Mississippi Power updates costs, schedule for troubled Kemper project

Mississippi Power, which on Sept. 29 filed its monthly Kemper County energy facility project status report for August with the Mississippi Public Service Commission, said it is further evaluating the project’s schedule as a result of ongoing start-up, commissioning and operational readiness activities.

Mississippi Power said it still expects the entire coal gasification power project to be placed in service during the first half of 2016. This is now anticipated to take place after April 19.

The company has also revised its cost estimate subject to the cost cap for the Kemper project to include approximately $15 million in cost increases primarily related to additional resources in support of startup and commissioning activities, as well as operational readiness. Customers will not pay for this increase.

“The power plant portion of the project is already in service and has been providing safe, reliable electricity for our customers for more than a year,” said Mississippi Power President and CEO Ed Holland. “Our November rate hearing before the PSC is only asking for cost recovery for this portion.”

The company’s current cost estimate for the Kemper project includes costs through March 31, 2016. As previously disclosed, any extension of the projected in-service date past March is estimated to result in approximately $25 million-$30 million per month above the project’s cost cap. Customers will not pay for costs above the cost cap. 

Additionally, approximately $13 million per month in financing costs and $7 million per month for items such as operating expenses and carrying costs are expected to be incurred. These costs are not capped and are eligible for rate recovery, if approved by the Mississippi Public Service Commission. 

An in-service date beyond April 19 would require the company to return to the Internal Revenue Service approximately $234 million of Phase II investment tax credits which were received for the Kemper project. Parent Southern Co. (NYSE: SO) is expected to support Mississippi Power’s cash needs in returning the funds to the IRS. 

Specific updates to the projected in-service date and related cost estimates are expected to be included in next month’s PSC report to be filed by the end of October.

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.