Haley Barbour Boondoggle Dealt Another Blow; SMEPA Terminates Purchase Agreement

Fitch Ratings sees mounting pressure on Mississippi Power Company’s Issuer Default Rating (IDR) following South Mississippi Electric Power Association (SMEPA)’s decision to terminate the Asset Purchase Agreement (APA) for a 15 percent ownership stake in the Kemper project. Fitch currently rates Mississippi Power’s IDR ‘A-‘ with a Negative Outlook.

Fitch believes that finding another partner to replace SMEPA could be challenging for Mississippi Power given the low wholesale price environment and the construction issues/delays the project has faced. Mississippi Power could allocate approximately 30 percent of the capacity to the FERC-jurisdictional wholesale rate base, in line with its current generation portfolio split. However, allocating the balance to retail rate base would intensify the pressure on customer bills and require modification to the rate filings made only last week, thus, exacerbating the ongoing regulatory uncertainty regarding recovery of Kemper costs. [More at Mississippi Business Journal]