Cost overruns in construction of Mississippi Power’s Kemper County lignite coal plant so far this year have taken a nearly $800 million bite out of parent Southern Co.’s earnings.
A cooler than normal summer across the Southeast further eroded earnings, the company reported in its third quarter earnings statement. Frequent rainfall combined with what Southern Co. says were the mildest summer temperature in 20 years caused residential and commercial energy sales to decreased 5.3 percent and 1.3 percent, respectively, in the Atlanta-based energy company’s four-state region which serves 4.4 million customers. Southern Co.’s Mississippi Power serves the southern half of the Magnolia State.
Mississippi’s Power is building the 582-megawatt, coal-gasification plant about 30 miles north of Meridian.
Southern Co. Wednesday reported third quarter earnings of $852 million, or 97 cents per share, compared with earnings of $976 million, or $1.11 per share, in the third quarter of 2012.
For the nine months ended Sept. 30, Southern Co.’s earnings were $1.23 billion, or $1.41 per share, compared with earnings of $1.97 billion, or $2.26 per share, for the same period a year ago.
Earnings for the three months and nine months ended Sept. 30, include after-tax charges of $93 million (11 cents per share) and $704 million (81 cents per share), respectively, related to increased cost estimates for construction of Mississippi Power’s Kemper County project. Earnings for the nine months ended Sept. 30, 2013, also include a $16 million (2 cents per share) after-tax charge related to the restructuring of a leveraged lease investment. Earnings for the nine months ended Sept. 30, 2012, include $21 million (2 cents per share) of insurance recovery related to the March 2009 litigation settlement agreement with MC Asset Recovery, LLC, said Southern Co.
582-megawatt integrated gasification combined cycle (IGCC). IGCC is designed specifically to have an advanced gasification plant and a combined cycle plant work together. This coal gasification facility will be located in Kemper County, Mississippi, approximately 30 miles north of Meridian. It will be owned and operated by Mississippi Power.
Earnings were also diminished by by cooler-than-normal temperatures and unusually heavy rainfall in the third quarter of 2013 compared with the third quarter of 2012.
“During the past quarter, our service territory experienced its highest level of rainfall in nearly 100 years,” said Thomas A. Fanning, Southern Co. chairman, president & CEO. “At the same time, cooler temperatures prevailed across our territory. For instance, in metro Atlanta – where we would normally expect to see more than 100 hours of summer temperatures above 90 degrees – we only saw one such hour. This unique combination of circumstances resulted in one of the mildest Southeastern summers in the last 20 years.”
Third quarter 2013 operating revenues were $5.02 billion, compared with $5.05 billion for the same period in 2012, a decrease of 0.6 percent. Year-to-date 2013 revenues were $13.16 billion, compared with $12.83 billion for the same period in 2012, a 2.5 percent increase.
Kilowatt-hour sales to retail customers in Southern Company’s four-state service area decreased 1.5 percent in the third quarter of 2013 compared with the third quarter of 2012. Residential and commercial energy sales decreased 5.3 percent and 1.3 percent, respectively, while industrial energy sales increased 2.6 percent.
For the year to date, retail sales decreased 0.9 percent compared with the same period in 2012. Residential and commercial energy sales decreased 1.4 percent and 1.5 percent, respectively, while industrial energy sales increased 0.4 percent.
Total energy sales to Southern Co.’s customers in the Southeast, including wholesale sales, decreased 2.9 percent in the third quarter of 2013 compared with the same period in 2012. For the year to date, total energy sales decreased 1.2 percent compared with the same period in 2012.