August 2, 2013 9:44:02 AM
JACKSON -- Southern District Public Service Commissioner Leonard Bentz says he won't vote to raise the $2.4 billion cap set by regulators for the Southern Co.'s Kemper County power plant despite new cost overruns.
Southern Co. said this week that shareholders will absorb $450 million in losses incurred from building the new coal-fired power plant in Mississippi, raising the total write-offs on the construction project to nearly $1 billion.
Bentz tells The Sun Herald that he is glad the company wasn't trying to pass those new cost overruns on to ratepayers. He says he won't vote for any rate hike that would allow the company to recover more than $2.4 billion from ratepayers. The PSC had set a rate hike cap on the project when it was approved.
"That's great that the ratepayers are not having to pay for that," Bentz said Wednesday.
Project costs have stung the Southern Co. and its Mississippi Power subsidiary. Southern Co. earlier absorbed a $540 million pre-tax loss on the plant.
Opponents of the project have long criticized the company's use of coal and its costs.
Bentz said he doesn't regret voting for the approval of the overall Kemper plan, as he believes there was no better alternative to it. He said there are still some hearings to determine whether the costs were "prudent" on the project, which could take place early next year, and also determinations about future rate increases.
"The most important thing that worries me is there's a lot of misinformation put out there," Bentz said. "The readers of the media outlets in the state of Mississippi don't understand. When articles are written, they are just thinking they have to pay $5 billion, or $4 billion or $3.8 billion. I've been consistent since day one. You can check the records. I expect them to build that plant for $2.4 billion."
Northern District Public Service Commissioner Brandon Presley had opposed the project from the beginning. He said Wednesday he was troubled by news of the new $450 million hit, which stockholders would absorb, and the climbing cost of the plant.
"The costs are very concerning," Presley said.
Southern Co. officials have struggled to contain building costs, which have grown to more than $4.7 billion when the power plant, a lignite mine, carbon dioxide pipeline and other expenses are included, according to company filings.
Customers will also have to pay off as much as $1 billion in bonds needed to finance the project, though Southern Co. will not make a profit off that borrowed money.
When finished, Plant Ratcliffe, as the Kemper plant is called, is supposed to turn coal into a gas then burn it to generate electricity. The process is meant to capture much of the carbon dioxide created in the process. Carbon dioxide is a greenhouse gas blamed for causing global warming.
The captured gas will then be sold to companies that use it to extract oil from the ground.