Spending review on Mississippi coal-fired plant may not be decided until 2014

Mississippi Power Southern Co Kemper County integrated gasification combined cycle power plant cost overruns Public Service Commission

A decision on whether Mississippi Power’s spending on the 582 MW coal-fired Kemper County Energy Facility was prudent may be delayed until 2014 despite state regulators earlier agreeing to a July 24 date, according to a report from the Associated Press.

The total price of the project is estimated at $4.3 billion for the plant, a lignite mine and carbon dioxide pipeline. Total costs for plant construction have increased from $2.88 billion to approximately $3.42 billion, with both amounts net of DOE grants and cost cap exceptions. The $540 million difference in the price of the plant will be paid by investors.

Mississippi Power cannot collect from ratepayers any amount over the $2.3 billion price of the power plant portion due to a settlement reached in January with the state's Public Service Commission. If the commission decides the utility wasted money constructing the facility, it can throw out costs and prohibit the company from charging ratepayers for them.

According to the report, a January agreement calls for a vote on whether spending was prudent by July 24, although the decision may come months after that. The commission originally did not plan to review the spending until the plant began commercial operation, but as part of a lawsuit settlement filed by Mississippi power over a rate denial, the commission agreed to review part of the spending within six months.

On June 28, Mississippi Power requested the review begin and cover all spending through March 31, 2013, although the utility said it accepts the delay because regulators need to request and analyze records, according to the Associated Press.

Mississippi Power is a unit of Southern Co (NYSE: SO).

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