By Rupert Howell

A couple of local governmental entities are scratching their heads wondering about a serious property tax increase that will apparently be coming when LSP Energy will no longer be responsible for county property taxes in 2013.

That is because South Mississippi Electric Power Association (SMEPA) is the apparent high bidder in Delaware District U.S. Bankruptcy Court for the Batesville power producing plant located at the Harmon Industrial Park.

SMEPA originally sought “stalking horse” or favored bidder protection with an initial bid of $249 million. Judge Mary F. Walrath denied the protection after objections from debtors and bidders who thought the protection offered the favored bidder was excessive.

Attorneys for local entities were led to believe that SMEPA would not participate in further bidding without the protection but SMEPA’s bid of $334 million topped all bidders at last Monday’s auction.

Local attorney Colmon Mitchell and Andy Phillips with Mitchell, McNutt and Sams of Oxford, also associated with the bankruptcy, both noted that the bid amount was subject to downward adjustments. Other news sources are reporting the high bid at $286 million.

Non-profit rural electric power distribution cooperatives are exempt from county taxes although they are not exempt from municipal property taxes. Hattiesburg-based SMEPA generates and transmits power to 11 cooperatives in southern and western Mississippi.

Panola Partnership, Panola County’s industrial development and recruiting entity, also receives a monthly payment in excess of $30,000 in an agreement that brought water from a 10’ water line from Enid Lake to the gas powered steam generating facility, a payment that is still up in the air, according to attorneys familiar with proceedings.

Attorney Phillips said those payments were current and that attorneys for Panola’s entities were not “conceding anything.”

Those funds are used for infrastructure and capital improvements to entice further economic development in Panola County.

The county was to receive approximately $3.6 million in tax revenue from the plant  listed on the tax rolls at $200 million. About one-half of that revenue goes to South Panola School District.

For taxing purposes property is valued at 15 percent leaving Panola County rolls with a missing $30 million asset to tax.

The facility received a 10-year exemption after construction and made payments in lieu of taxes to Panola County, some of that going to South Panola School District, that amounted to about one-third of the taxable rate.

The full amount was expected when the facility went on the rolls beginning in 2012 for 2011 taxes, but it never came and the facility later filed bankruptcy.

Both Panola County and South Panola School District expect to get payment for the taxes in arrears as does the City of Batesville which is owed approximately $800,000. The entities also expect to get the current year’s taxes either in full or pro-rated to the time that SMEPA gets ownership.

SMEPA currently buys 28 percent of its electricity from Mississippi Power Co. and has seven power plants, including a coal-fired plant near Purvis and 10 percent of the Grand Gulf nuclear plant near Port Gibson.