What is the primary impact of the MPSC order on Mississippi Power?

The primary impact is the MPSC's approval to include 266 megawatts of Plant Daniel generating capacity in Mississippi Power's jurisdictional cost of service, allowing for the recovery of related costs through retail rates. Additionally, it provides a clear path for amortizing a previously established regulatory liability.

How will the regulatory liability affect Mississippi Power's earnings?

The $60.3 million regulatory liability will be recognized as a positive impact on earnings through amortization over a four-year period. Specifically, $16.5 million is expected in 2004, $25.1 million in 2005, $13.0 million in 2006, and $5.7 million in 2007. An initial after-tax impact of $6.8 million for the first four months of 2004 will be recorded in the second quarter of 2004.

What changes were made to Mississippi Power's Performance Evaluation Plan (PEP)?

The MPSC approved several changes to the PEP, including the adoption of a forward-looking test year for rate setting (with oversight), a shift to annual rate filings instead of semi-annual ones, and modifications to performance indicator mechanisms. Annual rate changes will be limited to 4% of retail revenues.

Is this regulatory decision favorable for The Southern Company?

Yes, this decision is generally favorable as it allows Mississippi Power, a key subsidiary, to recover costs for generating capacity and provides a structured approach to address a regulatory liability, ultimately benefiting earnings over the next few years. The approved changes to the PEP also introduce more predictability in rate adjustments.

SOUTHERN CO 8-K SEC Disclosure

Summary

This 8-K filing reports on a significant regulatory development for Mississippi Power Company, a subsidiary of The Southern Company. The Mississippi Public Service Commission (MPSC) has issued an order approving Mississippi Power's request to include 266 megawatts of Plant Daniel generating capacity (units 3 and 4) in its jurisdictional cost of service, effective January 1, 2004. This approval allows Mississippi Power to recover associated costs and revenue credits through its retail rates. Furthermore, the MPSC's order addresses a $60.3 million regulatory liability that was established in December 2003. Mississippi Power will amortize this liability to earnings over a four-year period, beginning in 2004 and concluding in 2007. The immediate impact on earnings for the period January 1, 2004, through April 30, 2004, is $6.8 million after tax, which will be recognized in the second quarter of 2004.

Key Highlights

1Mississippi Public Service Commission (MPSC) approved the inclusion of 266 MW of Plant Daniel units 3 & 4 capacity in jurisdictional cost of service, effective January 1, 2004.
2This approval allows Mississippi Power to recover related costs and revenue credits in its retail rate calculations.
3The MPSC order authorizes the amortization of a $60.3 million regulatory liability established in December 2003.
4The regulatory liability will be amortized to earnings over four years: $16.5M in 2004, $25.1M in 2005, $13.0M in 2006, and $5.7M in 2007.
5The earnings impact for January 1, 2004, through April 30, 2004, is a positive $6.8 million after tax, to be reflected in Q2 2004 financials.
6The MPSC also approved changes to Mississippi Power's Performance Evaluation Plan (PEP), including a forward-looking test year and annual filings.
7Rate changes under the revised PEP will be capped at 4% of retail revenues annually, with a full review of PEP scheduled for 2007.

SOUTHERN CO 8-K Report (May 26, 2004)

Summary

Key Highlights

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