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Kemper power plant overruns climb another $45 million

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Southern Co. said it will spend at least another $45 million to finish the power plant it’s building in eastern Mississippi’s Kemper County, pushing total costs to nearly $6.2 billion.

The Atlanta-based parent of Mississippi Power Co. said the additional money will pay for further construction costs and fuel during plant startup.

Mississippi Power said it, and not its 186,000 customers from Meridian to the Gulf Coast, will cover the additional money. It is the latest in a series of overruns on the project.

Customers are already paying 18 percent higher rates for Kemper, and Mississippi Power has said it’s likely to seek another increase of at least 4 percent over 20 years to pay off $1 billion in bonds that the Legislature is allowing the company to issue.

Fourth-quarter earnings include after-tax charges of $43 million, or 5 cents per share, related to increased costs related to the Kemper overrun, the company said in a release on Wednesday

Earnings for the quarter were $300 million, or 33 cents per share, compared with earnings of $414 million, or 47 cents per share, in the corresponding quarter a year earlier.

The plant and associated lignite coal mine were originally supposed to cost $2.8 billion.

The utility is on track to absorb about $2 billion in overruns, as well as $133 million in federal tax credits that the company is forgoing.

The plant is supposed to turn soft lignite coal into a gas, burn the gas to generate power and extract chemicals to reduce pollution. Work on the parts of the plant that will gasify the lignite and extract chemicals is scheduled to be completed in the second half of this year. Another part, where turbines generate electricity, is running on natural gas.

In August, Mississippi Power put three power generating turbines into commercial operation burning natural gas piped to the east Mississippi plant, even as Mississippi Power works complete parts of the plant that will turn lignite coal into synthetic gas.

 

 

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