Mississippi Power adds month, $62 million at Kemper plant

By Jeff Amy, Associated Press

Mississippi Power Co. is adding another month to the construction schedule and another $62 million to the cost of the power plant it's building in Kemper County.


JACKSON, Miss. (AP) — Mississippi Power Co. is adding another month to the construction schedule and another $62 million to the cost of the power plant it's building in Kemper County.

Atlanta-based Southern Co., the parent of the electrical utility, announced Monday that it's pushing back the completion date from Oct. 31 to Nov. 30. Because every month's delay prompts more construction and interest costs, the total price of the plant is now nearly $6.9 billion.

Documents filed with the Mississippi Public Service Commission show Mississippi Power will absorb $33 million of the increase, but customers could be asked to pay the other $29 million. Customers could ultimately pay as much as $4.2 billion for the plant, although regulators will decide the final amount.

The plant and associated coal mine were originally supposed to cost $2.9 billion at most, and earliest estimates were lower. Stockholders have absorbed $2.6 billion in losses.

Kemper is designed to use two gasifiers to convert soft lignite coal into synthetic gas burned to generate electricity. In a Monday filing with the U.S. Securities and Exchange Commission, the company said that when it took the first gasifier to start making synthetic gas offline in August for inspection, it took longer than expected to remove ash. Maybe more importantly, the company said it wants more time to achieve sustained capacity, test removal of chemicals from the gas and synchronize both gasifiers to run at once. The second gasifier began operating in September.

Kemper is designed to remove carbon dioxide from the synthetic gas, cutting carbon dioxide emissions to the level of a similarly sized natural gas plant. That's why the federal government has given Kemper hundreds of millions of dollars in aid.

Brett Wingo, an engineer who formerly worked at the plant and claims Southern has misled investors and others about previous schedule delays, has told The Associated Press that internal schedules had at one time called for six months between first production of synthetic gas and full operation. Southern Co. CEO Tom Fanning told investors in July that integrating the plant's systems would be more complicated than a typical power plant startup.

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 Kemper equipment already generating electricity by burning conventional natural gas.

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