Since late March, the projected cost of Mississippi Power Co.’s Kemper County coal plant has gone from $2.4 billion to $2.8 billion.
The latest figure is the cap the Mississippi Public Service Commission imposed on the project.
David Newell, president of the Central Mississippi Building and Construction Trades Council, said he isn’t surprised. In an interview last week, Newell said the cost overruns should have been expected, given who the contractors were.
“We made these predictions when (MPC) decided to bring in Yates and KBR. A lot of the projects they work on end up with huge overruns and poor-quality work.”
Yates Construction has its headquarters in Philadelphia, with offices around the state. KBR is based in Houston, Texas, and owns a portion of the technology the Kemper facility will use to turn a fuel mixture that includes lignite coal into electricity.
“I understand why the job has gone the way it has,” said Newell, who operates out of Vicksburg. “A lot of the fabrication didn’t work, as far as piping, setting it, it’s been a bad deal all around. I don’t know if that’s poor planning, poor engineering, but they’ve had some labor unrest from Day One. It’s been terrible.”
Spokespeople from each company disputed Newell’s assertion. Yates spokesperson Kenny Bush called Newell’s claims “ridiculous.”
“We’ve been in business for 50 years because we have a lot of pleased owners out there,” Bush said. “We would not have been as successful as we’ve been if we had a history of doing things like that. We’ve done $30 million worth of work on Kemper. So for anyone to think that we’ve been responsible for the cost overruns is ridiculous.”
Marianne Gooch, a KBR spokesperson, and Bush both disputed reports that surfaced in the first week of August that Atlanta-based Southern Co. — MPC’s parent — had fired the two companies from the Kemper project.
Bush said Yates has four contracts with the coal plant , three exclusively under the Yates flag and one that was a joint venture with KBR. The joint venture contract was modified to bring in Baton Rouge-based Performance Contractors. The other three remain in place, Bush said.
KBR, as part-owner of the technology the plant will use, will still provide engineering and start-up services as the plant moves closer to commercial operation, scheduled for May 2014.
“The truth is we were almost done (with the contracting part) anyway,” Gooch said. “If Southern Co. really believed that we did poor-quality work, it would spill over into other elements, and that’s just not the case. The idea that we were fired from the project because we didn’t perform to a certain level could not be farther from the truth. Southern Co. has indicated to us that they are very pleased with our work. Even in private meetings they’ve indicated that. Proof of that is that we’re still active on the project.”
KBR employees will have the opportunity to catch on with Performance, Gooch said.
Newell said Performance started a round of interviews with those employees Aug. 8 at a satellite office in Meridian, a few miles south of the job site. Newell said he intended to visit that office late last week to assess that process.
Newell also claims that Southern Co. reneged on a labor agreement established with Newell’s Council.
Newell said while the Kemper project was still winding its way through the PSC-approval process, his organization reached a deal with Southern Co. that the utility would use workers who were either Council members, Mississippi residents or both, if it would throw its support behind the coal plant.
The Council agreed to those terms, Newell said, and spent $50,000 renovating and repairing an old school building near the job site that it would use to train workers, signing a five-year lease in the process. The Council, Newell added, provided the names of 9,000 workers who could potentially work on the project.
“We jumped through every hurdle they asked us to as far as putting together a project-labor agreement,” Newell said. “And when it came down to it, we haven’t received anything. No reason why, we just got the door slammed in our face.” Based upon his trips to the Kemper site, Newell estimated that “about 80 percent” of worker vehicles carried out-of-state tags.
In an Aug. 9 press release, MPC CEO Ed Day said of the 2,000 workers at the Kemper site, more than half were from Mississippi. Overall, Day said, more than 250 Mississippi companies are involved in the project, with Yates being the largest state-based contractor.
Newell said he’s hopeful Southern Co. will agree to use some of the workers on the Council’s list when it comes time to award the plant’s last major contract, which deals with the delivery of the coal from the nearby mine to the plant.
A phone message left with Southern Co.’s media relations office was not returned by the Mississippi Business Journal’s press time last week.