Kemper plant to cost $43M more as completion date extended

By Jeff Amy, Associated Press

Mississippi Power Co. said Monday that it will take at least another month to finish the multibillion dollar power plant it's building in Kemper County, pushing the completion date back to Oct. 31 from Sept. 30.

 

JACKSON, Miss. (AP) — Mississippi Power Co. said Monday that it will take at least another month to finish the multibillion dollar power plant it's building in Kemper County, pushing the completion date back to Oct. 31 from Sept. 30.

Atlanta-based Southern Co., the parent of the electrical utility, announced the delay in a stock filing after saying in July that it was re-evaluating the schedule based on testing results.

Mississippi Power spokesman Jeff Shepard said the delay will increase the cost of the plant by $43 million. The company added that amount to previously announced losses related to Kemper for the three months that ended June 30, pushing the total Kemper write-off for the quarter to $81 million.

The increase pushes the total cost of the plant above $6.8 billion. The plant, associated coal mine and pipelines were originally supposed to cost $2.9 billion at most, and earliest estimates were lower. Customers could be asked to pay as much as $4.2 billion, while stockholders have absorbed $2.6 billion in losses so far.

The company began making synthetic gas from soft lignite coal beginning July 14. Southern Co. said in the stock filing that it needs time to modify equipment on the two gasifiers that convert coal into gas and achieve "sustainable operations." The company also said that it must complete startup and testing on the part of the plant that's supposed to remove carbon dioxide and other chemicals from the synthetic gas. That operation is key to Kemper reducing the amount of carbon dioxide it emits to the level of a similarly-sized natural gas plant. That promise of "clean coal" is why the federal government has given Kemper hundreds of millions of dollars in aid.

Southern CEO Tom Fanning told investors on a July 27 conference call that one challenge is making sure all the parts of the plant work together, saying it's more complex than a typical power plant fueled by natural gas.

"And one of the challenges we always said was integrating the different systems in this plant," Fanning said. "Good news is that so far we think we've integrated or at least demonstrated maybe eight of those 14 systems."

Brett Wingo, an engineer who formerly worked at the plant and claims Southern has misled investors and others about previous schedule delays, told The Associated Press recently that internal schedules had at one time called for six months between first production of synthetic gas and full operation.

When asked about Wingo's claim, Shepard didn't directly respond.

"We will never compromise safety for schedule," Shepard wrote in an email. "We will continue to analyze the time needed to complete start-up and commissioning activities until the remaining assets are placed in service."

Two lawsuits against Southern Co. cite Wingo's allegations and the U.S. Securities and Exchange Commission is investigating the utility's previous statements about Kemper's cost and schedule. Fanning said the company doesn't believe any findings by the SEC will significantly affect its bottom line.

In December, the Mississippi Public Service 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.

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