Mississippi Power officials are responding to recent credit downgrades. The latest comes from Moody's Investors which downgraded the company by one notch. In July Fitch Ratings cut Mississippi Power's main credit rating from an 'A' to 'A Minus.' Officials from both credit agencies say there could be even more downgrades for Mississippi Power.
Officials with the utility company say the downgrades are due to two main factors. The first involves construction costs for the lignite coal plant in Kemper County. That project is now $400 million over the original $2.4 billion budget. Secondly, they say the downgrades were prompted by the Mississippi Public Service Commission's recent denial of a request from Mississippi Power for a rate hike to pay for the new plant.
'Mississippi Power Company is a capital intensive business each year just to maintain the existing infrastructure,' said Mississippi Power CEO, Ed Day. 'So we're always in the market borrowing money. We would not want to be downgraded much more, otherwise, it could cost us more interest to go out and borrow more money to keep our operations going.'
Day stresses that despite last month's downgrade from Fitch Ratings, Mississippi Power still has an 'A' level credit rating with that company. In fact, since that downgrade, he says Mississippi Power has stabilized. Because of this, he is not anticipating anymore downgrades.
Meanwhile, as for construction of the new lignite coal plant, it's expected to reach its peak within the next five to six months.
Right now there are roughly 2,000 people working at the site. By December or January that number is expected to swell to almost 2,600. At that time the increase in workers will be prompted by the arrival of 100 large vessels at the site.
Once the plant goes online in May 2014, Mississippi Power officials are optimistic that at least some suppliers for the facility will be located in east Mississippi.
'Because typically what we try to do is to get people who supply the plant and support the plant from a vendor and service perspective from at least within a two to three hour radius of the plant site,' says Day. 'So, we fully expect the majority of the suppliers to be from the state of Mississippi.'
Construction for the new lignite coal plant is about 40% complete. Currently, about half of the 2,000 workers at the site are from Mississippi. There are 250 Mississippi companies doing the work. Once open, the plant is expected to provide 300 permanent jobs.