JACKSON, Miss. (AP) -- Southern Co. has withdrawn plans to seek a federal loan guarantee for the power plant its subsidiary, Mississippi Power Co., is building in Kemper County.
A spokesman for Atlanta-based Southern said Mississippi Power can borrow money elsewhere at a lower rate than available under the loan from the U.S. Department of Energy.
"Mississippi Power has secured financing at a lower rate than our certified projected Department of Energy loan, reducing overall costs to customers," Southern spokesman Tim Leljedal said in an emailed statement Tuesday.
The company had applied for up to $1.5 billion in bonding authority to help finance the plant, whose costs are approaching $3.3 billion.
Southern said it's still pursuing up to $3.4 billion in loan guarantees for the two additional nuclear reactors it's building at Plant Vogtle near Augusta, Ga.
"Mississippi Power and Georgia Power have been engaged in separate and distinct loan guarantee negotiations based on the utilities' unique financing needs and alternatives," Leljedal said. "There continues to be constructive dialogue in the Vogtle 3 and 4 loan guarantee negotiations, and we are cautiously optimistic as we work toward the DOE's June deadline."
Leljedal said Southern's withdrawal is not related to recent actions taken by Mississippi to raise rates for the plant. The Mississippi Public Service Commission voted in March to approve a 15 percent rate increase this year, followed by a 3 percent rate increase in 2014. The increases would allow Mississippi Power to begin paying off debt related to what it calls Plant Ratcliffe even before it begins operations, scheduled for next year.
That rate increase resulted from one prong of a settlement of litigation over the Kemper plant. Under another part of the agreement, lawmakers passed a bill allowing Mississippi Power to issue up to $1 billion in bonds to pay off accumulated interest and some costs that overrun the $2.4 billion level on the plant itself. The plant is projected to cost $2.88 billion, while associated lignite mines and pipelines are supposed to cost $377 million. Mississippi Power has said it's likely to seek an additional 4 percent rate increase to repay the debt, although the company wouldn't collect a profit on any of the up to $1 billion it borrows.
Leljedal said Mississippi Power has already issued $1.1 billion in debt since 2010, using a majority of the money to pay for Kemper construction.
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