HATTIESBURG, MS (WDAM) - The Mississippi Supreme Court ruled Thursday that previous rate increases totaling 18 percent granted by the Public Service Commission to Mississippi Power Company will now be reversed.
The Miss. Public Service Commission was directed to enter an order directing the funds be refunded to customers.
The suit filed on behalf of Hattiesburg activist Thomas Blanton, by attorney Michael Adelman, after the Public Service Commission (PSC) approved rate increases for Mississippi Power in March 2013. Mississippi Power received a 15 percent rate increase for 2013 and a three percent increase for 2014, to fund the Kemper County Plant.
In essence, the high court said the Public Service Commission exceeded its authority to allow Mississippi power to start collecting higher rates now before the plant was complete.
"The decisions made to develop Kemper in the way that it has does not appear to be good business," said Thomas Blanton.
"To many cost unknowns, a cost overrun of this size is due to failure to plan very well or understand what you are doing," said Blanton.
According to the suit, the increased rates were achieved by including "mirror CWIP" in the rate base and rates. Following the inclusion of "mirror CWIP," the commission approved the retail revenue adjust over 2013 and 2014… allowing the company an annual rate designed to collect $125,000,000 for 2013, escalating to $156,000,000 in 2014.
This represents the 15 percent and 3 percent increase that were felt by 186,000 South Mississippi ratepayers.
According to the ruling the state Supreme Court determined "by not conducting prudency hearings, the Commission ignored the dictates of the Act and thus acted arbitrarily without lawful authority."
"The financing mechanism that they put in place called the Base Load Act, passed in 2008 is the root of the problem," said Blanton.
"It was a new way of financing risky energy projects and as a result we have the problem of we are paying for something that we don't own a part of and never have a share of the interest of and that's not right," said Blanton.
The court sent this case back to the PSC, and in the process, ordered multiple actions including the following:
Fix by order the rates in existence prior to its order of March 5, 2013; fix no rate increases until the Commission is in compliance with this Court's opinion; and enter an order refunding the monies attributable to the rate increases allowed by the March 5, 2013 order.
They also instructed the commission to provide notice to ratepayers about future proceedings related to rate base, rates, rate of return, and prudency hearings.
The Kemper Plant has experienced numerous cost overturns is the past, rising somewhere in the ballpark of $6 billion dollars, which is triple the estimate made years ago according to Blanton.
"Mississippi Power is currently reviewing today's ruling by the Mississippi Supreme Court to determine the company's options," said Mississippi Power Corporate Communications representative Bill Snyder.
It is not yet known when the ratepayers will receive their money back or when the process of refunding will begin.
WLOX contributed to this article.