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Kemper overrun reaches $81 million for second quarter


As expected, Mississippi Power’s coal-gasification power plant has missed another deadline.

The utility on Monday moved back the start-up of the commercial operation of the plant in Kemper County another month, till Oct. 31.

Time delayed is cost accumulated. The latest postponement will add $43 million to the price tag on the plant, which originally was projected to cost $2.9 billion to about $6.8 billion.

The company previously reported that it had a loss of $38 million because of the Kemper plant for the second quarter. “Today, we are adding $43 million, making the total $81 million for the second quarter,” the company said in an email. “This amount will not be paid by our customers – it is the responsibility of Mississippi Power and Southern Company.”

Hampered by technological problems, the plant is now nearly three years behind schedule. Each month of delay costs an average of $30 million a month, according to a team of independent monitors working in conjunction with the Mississippi Public Service Commission.

The independent monitors said in March in an open working session of the commission that the startup time then, the end of August, would likely not be met.

Mississippi Power said in May that the project, first of its kind, is being investigated by the federal Securities and Exchange Commission. Mississippi Power is a subsidiary of the publicly traded Southern Co.

The power plant has been generating electricity for two years by using natural gas. Thomas Fanning, chief executive and chairman of Southern Co., told analysts last month that the company has created a “dual fuel investment,” an “improvement” at the plant.

However, Mississippi Power, said in an emailed statement that “this plant . . . was always designed . . . almost exclusively to be run on lower-cost syngas” and that “it is not our intention to switch between fuel sources on a regular basis.”

Mississippi Power touted the first production of what it calls “syngas” on July 14.

With what it calls a 40-year supply of lignite at hand in a surface mine, the company maintains that it will protect its ratepayers from the volatility of the natural gas market.

In recent years, the supply of natural gas has become plentiful, thanks to the advent of what is called hydrofracturing, or “fracking,” and relatively cheap.


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