In the wake of Tuesday's Public Service Commission election, Moody's Investors Service has downgraded Mississippi Power's credit rating again.
In a memo from Moody's obtained by the Sun Herald, the ratings firm said it expects "a less credit supportive" PSC as the utility is in the middle of a rate-increase request.
Democrat Cecil Brown and Republican Sam Britton were elected to seats vacated by PSC members who chose not to seek re-election. Both have expressed concerns about Mississippi Power's Kemper plant, which is seriously over budget and behind schedule. The third member of the PSC, Democrat Brandon Presley, has consistently voted against Kemper rate increases.
The PSC earlier this year granted a temporary emergency rate increase of 18 percent after the state Supreme Court invalidated an earlier 18-percent increase and ordered Mississippi Power to return the proceeds of that increase to customers.
"The election of two new commissioners increases regulatory uncertainty and heightens the risk that the utility will not obtain full and timely rate recovery on all $2.88 billion of costs subject to the MPSC approved cost cap, as well as $1.3 billion of costs exempt from the cap," the Moody's memo said.
The PSC could consider whether to make the temporary increase permanent as early as next week.
"The recent series of adverse regulatory and legal actions concerning the Kemper Project have caused a steep decline in the already weakened financial position of Mississippi Power," said Mississippi Power spokesman Jeff Shepard. "On Nov. 5 Moody's further downgraded by one notch to Baa3.
"Any prolonged period without rate recovery associated with the Kemper project jeopardizes the company's ability to access the funds needed for normal business operations and for completion of the Kemper project.
"This interim rate option has provided the company with the minimum financial support needed to begin the process to improve the company's financial strength. But a permanent rate solution is still needed and we will discuss that before the PSC Nov. 10. Reduced financial strength increases company borrowing costs and therefore further increases costs to customers."