Mississippi Power Co. – a subsidiary of electric utility firm Southern Company (SO) – has filed a request with state regulators to increase customer rates, connected with the Kemper County energy facility, by $172 million, in order to cover up the financing cost related to the construction of the plant. The cost of the Kemper County Lignite Plant is estimated to be around $3 billion.
Last week, Mississippi Power and Mississippi Public Service Commission reached an agreement, which allows Mississippi Power to seek higher customer rates for rising costs associated with the plant. A day later the Mississippi power unit filed for the current rate increase. If the regulators approve the company’s proposal, customer bills will rise by 21% by April.
Mississippi Power has planned to build the Kemper plant in the Chickasawhay flood plain. The company will dig a hole of 100 feet for extracting lignite – a wet, woody and low energy coal – to be used as fuel for the 582-megawatt (MW) Kemper power plant. The plant is one of the two integrated gasification combined-cycle (IGCC) plants which are being constructed in the country.
The project is now almost 75% complete and is expected to be online by May 2014. The development has already created roughly 12,000 direct and indirect jobs. Management believes that it will create an additional 1,000 direct and indirect jobs once it starts operation and will also contribute millions of dollars as tax payment to the economy of Mississippi.
Mississippi Power is engaged in providing retail and wholesale electric services to approximately 200,000 customers in 23 counties from the Gulf Coast to Meridian. It owns or has major ownership interests in six generating facilities with net dependable generating capacity of 3,166 MW.
Headquartered in Atlanta, Georgia, Southern Company is one of the largest generators of electricity in the nation, along with the likes of Exelon Corporation (EXC) and Duke Energy Corporation (DUK) – which serves both regulated and competitive markets across the southeastern U.S.
Southern Company currently retains a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.
In the electric utility space Ameren Corporation (AEE) displays better fundamentals and currently holds a Zacks Rank #1 (Strong Buy).