The federal agency tasked with protecting investors has opened an investigation into the estimated costs and schedule of Mississippi Power Co.’s overrun-plagued $6.7 billion Kemper County power plant being built in Mississippi.
In a filing Thursday with the Securities and Exchange Commission, the unit of Atlanta-based Southern Co. said it believes the inquiry is focused primarily on “periods subsequent to 2010 and on accounting matters, disclosure controls and procedures, and internal controls over financial reporting associated with” Kemper.
It was unclear when the probe began.
“The company started to pick up indications that public awareness of the investigation had matured to a point that, in our judgment, it should be disclosed,” Mississippi Power Co. spokesman Jeff Shepard said in a statement Thursday. “As this is an ongoing investigation, please understand that we cannot provide details beyond what we have already provided.
“While we cannot predict the ultimate outcome, as we have said in our disclosures on this matter, we do not expect the investigation to have a material impact on the financial statements of either Southern Company or Mississippi Power.”
Southern Co. shares dropped by as much as 2 percent on the disclosure before closing at $50.62 on the New York Stock Exchange.
Kemper is supposed to gasify lignite coal and burn the resulting gas, stripping out much of the carbon dioxide and other chemicals. The plant has been running for more than a year powered by natural gas. Mississippi Power is currently testing one of the two gasifiers by pumping sand through it.
Last month, Mississippi Power said it would spend another $61 million on the Kemper project, pushing its total cost above $6.7 billion.
The 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 $4.3 billion for the plant.
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.
Southern Chief Executive Officer Tom Fanning said last week that the Kemper project will use coal for the first time this summer after more than two years of delays. The plant, which has been burning natural gas to produce electricity, will fully convert to coal in the third quarter, Fanning said.
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