Power’s High Price Will Cost Jobs PSC LEONARD BENTZ:
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PSC COMMISSIONER LEONARD BENTZ: Power’s High Cost Will Cost Coast Jobs
Sunday, February 08, 2009 12:53 PM
(Source: The Sun Herald (Biloxi, Miss.) tracking By Mary Perez, The Sun Herald, Biloxi, Miss.
Feb. 8–Leonard Bentz knows this week he has to sign off on a fuel-cost adjustment requested by Mississippi Power and he knows it will mean job losses in South Mississippi.
“I believe I’ve had every single casino call me,” said Bentz, chairman of the Mississippi Public Service Commission. He said they’ve told him, “The fuel-price increase is going to make us have to lay people off.”
Mississippi Power has requested a 9.2 percent increase for residential customers. The increase is higher for commercial and industrial customers because fuel costs make up a larger portion of their bills.
For Northrop Grumman it could mean an increase of $2 million this year. Beau Rivage Resort and Casino faces a $700,000 to $800,000 increase and Island View Casino around $300,000.
“Those are just some of the numbers we are hearing,” said Bentz.
He tells everyone who calls him about the increase, “If you have an idea, please give it to me.”
Bentz said, “I should have signed that order two months ago. I’ve not allowed them to put the new fuel prices in place yet.”
Business owners knew the increase was coming. In July and August representatives from Mississippi Power gave all major business customers an estimate of the increase, said company spokeswoman Cindy Webb. (I strongly question the effectiveness of this communication, for I have asked multiple Business owners and members of Chamber and rarely did one say, “oh yes I heard about it.” And no one said MS power told me.) In November, when the utility filed for the fuel-cost adjustment, representatives went back and gave the businesses specific costs.
“It’s our annual true-up on fuel,” said Webb. It’s not the largest annual fuel adjustment. That was 10 percent in 2006. In 2008 Mississippi Power customers paid a 4 percent fuel-adjustment increase, and Webb said there were decreases in 2002 and 2003.
“It depends on the fuel markets,” she said.
Mississippi Power Company hasn’t had public hearings on fuel increases, but Bentz scheduled one for Dec. 29 in Gulfport. Only a handful of residents and business owners attended. (that is because no one knew about the meeting. Bentz cares more about his no call list than a change that will affect the homes of every Mississippian.)“It was not the best time in the world to have a hearing,” Bentz said, “but I wanted to have a public hearing anyway.” He said at the meeting the dollar-for-dollar “pass-through,” in a regulated market such as Mississippi’s, allows the utility to pass on the cost of doing business to the customer. If the company spends $100 million on fuel and is allowed a rate of return of 10 percent, the company can bill the customers for the additional $10 million.
“Mississippi Power Company can only earn what the state regulators allow them to earn,” Bentz said.
Mississippi Power uses coal and gas to operate its power plants.
Mississippi Power CEO Anthony Topazi said gas was up 100 percent in 2008 and coal was at an all-time high.
“I’m spending more to provide the same amount of energy,” he said.
When the prices were steadily climbing last year, the company negotiated multi-year contracts on the futures market to lock in the cost and be assured a supply of coal and gas.
“It’s a great deal when you lock that contract price in and the prices skyrocket,” said Bentz.” It’s a horrible deal when you lock that price in and the prices go down,” as they did in this case.
Bentz said he doesn’t have the staff or the $1 million it would take to do an audit to see if the utility paid the lowest price possible for fuel.
“There needs to be a disincentive, or some type of incentive to the power company for purchasing fuel the cheapest they possibly can do it,” he said.
It won’t be just the customers who feel the pinch. Bentz said, “I told Anthony (Topazi) the other day, ‘Y’all need to put these planes on the ground,'” referring to corporate aircraft.
Bentz added, “Profitmargins are not going to be what they were in the good years,” and he said, “I don’t believe bonuses are going to be paid to the amount that they’ve been paid.”
Webb said Mississippi Power has a hiring freeze and, “we are doing everything we can to control costs. We’re looking at the things we can do that won’t impact customerservice.”
If Bentz doesn’t sign the increase, he said, the Mississippi Supreme Court would most likely overturn that decision and grant it anyway, as the court has done in the past.
He can amortize the increase over 12 months or possibly two years. “When you do that, it’s just like putting it on a credit card,” he said, with the customers paying the carrying costs.
“It’s a crap shoot,” he said. “If prices keep going down it’s a great thing. But if they keep going up, you’re just compounding costs on top of each other.”
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Mississippi Coal Comments are in Red and added for commentary