PSC looking into timing, amount of Kemper County Coal Plant overrun

$366 million in additional costs revealed after plant approved

Sixteen days after the Mississippi Public Service Commission reapproved the certificate of public convenience and necessity for Mississippi Power Co.’s Kemper County coal plant, the company revealed to independent monitors an anticipated $366 million cost overrun for the project.

The revelation was included in monitors’ May report, which says MPC officials broke the news on May 10. The PSC reissued the plant’s certificate April 24, after the Mississippi Supreme Court said that 2010’s order granting the original certificate did not cite sufficient evidence from the record of proceedings.

Should Mississippi Power Company be allowed to spend over the $2.88 billion cap assigned for the Kemper County Coal Plant? Vote here

The company now puts the plant’s total construction cost at $2.76 billion, about 15 percent higher than the $2.4 billion projection in 2009. That’s closer to the PSC-imposed hard cap of $2.88 billion than a MPC spokesman said the company was April 24.

Jeff Shepard said then that the company anticipated an overrun in the neighborhood of $30 million. Shepard refuted assertions by the Sierra Club — which has filed a new round of litigation seeking to stop the plant’s construction — that the plant would incur an overrun in excess of $100 million, saying the company was “nowhere close” to that number. On March 30, when the PSC issued a temporary certificate for the plant, Shepard told reporters that the company anticipated no overrun at all.

Before MPC can recover from ratepayers any cost above $2.4 billion, the plant has to be in commercial operation, which is scheduled for May 2014. Commissioners also have to approve the recovery, provided the overrun meets a set of conditions, including proof that additional costs will save ratepayers money in the long term.

“We are committed to bringing the Kemper project on line, within the cost cap, to provide clean, safe and reliable energy to our customers,” MPC spokesperson Cindy Duvall said in a press release.

Construction on the the Kemper County IGCC Project has already begun in Kemper County on the east central side of the state.

The company said the newly revealed overrun would have no rate impact on customers. Estimates for how much the plant would raise power bills for MPC ratepayers have varied. The April 24 order from the PSC granting the new certificate said rate increases would peak at 30 percent when the plant came online in 2014, before decreasing as MPC paid off plant-related debt. A 2009 MPC filing said rate increases would peak at 45 percent.

That number has been disputed by Southern District Commissioner Leonard Bentz, whose district is home to the vast majority of MPC’s nearly 200,000 customers. Mississippi Power officials did not respond to messages seeking further comment last week. Bentz said in a statement he expects MPC to build the plant for the original estimate of $2.4 billion.

“Any impact on the ratepayer will have to be approved by the Commission,” Bentz said. “And I won’t personally approve anything unless it is prudent and in the best interest of the ratepayer.”

The report issued by monitors said the plant’s construction was 22 percent completed; as of the end of March, it added, the company had spent $1.14 billion on the project. The report also said that monitors are in the process of reviewing PSC-submitted questions that seek to clarify the reasons for the additional $366 million in construction costs.

“That’s supposedly the outside limit, but we’ve got folks looking at the numbers,” said Central District Commissioner Lynn Posey. “Quite honestly, I was surprised at the overrun. We had heard for a long time that it was on schedule and on budget.”

Posey said, based on a preliminary review, that it’s possible the additional costs could meet the standard that requires long-term savings for ratepayers. “Nevertheless, this is a big overrun, and we’re serious about thoroughly checking it out,” he said. “We intend to see why we didn’t find out about it earlier and why it’s as much as it is. I think it raises everybody’s eyebrows.”

Northern District Commissioner Brandon Presley, who has voted against the project since its start, said MPC waiting until after the plant’s certificate had been reissued to reveal an overrun proves the company is not operating in good faith.

“I said from the beginning that there was a probability of this happening. That’s one of the reasons I voted against it. It’s a disservice to my colleagues. It’s a disservice to Mississippi Power customers.”

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2 Responses to “PSC looking into timing, amount of Kemper County Coal Plant overrun”

  1. Randy Brewer Says:

    Isn’t it ironic that MPC waited until after the plant’s certificate had been reissued to reveal the $366 million cost overrun? This was no accident and proves the company is not operating on the up & up. In fact, it almost seems fraudulent that they waited until AFTER the certificate had been reissued. Mark my words, this will not be the only cost overrun. It will go over the $2.88 billion cap before it’s over. They first said the rate increases would peak at 45%, Now they say it will peak at 30% which doesn’t hold water if the plant is already $3.66 million in cost overrun. There is absolutely no proof that the plant will reduce customer rates in the long run. Spokesman Jeff Shepard is feeding the MPC and the public false information if not outright lies in his announcements.
    Natural gas is becoming more & more plentiful and the U.S. has a 100 year supply of it. Natural gas plants cost far less to build and operate, not to mention the reduction in carbon output. Yet, MPC is bound and determined to go forward with this plant whose technology is only theoretical and never been proven anywhere in the world. The carbon capture technology is in no way proven and is 10 years away from even being possibly practical. Why MPC insists on going ahead with this monstrousity means only one thing. They intend to make $billions off of it eventhough the thing probably isn’t going to work in the first place. It’s nothing short of robbing their customers in South Mississippi for their own corporate profit at their expense and making MPC a ton of money off of flawed technology. The MPC should shut this boondoggle down before it costs the citizens of South Mississippi more than $2.88 billion- the poorest citizens in the nation. This amounts to nothing more than out and out fraud and yet, they keep on pushing this monstrousity on us. They have no shame.

  2. PSC looking into timing, amount of Kemper County Coal Plant overrun | South Mississippi Business News Says:

    […] PSC looking into timing, amount of Kemper County Coal Plant overrun » Mississippi Business Journal. This entry was posted in Mississippi. Bookmark the permalink. ← G2G: Guide to Growing […]

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