8-KOther Events

SOUTHERN CO 8-K Report, Corporate Update (Jun 1, 2010)

Filed June 1, 2010For Securities:SOSOJESOJFSOJCSOJDSOMN

Summary

This 8-K filing from Southern Company (SO) on June 1, 2010, primarily concerns developments at its subsidiary, Mississippi Power, regarding the Kemper Integrated Coal Gasification Combined Cycle (IGCC) project. Following an April 29, 2010, order from the Mississippi Public Service Commission (PSC) with specific conditions, Mississippi Power filed a motion proposing alternatives. The key development is the Mississippi PSC's subsequent May 26, 2010, order, which revised its earlier findings. This revised order approved an alternate construction cost cap of up to $2.88 billion, subject to prudence reviews for costs exceeding $2.4 billion. It also established parameters for operational costs and revenues, and provided a framework for financing cost recovery on construction work in progress (CWIP) through May 1, 2014, with adjustments for government incentives and customer benefits. Mississippi Power accepted these revised conditions, signaling a step forward in resolving regulatory uncertainties surrounding this significant project.

Key Highlights

  • 1Mississippi Power filed a motion with the Mississippi PSC on May 10, 2010, proposing alternatives to an April 29, 2010, order regarding the Kemper IGCC project.
  • 2The Mississippi PSC issued a revised order on May 26, 2010, modifying its previous findings.
  • 3The revised order approved an alternate construction cost cap of up to $2.88 billion for the Kemper IGCC project.
  • 4Costs exceeding $2.4 billion within the cap are subject to Mississippi PSC determinations of prudence and public necessity.
  • 5The order established operational cost and revenue parameters for the project.
  • 6Financing cost recovery on Construction Work in Progress (CWIP) was approved under specific conditions through May 1, 2014, including accruals in 2010-2011 and recovery of 100% of CWIP in subsequent years, with adjustments for government incentives and customer benefits.
  • 7Mississippi Power accepted the conditions of the May 26, 2010, order on May 27, 2010.

Frequently Asked Questions

This filing primarily concerns the regulatory developments at Southern Company's subsidiary, Mississippi Power, specifically regarding the Mississippi Public Service Commission's (PSC) revised order on the Kemper Integrated Coal Gasification Combined Cycle (IGCC) project and its associated cost recovery.

The Mississippi PSC's revised order approved an alternate construction cost cap of up to $2.88 billion. However, costs exceeding $2.4 billion are subject to further determinations by the PSC regarding their prudence and necessity for public convenience.

The order approved financing cost recovery on Construction Work in Progress (CWIP) under the State of Mississippi Baseload Act. This includes the accrual of allowance for funds used during construction in 2010 and 2011, and recovery of financing costs on 100% of CWIP in 2012, 2013, and through May 1, 2014. This recovery is subject to adjustments based on government construction cost incentives received and a demonstration that the CWIP allowance will benefit customers.

Mississippi Power filed a motion on May 27, 2010, accepting the conditions set forth in the Mississippi PSC's May 26, 2010, order, which represents a significant step in resolving regulatory uncertainties for the Kemper IGCC project.