Dive Brief:
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Mississippi Power has again raised its estimate of cost overruns for its troubled 582 MW goal gasification plant in Kemper County, Mississippi.
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In its second quarter earnings release, Southern Company, the parent of Mississippi Power, added $9 million to the expected cost of the Kemper project, bringing the total to about $6.8 billion.
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The project, designed to gasify lignite from a nearby mine to fuel the generators, was originally slated to cost $2.9 billion.
Dive Insight:
Mississippi Power’s Kemper clean coal plant recently passed a significant milestone when it produced synthesis gas from lignite. But the milestone does not change the troubled history of the project.
The project was originally supposed to cost about $2.9 billion and be online in 2014. But construction delays and cost overruns have plagued the project, most recently in April when parent Southern Company informed federal regulators that costs had risen by $18 million.
With the latest cost estimates, Southern will have to cover part of the $2.5 billion in costs exceeding the $4.2 billion that will be shouldered by Mississippi Power customers. Southern is now looking at a $38 million before-tax write off from Kemper.
In addition to financial problems, the delays and cost overruns have brought legal problems. The U.S. Securities and Exchange Commission in May launched an investigation into the rising costs of the Kemper project.
Many of Kemper's problems were captured in a lengthy New York Times investigation of the plant, in which whistleblowers at Southern tell of rampant mismanagement at the utility. Southern has disavowed the story, and Mississippi Power says it plans to finish work on the project by Sept. 30.
