Miss. Power reconsidering operation date for Kemper IGCC

It’s possible that the in-service date for the 582-MW Kemper County integrated gasification combined-cycle (IGCC) plant could suffer another delay, Southern (NYSE:SO) utility subsidiary Mississippi Power  suggested in a Jan. 5 filing with government agencies.

On Jan. 5, Mississippi Power submitted its monthly Kemper IGCC status report for November with the Mississippi Public Service Commission. In that document and an 8-K report with the U.S. Securities and Exchange Commission (SEC), the company hinted that the coal gasification power plant might not be ready for commercial operation in the first half of this year.

Kemper’s combined cycle portion of the plant, which has been in service since August of 2014, providing electricity to while fueled with natural gas.

“Management of Mississippi Power is evaluating the construction, commissioning, and start-up schedule for the Kemper IGCC as the result of challenges in ongoing start-up and commissioning activities, including repairs and modifications to the refractory lining inside the gasifiers, as well as operational readiness,” the company said in the SEC document.

“Mississippi Power’s previously disclosed projected in-service date for the Kemper IGCC is during the first half of 2016,” the company noted. “Any specific updates to the projected in-service date and related cost estimate are expected to be reflected in the Kemper IGCC Project Monthly Status Report through December 2015, which Mississippi Power expects to file by early February 2016.”

As previously disclosed, any extension of the in-service date beyond June 30, 2016, is currently estimated to result in additional base costs of approximately $25m to $30m per month, which includes maintaining necessary levels of start-up, labor, materials, and fuel, as well as operational resources required to execute start-up and commissioning activities.

“However, additional costs may be required for remediation of any further equipment and/or design issues identified,” the utility said. “Any extension of the in-service date with respect to the Kemper IGCC beyond June 30, 2016 would also increase costs for the Cost Cap Exceptions, which are not subject to the $2.88 billion cost cap established by the Mississippi PSC. These costs primarily include AFUDC, which is currently estimated to total approximately $13 million per month,” said the Southern subsidiary.

The analysis of the time needed to complete the start-up and commissioning activities for the Kemper IGCC will continue until the remaining Kemper IGCC assets are placed in service, the company said.

“The ultimate outcome of this matter cannot be determined at this time,” the company said.

The Mississippi PSC case is Docket No. 2009-UA-14.

The Mississippi PSC elected Brandon Presley as its chairman on Jan. 5. The PSC also announced that it was moving to reduce bills for customers for both Entergy (NYSE:ETR) utility Entergy Mississippi as well as Southern subsidiary Mississippi Power.

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.