Pricetag of Kemper IGCC rises to $5bn

The full price of the 582-MW integrated gasification combined-cycle (IGCC) power plant that Southern (NYSE:SO) subsidiary Mississippi Power is building in Kemper County, Miss., continues to creep upward and is now listed at more than $5bn.

That’s according to an 8-K filing that Mississippi Power made Jan. 3 with the Securities & Exchange Commission (SEC). During a similar filing in late October, the utility had listed the cost at more than $4bn net of certain federal clean coal power grants, the cost of the adjoining lignite mine and certain other infrastructure.

The latest cost update puts the total plant subject to cost cap at $4.03bn. It also lists roughly $986m worth of total exemptions and exceptions and total project cost of more than $5.01bn.

“While the total project cost estimate is higher than the previous month’s report, it is normal for a project of this size and scope to see estimated fluctuations from month to month,” said a Southern spokesperson on Jan. 6. “We saw the biggest increases related to plant cost in the areas of direct labor, scaffolding and start-up cost.”

“It’s important to note that any future changes in the estimated costs to complete construction of the Kemper facility subject to the $2.88 billion construction cost cap established by the Mississippi PSC [Public Service Commission] will be fully evaluated in connection with the company’s quarterly reporting. Mississippi Power customers will not pay a penny of cost above the limit agreed to by regulators and legislators,” the Southern representative added.

There were more than 1,600 construction workers involved in the project during November. The project remains on pace to enter service in the fourth quarter of 2014.

Construction is complete on three 115-kV line rebuild projects. Also the four new 230-kV lines and the mine service line are complete and energized, the company said.

Long-term contracts have been signed for the sale of carbon dioxide (CO2), sulfuric acid and ammonia, according to the filing.

A major milestone was reached when the mine’s dragline was placed into service on Nov. 15, 2013.

Subject to approval from the Mississippi PSC and some other milestones, South Mississippi Electric Power Authority (SMEPA) will become a 15% owner the project.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.