Although the unit of Atlanta-based Southern Co. will absorb $110 million of the cost, customers could pay for $32 million in interest, regulatory costs and legal fees if the Mississippi Public Service Commission eventually approves.
The utility is absorbing $2.4 billion in overruns so far, and Southern Co. will write off $173 million before taxes from its quarterly earnings, which will be announced Wednesday. After taxes, the write-off is projected to cost $113 million.
The power plant and associated lignite coal mine were originally supposed to cost $2.9 billion at most, and the earliest estimates were even lower. Customers could be asked to pay as much as $4.2 billion for the plant.
Mississippi Power also said it's pushing back the plant's projected completion date by two months to Aug. 31, saying it needs to reline pipes that control gas heated to 1,800 degrees. That gas, extracted from ground-up lignite coal at intense heat and pressure, is supposed to power the plant. Right now, it's running on piped-in natural gas.
Mississippi Power had previous trouble with the refractory lining in 2011 and 2012, causing delays and some rework. Spokesman Jeff Shepard said the problems announced Tuesday were not related to those previous problems.
The company found the problems after testing the coal gasifier unit. It's the power plant's ability to turn soft lignite into a synthetic gas and extract carbon dioxide and other pollutants before burning the gas that makes it special. The reduced carbon dioxide output is supposed to make Kemper emit about the same amount of carbon dioxide as a similarly sized plant burning natural gas. Those lower carbon emissions could help the company keep burning coal. Conventional coal plants emit much more of the greenhouse gas.
In December, the commission agreed to let Mississippi Power raise rates on its 186,000 customers by $126 million a year to pay for $1.1 billion worth of assets at Kemper that are already in operation, burning natural gas and transmitting electricity to the grid. The company won the rate increase after warning that it was within months of running out of cash because of the costs of building the first-of-its-kind power plant.