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Southern Company losing grip

Wyatt Emmrich | The Northside Sun | Editorials | August 14, 2014

The Southern Co. was dealt a huge — and deserved — blow this week when Mississippi’s Public Service Commission voted unanimously to delay prudency hearings on the controversial “clean coal” plant the utility giant is building in Kemper County.

Southern Co., the parent of Mississippi Power Co., wanted those prudency hearings now so it wouldn’t have to worry about paying back some or all of the higher rates it’s been collecting in advance from Mississippi ratepayers to cover the costs of building the plant.

Now, Southern will have to wait until it proves the experimental technology — converting lignite to gas to drive turbines that produce power — will work before it can ask for the state’s seal of approval. If gasifying lignite doesn’t work, and the skeptics claim it won’t, Southern will be stuck for paying for the boondoggle, rather than 186,000 consumers in the lower third of this state.

Already Southern has been forced to eat almost half of its $3 billion in cost overruns, thanks to the exposure that the press has given this dubious project and the persistent opposition of Brandon Presley, the Northern District’s public service commissioner. For years, Presley, a Democrat, was being outvoted by two Republican members on the commission, but he has finally prevailed.

Up until now, Southern wasn’t risking much if its two-pronged gamble — that coal gasification would work and over the long haul be cost-competitive with natural gas — didn’t pan out. Now, it faces the real possibility that if the Kemper plant fails to produce as planned, it will be Southern’s shareholders, rather than the ratepayers in the poorest state in the country, paying for the mistake. That’s how it should be. Let the risk takers in the business world reap the rewards when their ideas succeed, but also let them foot the tab when they don’t. Southern was trying to have it both ways — positioning itself for a windfall if the technology works on a large scale, but cushioning itself from possible failure by passing that risk on to the ratepayers. By postponing the prudency hearings, the Public Service Commission has in effect put both the potential upsides and downsides on Southern’s shoulders.

In the meantime, perhaps knowing that the PSC was finally going to do the right thing, the Sierra Club settled its lawsuit over Kemper with Mississippi Power. The environmentalist group has dropped its opposition to the plant in return for the power company’s agreement to reduce its coal-fired generation elsewhere. Just as significantly, Mississippi Power has agreed to not oppose “net metering” — a proposal now before the PSC that would allow consumers to get billing credit for electricity they generate from solar power that goes back into the grid system of the power company. As solar technology evolves, this has the potential of being a big cost savings for consumers.

All in all, a bad week for Southern but a very good one for its customers.

http://www.northsidesun.com/content/southern-company-losing-grip