Mississippi Power shuffles Kemper County contractors amidst cost overruns

The Sierra Club said Aug. 7 that Mississippi Power has effectively terminated the company’s partnership with two companies involved in the design and construction of the Kemper County (also known as Ratcliffe) coal gasification power project.

KBR, a Texas-based company, was jointly responsible for the design and engineering plans of the plant with Mississippi Power and owned parts of the “Transport Integrated Gasification” technology, or “TRIG” technology at the core of the Kemper project, the club noted. Yates Construction, based in Mississippi, was the primary construction contractor for the plant, it added. KBR and Yates Construction in part been replaced with a new firm, Performance Contractors of Baton Rouge, La., the club said.

“Today’s news that Mississippi Power has fired KBR and Yates Construction indicates a monumental meltdown at the Kemper plant job site,” said Louie Miller, Director of the Mississippi Sierra Club. “If the reports are accurate, for Mississippi Power to fire the co-owner and co-developer of their design technology is absolutely astounding. This will only lead to further delays, more cost overruns and likely litigation between aggrieved parties; all costs that Mississippi Power will try and pin on the ratepayer. This shocking development is one more reason it’s past time to pull the plug on the Kemper plant.”

In recent months, Mississippi Power, a unit of Southern Co. (NYSE: SO) has faced multiple legal and financial challenges in building the Kemper County plant. In March, the Sierra Club won a legal challenge in a unanimous ruling from the state Supreme Court, which found that the state Public Service Commission had not adequately justified its decision to allow the Kemper proposal to move forward and to charge ratepayers for its construction. In June, Independent Monitor reports revealed that the project was then $366m over budget, a figure which has recently climbed to more than $454m. Following this news and pending further legal challenges from the Sierra Club, the PSC voted to deny Mississippi Power’s proposed $56m rate increase in a public meeting held June 22. Fitch Ratings then downgraded Mississippi Power’s credit rating.

Mississippi Power appealed the PSC’s decision to deny the rate increase, going directly to the state Supreme Court. On July 31, the court ruled that Mississippi Power could not institute a partial rate increase to customers while waiting for the court to hear the full appeal.

GenerationHub efforts to reach Mississippi Power for comment were unsuccessful.

An Aug. 8 Associated Press report said that Performance Contractors has been overseeing other work at the site. Mississippi Power spokesperson Jeff Shepard was quoted by the AP as saying the move to shift contractors would save money and speed up work. Shawn Shurden, a lawyer for the Mississippi Public Service Commission, said Mississippi Power representatives told him the move will save about $10m.

Houston-based KBR, a supplier of the gasification technology, will still provide engineering and startup support on the unit. The construction contract was the one that was closed, while the technology contract is still ongoing, the Mississippi Power spokesperson is quoted as saying.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.