PSC’s Britton: $2.88 billlion cap on Kemper Project isn’t a guarantee for utility

Mississippi Public Service Commissioner Sam Britton said the existence of a $2.88 billion cap on capital costs for the Kemper Project clean coal power plant doesn’t mean Mississippi Power will necessarily get to charge ratepayers for that full amount.

The cap — which was instituted in a deal reached with Mississippi Power and the PSC — limits the amount the company can seek from its 186,000 customers through rate increases. Additional costs are the responsibility of the company under the cap, designed to protect customers from additional rate increases caused by cost overruns.

The company has said repeatedly in its financial statements, including the most recent one, that it would not seek capital cost recovery from ratepayers above the $2.88 billion cap, except for exceptions and allowance for funds used during construction (AFUDC). That implies that the utility will seek at least that much from ratepayers and possibly more, when costs outside the cap are added.

The PSC has the ability to rule that additional costs — such as AFUDC and operations costs — above the cap are “prudent,” which would allow them to be passed on to ratepayers.

MS Watchdog