Kemper coal-to-gas power plant sees more cost overruns

JACKSON, Miss. (AP) — Southern Co. said it will spend at least another $45 million to finish the power plant it is building in eastern Mississippi's Kemper County, pushing total costs to nearly $6.2 billion.

The Atlanta-based parent of Mississippi Power Co. said the additional money would pay for further construction costs and fuel during plant startup.

Mississippi Power said it, and not its 186,000 customers from Meridian to the Gulf Coast, will cover the additional money. It is the latest in a series of overruns on the project.

Customers are already paying 18 percent higher rates for Kemper, and Mississippi Power has said it's likely to seek another increase of at least 4 percent over 20 years to pay off $1 billion in bonds that the legislature is allowing the company to issue.

The company had already announced about a month ago that it would write off about $25 million and warned it would announce further overruns this month. Combined, Southern said it will take a $70 million pretax loss when it announces quarterly earnings Wednesday. After taxes, shareholders would lose $43 million.

The plant and associated lignite coal mine were originally supposed to cost $2.8 billion.

The utility is on track to absorb about $2 billion in overruns, as well as $133 million in federal tax credits that the company is forgoing.

The plant is supposed to turn soft lignite coal into a gas, burn the gas to generate power and extract chemicals to reduce pollution. Work on the parts of the plant that will gasify the lignite and extract chemicals is scheduled to be completed in the second half of this year. Another part, where turbines generate electricity, is running on natural gas.

In August, Mississippi Power put three power generating turbines into commercial operation burning natural gas piped to the east Mississippi plant, even as Mississippi Power works complete parts of the plant that will turn lignite coal into synthetic gas.

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