Moody’s on Thursday upgraded Mississippi Power’s credit outlook from “under review” to “stable.”
A leading factor for the upgrade, Moody’s said in a press release, was that Mississippi Power and its parent Southern Co. absorbed all costs for the lignite coal gasification portion of the Kemper County energy facility.
Moody’s said criteria it will look for to give a future upgrade will be an improved regulatory environment and a final decision in January on cost recovery on the natural gas combined cycle portion operating at the plant for the past three years.
Michael Haggarty, Moody’s associate managing director, said ending construction reflects the utility’s improved liquidity position and reduced leverage following a $1 billion capital contribution from Southern Co. in June. These developments have lowered the likelihood of further credit deterioration at Mississippi Power as a result of the Kemper plant, Moody’s said.
Mississippi Power’s current credit profile and Ba1 rating are due to several years of high spending and delays and cost overruns at the plant, Moody’s said.
The Mississippi Public Service Commission in June directed the company to suspend operations with lignite and operate the plant on natural gas. The company was unable to come to a settlement with the Mississippi Public Utilities Staff and the PSC set a December hearing on the case.
“We believe the inability to reach a settlement demonstrates how seriously the Kemper project has negatively affected the utility’s regulatory environment,” Moody’s said. Mississippi Power and the Utilities Staff proposals aren’t far apart, the report said, and Moody’s said an agreement still could be worked out.
On Sept. 15, Mississippi Power issued a $150 million promissory note to Southern Co. and borrowed $109 million to pay federal income taxes. Moody’s said Mississippi Power expects to repay the money with proceeds of an income tax refund expected shortly.