Monday, November 7, 2016
JACKSON, Miss. (AP) — Mississippi Power Co. now says it won't complete its Kemper County power plant until the end of the year, a delay of a month that pushes the price tag up by $25 million to nearly $7 billion.
The company announced the delay Friday as its Atlanta-based parent Southern Co. filed quarterly stock disclosures, saying ratepayers wouldn't have to pay the $25 million.
The documents show that if the coal-fueled plant doesn't start commercial operation by Dec. 31, Mississippi Power would have to repay $250 million of previously received tax benefits. Mississippi Power spokesman Jeff Shepard didn't immediately respond to questions about the potential repayment.
The plant and associated coal mine were originally supposed to cost $2.9 billion at most, and earliest estimates were lower. Stockholders have absorbed $2.6 billion in losses, while customers could be asked to pay more than $4.2 billion.
Mississippi Power said it decided Wednesday that it must shut down one of the two units that turn coal into a burnable gas to improve ash removal systems. The company says that by Dec. 31, it will start the second gasifier, make the improvements on the first one and synchronize them. The plant has been making power using natural gas since 2014 and made electricity by burning synthetic gas for the first time last month.
Kemper is designed to remove carbon dioxide from the synthetic gas, cutting carbon dioxide emissions to the level of a similarly sized natural gas plant. That's why the federal government has given what Mississippi Power calls Plant Ratcliffe hundreds of millions of dollars in aid.
Brett Wingo, an engineer who formerly worked at the plant, claims Southern has misled investors and others about previous schedule delays. Southern said Friday that the U.S. Securities and Exchange Commission continues to investigate those claims. Wingo has told The Associated Press that internal schedules had at one time called for six months between first production of synthetic gas and full operation. Southern Co. CEO Tom Fanning told investors in July that integrating the plant's systems would be more complicated than a typical power plant startup.
In December, the Mississippi Public Service commission agreed to let Mississippi Power raise rates on its 186,000 customers by $126 million a year to pay for $1.1 billion worth of Kemper equipment already generating electricity by burning conventional natural gas.
Mississippi Power has lost $222 million on Kemper this year alone, far outweighing the $40 million profit the company has posted.
The company says further delays would cost $25 million to $35 million a month that the company would pay, plus $18 million or more monthly in interest and other costs that customers could be asked to pay. The company has taken on a heavy debt to build Kemper, and its liabilities currently outweigh its assets by $411 million, in part because of $300 million in borrowing that came due Oct. 15.