Southern Co. pumps in $1 billion for money-losing Mississippi subsidiary

[private]Atlanta-based Southern Co. has had to pump in $1 billion worth of equity funding to enable its Mississippi Power Co. subsidiary to remain in operation.

The utility holding company reported the financial infusion in a June 30 filing with the Securities and Exchange Commission (SEC).

Mississippi Power is trying to deal with the fallout from the attempted construction of a coal-gasification plant in Kemper County that is behind schedule and more than $4 billion over budget.

After the Mississippi Public Service Commission said it would not allow the utility to pass along the cost overruns to its customers, Southern Co. pulled the plug on the “clean coal” project and said the Kemper facility would run on natural gas.

In its SEC filing, Southern Co. said it made equity contributions totaling $1 billion to Mississippi Power, with the subsidiary using the funds to “prepay $300 million of the outstanding principal amount under its $1.2 billion unsecured term loan . . . repay $591 million of the outstanding principal amount of promissory notes to Southern Company and repay $10 million of the outstanding principal amount of bank loans.”

Southern also said that $3.4 billion of the Kemper project costs have still not been reflected in the rates charged to Mississippi Power customers.

If the PSC does not allow Mississippi Power to raise rates to cover the Kemper overruns, Southern said it “would be required to recognize a charge to income in the second quarter of 2017 for those unrecovered costs.”

Another Southern Co. subsidiary, Georgia Power, is also struggling with cost overruns on a nuclear power project at Plant Vogtle.

© 2017 by The Georgia Report

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Tags: Kemper facility , Mississippi Power , Southern Co.