Recovering the cost of the coal-burning portion of Kemper County energy facility from ratepayers is no longer likely, Southern Company said in a press release Wednesday.
As the parent of Mississippi Power, Southern reported earnings and recorded an additional charge to income of $2.8 billion for the plant.
For Mississippi Power customers, this means the company will assume the bill for building the Kemper plant rather than residential and commercial customers facing large rate increases for the $7 billion facility.
Mississippi Power now has incurred charges for the plant of $6 billion, or $3.9 billion after tax, the company reported.
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The next milestone comes on or before Aug. 21, when Mississippi Power will release its proposal to meet the conditions set by the Mississippi Public Service Commission, Southern Co. Chairman Thomas Fanning said in a conference call Wednesday. Additional charges may be absorbed by Mississippi Power under that settlement, he said, including $100 million to $200 million in future cancellation costs.
In June, the PSC took action as costs continued to rise by about $30 million a month and the deadline to get the facility fully operational extended two years after the original start date. The commission directed Mississippi Power to operate the plant with natural gas and to remove all of the cost risk to customers for the lignite coal-burning part of the plant.
Mississippi Power on June 28 notified the PSC it was suspending operations on the lignite portion of the plant, and Southern Co. said in its earnings report it still has $500 million to recover for that part of the plant. The plant continues to operate on natural gas, as it has done since Aug. 2014.
That leaves the PSC with a “pretty clear kind of evaluation,” Fanning said. “They’re not dealing with the gasifier anymore,” he said, referring to the coal-burning part of the plant. But he said a combined cycle unit that runs on natural gas is among the best in the United States and has produced electricity since 2014.
“What we’re left with, I think, in Mississippi is how does the commission want to treat the company on a sustaining basis,” he said. “We believe we should be treated fairly there.”
Wednesday’s quarterly report shows Southern Company reported a loss in the second quarter of $1.38 billion, or $1.38 per share, compared with earnings of $623 million, or 67 cents a share, in the second quarter of 2016. For the first six months of the year, Southern had a loss of $723 million, compared with earnings of $1.11 billion for the same period in 2016.
Southern Company also faces a “go/no go” decision from Georgia regulators on whether construction will proceed at Plant Vogtle nuclear facility in Georgia.
Southern Company has had a dividend increase every year for 16 years and the company said that remains sustainable.