Monitors: Kemper project cost could come in under cap
The latest report from the independent monitors the Mississippi Public Service Commission hired to evaluate the Kemper county coal plant shows the project may come in under the $2.88 billion cap.
In its December report, filed with commissioners in early January, URS says Mississippi Power estimates the plant will cost $2.84 billion to build, about $44 million less than the cap the PSC imposed on the project. The filing says the plant is between 70 and 75 percent complete, and that it will, according to MPC, begin commercial operation in May 2014, the original target date.
That lines up with URS’ November report, which estimated there was a 72 percent chance the project would cost $2.88 billion or less.
In its December filing, URS does express concern about different pieces of the construction having to be reworked, due to noncompliance by contractors or design flaws. Monitors also said it was possible the conversion to union labor could increase costs. Union leadership told the Mississippi Business Journal late last year that there would be no significant increase in construction costs due to union workers being hired. The Central Mississippi Building and Construction Trades Council and the Mississippi chapter of the AFL-CIO struck a deal with Southern Co., MPC’s parent, to provide workers for the project.
The cost and timeline estimates in URS’ latest report are different than what was included in the last report filed by monitors hired by the PSC’s Public Utilities Staff. Burns and Roe said in its Nov. 26 filing that there was a 90 percent chance the coal plant’s cost would fall somewhere between $3 billion and $3.15 billion, which has been its estimate for several months. Burns and Roe added that there was an 80 percent chance the plant would begin operation on or before Dec. 20, 2014; a 50 percent chance it starts on or before Nov. 29, 2014; and a 20 percent chance the same happens by Nov. 6, 2014.
Mississippi Power spokesperson Jeff Shepard told the MBJ late last year that the company anticipates the plant’s cost coming in at $2.88 billion or under, and that it will start producing electricity on a commercial scale in May 2014.
The Kemper facility is still the subject of litigation between Mississippi Power and the Sierra Club, which opposes the project. A Harrison County chancery judge ruled for the project late last year, after the Sierra Club had challenged the validity of the second certificate commissioners had issued it. Lawyers for the environmental advocacy group have already appealed that decision to the Mississippi Supreme Court.
Commissioners ruled over the summer that they would not entertain any rate increase requests related to the project until the state’s high court had its say on the matter. That decision came after Mississippi Power had asked for a 13 percent rate increase that would have generated about $58 million.