Dive Brief:
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Attorneys representing Southern Co. shareholders have filed a class action lawsuit against the Atlanta-based utility company seeking to recover damages from cost overruns at the integrated gasification combined-cycle (IGCC) Kemper project being built by Southern’s subsidiary, Mississippi Power.
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The suit alleges that Southern made false or misleading statements regarding the progress of the project, which is designed to gasify local lignite and capture most of the carbon dioxide emissions from the plant.
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Originally budgeted at about $2.8 billion, costs have risen to almost $7 billion and that burden falls mostly on shareholders.
Dive Insight:
The 582 MW Kemper project in Mississippi has suffered through multiple delays and cost overruns, most recently in December when Mississippi Power saying it expects to begin full operations in January, instead of at the end of last year.
At the time, Mississippi said the delay would add an additional $25 million to $35 million each month to cover labor, materials, fuel and operational resources required to start the plant.
The class action suit, Monroe County Employees' Retirement System v. The Southern Company et al., has been filed in the U.S. District Court for the Northern District of Georgia on behalf of shareholders who purchased Southern common stock between April 25, 2012 and October 29, 2013.
The project began in 2010 and has been the recipient of almost $1 billion in Department of Energy grants and Internal Revenue Service tax credits. The Kemper project was originally scheduled for completion by May 2014 and has a $2.88 billion cost cap set by state regulators, meaning shareholders have shouldered the brunt of cost overruns.
