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Holland: Kemper details are complex but plant still makes sense

TIM ISBELL/SUN HERALD 
 Ed Holland discusses the ongoing work at the Kemper County plant, Monday, Oct. 5, 2015.
TIM ISBELL/SUN HERALD Ed Holland discusses the ongoing work at the Kemper County plant, Monday, Oct. 5, 2015. SUN HERALD

Mississippi Power CEO Ed Holland told the Sun Herald this week he realizes the technology and financing of the Kemper energy facility are complicated but he hopes ratepayers realize the company is trying to keep rates down.

"Most of our customers trust us and know we're trying to do the absolute best thing by them," he said. "We are at the end of the day motivated to keep our rates as low as we possibly can."

Starting Monday, customers of Mississippi Power can choose to receive a refund check or have their share of $377 million credited to their account.

The average residential refund will be $650, and checks will be in the mail starting Nov. 9. Those who don't register their preference by Oct. 30 will automatically get a credit on their bill.

The refunds were ordered by the Mississippi Supreme Court after Thomas Blanton filed a lawsuit claiming the Public Service Commission was wrong to allow a rate hike in 2013 to help pay for construction of Mississippi's Kemper energy facility. The refund applies to all current and former customers from April 2013 to July 15.

Holland also hopes regulators will treat the company fairly. In November he will go before the PSC and ask that the emergency 18 percent rate increase granted in August become permanent. The increase is justified, he said, because Kemper has operated on natural gas for more than a year without any increase to pay for construction of that portion of the plant.

"We haven't got one dime in recovery from that," he said.

Kemper is running on natural gas at 99 percent availability most of the time, and Holland said, "It's saved our customers about $15 million in fuel costs."

If the PSC makes the rate hike permanent, Holland said Mississippi Power won't go back and ask for any additional rate increase until the lignite portion of the plant is operational, which the company still expects to happen in the first half of next year.

Holland said he remains confident the technology will work.

"If it doesn't work, the customers won't have to pay for it," he said.

His primary duty these days is the Kemper Plant and he said Mississippi Power looked at 18 gas options before choosing to operate the new plant on lignite.

"The Kemper facility was the most economical long-term solution for our customers," he said.

Go back to 2008-2009 and he said the cost of natural gas made power rates about the same or more than they are today, which he said is 11 percent less than the national average, although higher than the Southeast average.

The PSC supported Kemper, but Holland said Mississippi Power would not have built the plant had the company known it wouldn't get compensation for work in progress from the agency.

"We were promised that over and over and over again," he said.

When Kemper starts burning lignite it will be one of the few dual fuel plants in the country. Depending on price and availability, Holland said the company will be able to switch between gas and coal.

He maintains that lignite is the best option for Mississippi Power customers. Gas prices are low now but lignite is lower, he said, and there's enough lignite on the site and within 10 miles of Kemper to operate for the next 60 years.

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