Recently the Mississippi Supreme Court ruled that Mississippi Power retail customers were due an 18 percent refund from the Kemper generating plant. As a Coast Electric member, you may be wondering if you will get an 18 percent rate refund. The answer to the question is no because the 18 percent retail rate increase did not apply to Coast Electric members. It only applied to Mississippi Power Company retail customers.
Coast Electric’s costs have been impacted by a 4 percent increase due to the construction of Mississippi Power’s Plant Ratcliffe in Kemper County. Coast Electric purchases 100 percent of our wholesale power from our generation and transmission cooperative, South Mississippi Electric (SME). South Mississippi Electric generates most of its electricity and purchases the rest. Of the purchased power, only 25 percent comes from Mississippi Power Company.
It is important to note the difference between wholesale and retail power costs. First, wholesale power costs are regulated by the Federal Energy Regulatory Commission, or FERC, and not the Mississippi Public Service Commission. Second, FERC allows a portion of the construction costs for new power plants to be recovered prior to completion. The Kemper plant costs that have been recovered so far in South Mississippi Electric’s rates were actually less than what is allowed.
You may also wonder why the wholesale rate increases were so much less than the retail rate increases. Wholesale power costs can be lessened when a variety of wholesale power resources are purchased. South Mississippi Electric works hard to keep costs low by generating or purchasing a blend of resources including natural gas, coal, nuclear and hydroelectric power. The blended cost savings are then divided by the 11 member electric distribution cooperatives that comprise SME.
For some time, SME and its member systems considered purchasing a 15 percent interest in the plant and even paid a $235 million deposit to Mississippi Power. When SME and its member systems, like Coast Electric, decided they would not buy into the plant, Mississippi Power returned the deposit, with interest, to SME and SME repaid that money to its lenders. Neither SME, Coast Electric or any other SME system ever collected money for the deposit from their members.
We understand this is a complex issue that can be difficult to understand. If any of you have questions, please contact us and we will be happy to discuss this with you.
As always, we appreciate your support as we work to make the best decisions we can for you, our member-owners to deliver reliable, affordable electric service.