What is the main issue addressed in this filing regarding the Kemper IGCC facility?

The filing addresses the mandatory termination and refund of rates previously collected for the Kemper IGCC facility, stemming from a Mississippi Supreme Court decision. This requires Mississippi Power to refund a significant amount of money ($331 million) and has adverse financial implications for the company.

What is Mississippi Power's proposed solution to recover Kemper IGCC costs?

Mississippi Power has proposed an "In-Service Asset Proposal" which seeks to recover costs for the portion of the Kemper IGCC facility that is already operational and providing service to customers. This proposal aims to recover approximately $159 million annually and is intended to be implemented as interim rates to avoid additional rate impacts on customers.

What are the potential financial impacts on Mississippi Power?

The required refund of $331 million in collected rates (Mirror CWIP) and the termination of those rates, along with the termination of an asset purchase agreement with South Mississippi Electric Power Association ($301 million deposit return), will adversely affect Mississippi Power's financial condition. This includes challenges in obtaining necessary funds for normal business operations and the completion of the Kemper IGCC.

What happens if the Mississippi Public Service Commission (PSC) does not approve the proposed rates?

If the Mississippi PSC does not make a decision on the proposed rates within 120 days of the filing, Mississippi Power expects to implement one of the proposed rate alternatives as temporary rates, posted under bond and subject to refund, as allowed by Mississippi state law. The company also plans to seek additional rate relief for the remaining Kemper IGCC costs.

SOUTHERN CO 8-K SEC Disclosure

Summary

This 8-K filing from Southern Company (SO) on July 10, 2015, primarily concerns updates regarding the Kemper County Integrated Gasification Combined Cycle (IGCC) facility and its rate recovery for Mississippi Power Company, a subsidiary. The filing details Mississippi Power's response to a Mississippi Supreme Court decision mandating the termination of previously implemented rates for the Kemper IGCC, effective July 20, 2015. This requires Mississippi Power to refund approximately $331 million in collected rates (Mirror CWIP) and accrued interest, significantly impacting its financial condition and ability to fund ongoing operations and project completion. In response, Mississippi Power has filed a supplemental notice with the Mississippi Public Service Commission (PSC) proposing an "In-Service Asset Proposal." This proposal aims to recover costs for Kemper IGCC assets that are currently operational and serving customers, such as transmission facilities and combined cycle components. The proposal seeks to implement these as interim rates, effective August 2015, with the goal of not causing additional rate increases for customers beyond what the terminated Mirror CWIP rates would have entailed. The company also anticipates seeking further rate relief for remaining Kemper IGCC assets and notes that if the PSC does not act within 120 days, Mississippi Power may implement temporary rates under bond.

Key Highlights

1Mississippi Power Company must terminate and refund approximately $331 million in previously collected Kemper IGCC rates (Mirror CWIP) due to a Mississippi Supreme Court order, effective July 20, 2015.
2This refund and termination significantly adversely impacts Mississippi Power's financial condition and its ability to secure funds for operations and Kemper IGCC completion.
3A supplemental filing proposes an "In-Service Asset Proposal" to recover costs for operational Kemper IGCC assets, seeking to mitigate further rate increases for customers.
4The In-Service Asset Proposal aims to collect approximately $159 million annually and is requested to be effective for the first billing cycle of August 2015.
5Mississippi Power is requesting these rates as interim, subject to refund, pending a final PSC review.
6If the PSC does not act within 120 days, Mississippi Power may implement temporary rates under bond.
7The company expects to seek additional rate relief for the remaining Kemper IGCC assets.

SOUTHERN CO 8-K Report, Corporate Update (Jul 10, 2015)

Summary

Key Highlights

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