Low fuel costs mean cuts for Mississippi Power customers

The Associated Press

Pending approval by the state Public Service Commission, the company said that bills for a residential customer who uses 1,000 kilowatt-hours per month is likely to fall from $144 to $130 early next year.

GULFPORT, Miss. (AP) — Thanks to lower natural gas costs, Mississippi Power Co. is planning to cut customer bills early next year.

Pending approval by the state Public Service Commission, the company said Monday that bills for a residential customer who uses 1,000 kilowatt-hours per month is likely to fall from $144 to $130.

The unit of Atlanta-based Southern Co. is asking to reduce bills because it's been charging more for natural gas than it's been paying. Under state law, utilities get to recover their fuel costs, but aren't supposed to make a profit.

Spokesman Jeff Shepard said Mississippi Power has charged roughly $70 million too much for natural gas in 2015, because at this time last year it projected higher gas prices than it has paid. The company will refund that over-collection as part of the rate cut.

Bills will go down another $47 million because the company is also reducing how much it projects it will pay for natural gasin 2016.

The three-member Public Service Commission mandates the once-a-year look at fuel charges for Mississippi Power. However, the changes are usually not this dramatic. While a 1,000 kwh-per-month residential customer is paying nearly $40 a month for fuel this year, that same customer will be paying more than a third less for fuel next year — about $26.

Entergy Corp.'s Mississippi unit cut prices temporarily in September because it too was collecting too much for natural gas, although those cuts could end in February. New Orleans-based Entergy's 442,000 customers in the western half of the state currently pay $100 for 1,000 kwh of electricity, substantially less than Mississippi Power's 186,000 customers from Meridian to the Gulf Coast.

Mississippi Power's filing comes less than two weeks before the three-member regulatory body is expected to vote on a making permanent a rate increase to pay for part of the $6.4 billion power plant that Mississippi Power is building in Kemper County.

Under an agreement reached between the Public Utilities Staff and the company, bills could fall by another $5 a month for residential customers, although they would still be paying an additional $18 per month to cover $1.1 billion worth of assets that are now in commercial service at the site. The company would also issue bill credits for extra amounts it has collected in emergency rates, equal to $22 for a residential customer

Shepard said the timing of the fuel cost change was not related to the impending decision on Kemper, noting Mississippi Power makes its yearly fuel cost projection every November.

"The costs related to Kemper are separate," Shepard said.

The low cost of natural gas has been a key argument of opponents of the Kemper plant, who say the company was only originally able to justify building the plant because it projected high natural gas costs. Opponents of Kemper have also argued that the company should only be able to recover the cost of buying or building an equivalent power plant.

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