Thursday, July 12, 2012

Possible Moody's downgrade for Mississippi Power

Moody's placed the ratings of Mississippi Power on review for a downgrade. The letter issued by the service states:

"New York, July 09, 2012 -- Moody's Investors Service placed the ratings of Mississippi Power Company (A2 Senior Unsecured) on review for downgrade. Moody's affirmed the ratings of The Southern Company (Southern, Baa1 senior unsecured) with a stable outlook. The VMIG-2 short-term rating on Mississippi Power's pollution control revenue bonds is not on review. We do not expect the review to result in more than a one notch downgrade of Mississippi Power's long-term ratings."

The review of Mississippi Power's ratings reflects the significant decline in the company's cash flow coverage metrics as a result of the construction of the $2.88 billion Kemper County integrated coal gasification combined cycle (IGCC) plant. Because of the high capital expenditures and additional debt associated with this project, the company's cash flow pre-working capital to debt has fallen to slightly below 15% in 2011 from the 30% range as recently as 2009, which is now well below our parameters for an A2 rating. Financial metrics may not recover until well after construction is completed and the plant becomes operational in 2014.

The review also reflects a recent Mississippi Public Service Commission (MPSC) order denying the company recovery of financing costs during the plant's construction. The MPSC unanimously ruled that such recovery would not be prudent given a Sierra Club lawsuit challenging the plant's certificate of need pending before the Mississippi Supreme Court. The inability to recover financing costs and an uncertain timetable for a Mississippi Supreme Court decision on the matter will further stress already weak financial metrics and could lead to higher than anticipated rate increases when the plant is completed.

The review is also prompted by $366 million of cost overruns that the plant has experienced to date that have put the cost of the plant very close to its $2.88 billion MPSC approved cost recovery cap, as well as the additional debt the company assumed in 2011 to purchase the previously leased Plant Daniel combined cycle units..."


The ratings service does not expect the problems at Mississippi Power to affect its parent Southern Company, as it's a relatively small part of the company.

2 comments:

Anonymous said...

Weren't there a few comments here?

Anonymous said...

I don't know much about this, and don't quite understand what this will mean, if anything, to cosumers. I do know that EPA is MUCH more expensive than Entergy to use, shockingly so, because I get bills from each of them monthly.



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In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.


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Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

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If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

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