Mississippi Power expects rising coal and natural gas prices to cause larger-than-normal fuel cost increases for customers in 2005. The company filed its annual fuel cost adjustment with the Mississippi Public Service Commission (PSC) Friday.
“Monthly bills for residential customers will go up approximately 8%, or about $7 for 1000 kilowatt hours of usage,” said company spokesman Kurt Brautigam.
“We want to help our customers understand and prepare for these increases, which will begin with the January billing cycle,” Brautigam said. “Fuel prices are increasing dramatically in all energy segments, nationally and internationally. Prices for natural gas have increased by 90% during the last year or two, and coal prices have gone up anywhere from 30% to 60% or more. Those are our two main fuels, and the increases have directly affected our costs.”
Fuel costs, which account for nearly 40% of Mississippi Power’s total operating costs, are passed through to customers. By law, the company does not profit from fuel related expenditures.
To determine how much customers pay for fuel each year, Mississippi Power makes a filing with the PSC based on the past year’s actual fuel costs compared with last year’s projections and estimates for the next year’s costs.
Fuel cost volatility causes Mississippi Power’s annual fuel adjustments to change from one year to the next. Over the past five years the net change attributable to fuel costs has been only one percent.
“It’s important to manage fuel expenses as much as possible, in order to minimize the impact those costs have on our customers,” said Brautigam. “Over the past few years, we have worked with the PSC to adopt new fuel purchasing practices that try to lock in future prices and limit future risk. We also work hard to maintain and operate our generating units as efficiently as possible, in order to make the best possible use of the fuels we purchase.”
Mississippi Power, a Southern Company subsidiary, serves more than 193,000 customers in 23 southeast Mississippi counties.