XML 62 R23.htm IDEA: XBRL DOCUMENT v3.7.0.1
Contingencies and Regulatory Matters (Tables)
 3 Months Ended
Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract]  
Recovery Balance of Each Regulatory Clause
The balance of each regulatory clause recovery on the balance sheet follows:
Regulatory Clause
Balance Sheet Line Item
March 31,
2017
December 31, 2016


(in millions)
Fuel Cost Recovery
Other regulatory liabilities, current
$
5

$
15

Purchased Power Capacity Recovery
Under recovered regulatory clause revenues
4

—

Environmental Cost Recovery
Under recovered regulatory clause revenues
40

13

Energy Conservation Cost Recovery
Under recovered regulatory clause revenues
3

4

The balance of each regulatory clause recovery on the balance sheet follows:
Regulatory Clause
Balance Sheet Line Item
March 31,
2017
December 31, 2016


(in millions)
Rate CNP Compliance(*)
Deferred under recovered regulatory clause revenues
$
—

$
9

Rate CNP PPA
Over recovered regulatory clause revenues
3

—

 
Deferred under recovered regulatory clause revenues
—

142

Retail Energy Cost Recovery
Other regulatory liabilities, current
40

76

Natural Disaster Reserve
Other regulatory liabilities, deferred
66

69


(*)
In accordance with an accounting order issued on February 17, 2017 by the Alabama PSC, Alabama Power reclassified the $23 million under recovered balance for Rate CNP Compliance to a deferred regulatory asset account.
Current And Actual Cost Estimate for Kemper IGCC
As of March 31, 2017, in addition to the $2.87 billion of costs above the Mississippi PSC's $2.88 billion cost cap that have been recognized as a charge to income, Mississippi Power had incurred approximately $2.01 billion in costs subject to the cost cap and approximately $1.50 billion in Cost Cap Exceptions related to the construction and start-up of the Kemper IGCC that are not included in current rates. These costs primarily relate to the following:
Cost Category
Actual Costs
 
(in billions)
Gasifiers and Gas Clean-up Facilities
$
1.90

Lignite Mine Facility
0.31

CO2 Pipeline Facilities
0.11

Combined Cycle and Common Facilities
0.17

AFUDC
0.73

General exceptions
0.07

Plant inventory
0.04

Lignite inventory
0.06

Regulatory and other deferred assets
0.12

Subtotal
3.51

Additional DOE Grants
(0.14
)
Total
$
3.37

Mississippi Power's Kemper IGCC 2010 project estimate, current cost estimate (which includes the impacts of the Mississippi Supreme Court's (Court) decision discussed herein under "Rate Recovery of Kemper IGCC Costs – 2013 MPSC Rate Order"), and actual costs incurred as of March 31, 2017, all of which include 100% of the costs for the Kemper IGCC, are as follows:
Cost Category
2010 Project Estimate(a)
 
Current Cost Estimate(b)
 
Actual Costs
 
(in billions)
Plant Subject to Cost Cap(c)(e)
$
2.40

 
$
5.75

 
$
5.57

Lignite Mine and Equipment
0.21

 
0.23

 
0.23

CO2 Pipeline Facilities
0.14

 
0.12

 
0.12

AFUDC(d)
0.17

 
0.83

 
0.80

Combined Cycle and Related Assets Placed in
Service – Incremental(e)
—

 
0.05

 
0.04

General Exceptions
0.05

 
0.10

 
0.09

Deferred Costs(e)
—

 
0.22

 
0.22

Additional DOE Grants(f)
—

 
(0.14
)
 
(0.14
)
Total Kemper IGCC(g)
$
2.97

 
$
7.16

 
$
6.93

(a)
The 2010 Project Estimate is the certificated cost estimate adjusted to include the certificated estimate for the CO2 pipeline facilities approved in 2011 by the Mississippi PSC, as well as the lignite mine and equipment, AFUDC, and general exceptions.
(b)
Amounts in the Current Cost Estimate include certain estimated post-in-service costs which are expected to be subject to the cost cap.
(c)
The 2012 MPSC CPCN Order approved a construction cost cap of up to $2.88 billion, net of the Initial DOE Grants and excluding the cost of the lignite mine and equipment, the cost of the CO2 pipeline facilities, AFUDC, and certain general exceptions, including change of law, force majeure, and beneficial capital (which exists when Mississippi Power demonstrates that the purpose and effect of the construction cost increase is to produce efficiencies that will result in a neutral or favorable effect on customers relative to the original proposal for the CPCN) (Cost Cap Exceptions). The Current Cost Estimate and the Actual Costs include non-incremental operating and maintenance costs related to the combined cycle and associated common facilities placed in service in August 2014 that are subject to the $2.88 billion cost cap and exclude post-in-service costs for the lignite mine. See "Rate Recovery of Kemper IGCC Costs – 2013 MPSC Rate Order" herein for additional information.
(d)
Mississippi Power's 2010 Project Estimate included recovery of financing costs during construction rather than the accrual of AFUDC. This approach was not approved by the Mississippi PSC as described in "Rate Recovery of Kemper IGCC Costs – 2013 MPSC Rate Order." The Current Cost Estimate also reflects the impact of a settlement agreement with the wholesale customers for cost-based rates under FERC's jurisdiction. See "FERC Matters" herein for additional information.
(e)
Non-capital Kemper IGCC-related costs incurred during construction were initially deferred as regulatory assets. Some of these costs are now included in rates and are being recognized through income; however, such costs continue to be included in the Current Cost Estimate and the Actual Costs at March 31, 2017. The wholesale portion of debt carrying costs, whether deferred or recognized through income, is not included in the Current Cost Estimate and the Actual Costs at March 31, 2017. See "Rate Recovery of Kemper IGCC Costs – Regulatory Assets and Liabilities" herein for additional information.
(f)
On April 8, 2016, Mississippi Power received approximately $137 million in additional grants from the DOE for the Kemper IGCC (Additional DOE Grants), which are expected to be used to reduce future rate impacts for customers.
(g)
The Current Cost Estimate and the Actual Costs include $2.87 billion that will not be recovered for costs above the cost cap, $0.83 billion of investment costs included in current rates for the combined cycle and related assets in service, and $0.09 billion of costs that were previously expensed for the combined cycle and related assets in service. The Current Cost Estimate and the Actual Costs exclude $0.23 billion of costs not included in current rates for post-June 2013 mine operations, the lignite fuel inventory, and the nitrogen plant capital lease, which will be included in the 2017 Rate Case to be filed by June 3, 2017. See Note 1 and Note 6 to the financial statements of Mississippi Power under "Fuel Inventory" and "Capital Leases," respectively, in Item 8 of the Form 10-K and "Rate Recovery of Kemper IGCC Costs – 2017 Rate Case" herein for additional information.