligible costs for the Kemper County energy facility. A decision is needed because a permanent cost recovery plan for the Kemper project has not been implemented by the PSC. The company remains committed to delivering the lowest-cost solution for its customers.

Of the multiple proposals filed, the company’s preferred plan would keep customers’ bills lower than the other options offered, over a four-and-a-half-year period. This plan would keep rates at current levels until the entire facility is placed in service, expected in the first half of 2016, after which there would be a monthly increase of approximately $6-9 for a residential customer having a monthly usage of 1,000 kWh.

This plan is similar to the rate mitigation plan Mississippi Power proposed two years ago and provides for the issuance of low-interest bonds to pay for a portion of Kemper project costs once the entire facility is in commercial operation. It also includes the use of funds already collected from customers since 2013 to offset Kemper project costs.

The company also filed two other options – a traditional plan and a two-year rate mitigation plan. Both plans would increase rates over a two-year time period. The traditional plan would result in a monthly increase of approximately $17 for a residential customer having a monthly usage of 1,000 kWh in the first year of approval. The second year’s increase, which would require additional rate filings by the company, would result in an approximately $20 monthly increase, for an overall increase of $37.

The two-year rate plan would result in a monthly increase of approximately $5 for a residential customer having a monthly usage of 1,000 kWh in the first year of approval and an additional $29 monthly in the second year, for an overall increase of $34.

These two alternatives assume funds collected from customers over the last two years are refunded under a February decision made by the Mississippi Supreme Court. That decision determined the current rates approved by the PSC in 2013 to recover the cost of the Kemper project were not properly approved due to the process used by the PSC.

Mississippi Power does not believe the Court’s decision was in the best interest of customers. Both the company and the PSC have requested a rehearing, and business leaders from around the state have voiced their support.

“Our employees have exhausted options for creating and delivering a plan that focuses on minimizing the burden on the hardworking families we are privileged to serve. Implementing a plan that lessens the strain on our customers has always been and will continue to be our intent,” said Mississippi Power President and CEO Ed Holland. “We hope to avoid the need to put in place any proposal that will cause more pressure on our customers. We owe that to them and believe we have developed a solution that delivers on that promise.”

While the company awaits the Court’s decision on the rehearing request, it is moving forward with the rate case process and continuing settlement discussions with the Mississippi Public Utilities Staff.

A new cost-recovery plan for the Kemper County energy facility would be effective once approved by the PSC. By state law, if the PSC takes no action within 120 days after filing, the traditional plan may be put into effect as temporary rates under bond and subject to refund.

The Kemper County energy facility is designed to use innovative technology and low-cost, abundantly-available lignite to provide Mississippi families and businesses affordable energy for decades. The facility already is producing benefits for customers and the state, including providing low-cost energy from its combined cycle units using natural gas, the creation of thousands of direct and indirect jobs and the immediate impact it is having on state and local tax revenues. Construction of the plant has also led to job training programs for Mississippians and national and international interest in the future of clean coal technology.

The project is expected to be completed in the first half of 2016.

Mississippi Power, a subsidiary of Southern Company (NYSE: SO), produces safe, reliable and environmentally responsible energy for more than 186,000 customers in 23 southeast Mississippi counties. Mississippi Power has been recognized throughout the utility industry for excellence in storm restoration and recovery efforts and as a leader in safety. Visit our websites at mississippipower.com and mississippipowernews.com, like us on Facebook, follow us on Twitter, LinkedIn, Google+ and YouTube.

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Cautionary Note Regarding Forward-Looking Statements

Certain information contained in this release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning Mississippi Power’s filing with the Mississippi Public Service Commission (“PSC”) to increase retail base rates relating to the recovery of costs for the integrated coal gasification combined cycle in Kemper County, Mississippi (the “Kemper IGCC”) and completion and operation of the Kemper IGCC. Mississippi Power cautions that there are certain factors that could cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Mississippi Power; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Mississippi Power’s Annual Report on Form 10-K for the year ended December 31, 2014, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to the Mississippi PSC’s review of Mississippi Power’s filing to increase retail base rates; the impact of recent and future federal and state regulatory changes, as well as changes in application of existing laws and regulations; current and future litigation, regulatory investigations, proceedings, or inquiries; variations in demand for electricity; available sources and costs of fuels; effects of inflation; the ability to control costs and avoid cost overruns during the development and construction of facilities, which include the development and construction of generating facilities with designs that have not been finalized or previously constructed, including changes in labor costs and productivity, adverse weather conditions, shortages and inconsistent quality of equipment, materials, and labor, contractor or supplier delay, non-performance under construction or other agreements, operational readiness, including specialized operator training and required site safety programs, unforeseen engineering or design problems, start-up activities (including major equipment failure and system integration), and/or operational performance (including additional costs to satisfy any operational parameters ultimately adopted by the Mississippi PSC); the ability to construct facilities in accordance with the requirements of permits and licenses, to satisfy any environmental performance standards and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction; advances in technology; actions related to cost recovery for the Kemper IGCC, including actions relating to proposed securitization, Mississippi PSC approval of a rate recovery plan, including the ability to complete the proposed sale of an interest in the Kemper IGCC to South Mississippi Electric Power Association, the ability to utilize bonus depreciation, which currently requires that assets be placed in service in 2015, and satisfaction of requirements to utilize investment tax credits and grants; Mississippi PSC review of the prudence of Kemper IGCC costs; the ultimate outcome and impact of the February 2015 decision of the Mississippi Supreme Court, Mississippi Power’s request for rehearing of such decision, and any further legal or regulatory proceedings regarding any settlement agreement between Mississippi Power and the Mississippi PSC, the March 2013 rate order regarding retail rate increases, or the State of Mississippi legislation designed to enhance the Mississippi PSC’s authority to facilitate development and construction of baseload generation in the State of Mississippi; the ability to successfully operate generating, transmission, and distribution facilities and the successful performance of necessary corporate functions; the ability of counterparties of Mississippi Power to make payments as and when due and to perform as required; the ability to obtain new short- and long-term contracts with wholesale customers; interest rate fluctuations and financial market conditions and the results of financing efforts; changes in Mississippi Power’s credit ratings, including impacts on interest rates, access to capital markets, and collateral requirements; catastrophic events such as fires, earthquakes, explosions, floods, hurricanes and other storms, droughts, pandemic health events such as influenzas, or other similar occurrences; and the direct or indirect effects on Mississippi Power’s business resulting from incidents affecting the U.S. electric grid or operation of generating resources. Mississippi Power expressly disclaims any obligation to update any forward-looking information.