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Update: SEC launches probe of Mississippi Power over Kemper plant

MISSISSIPPI POWER 
 The cost of the Kemper Co. energy facility rose by $7.3 million in January. The total cost of the facility now stands at $6.6 billion.
MISSISSIPPI POWER The cost of the Kemper Co. energy facility rose by $7.3 million in January. The total cost of the facility now stands at $6.6 billion.

The Securities and Exchange Commission has launched an investigation into Mississippi Power and its parent, Southern Co., over the power plant under construction in Kemper County, Southern Co. said in a federal filing.

The filing said the probe is looking into the estimated costs, which have skyrocketed, and the expected in-service date of the Kemper County plant, which has changed several times during construction.

"Southern Company and Mississippi Power believe the investigation is focused primarily on periods subsequent to 2010 and on accounting matters, disclosure controls and procedures, and internal controls over financial reporting associated with the Kemper IGCC," the filing said.

Jeff Shepard, Mississippi Power spokesman, said in a statement Thursday, "The company started to pick up indications that public awareness of the investigation had matured to a point that, in our judgment, it should be disclosed. As this is an ongoing investigation, please understand that we cannot provide details beyond what we have already provided in our 10-Q. While we cannot predict the ultimate outcome, as we have said in our disclosures on this matter, we do not expect the investigation to have a material impact on the financial statements of either Southern Co. or Mississippi Power."

Bloomberg reported shares of Southern Co.'s stock fell as much as 2 percent after Thursday's disclosure, closing at $50.62.

Southern Co. also announced Thursday a public offering of 18,300,000 shares of its common stock to raise an estimated $900 million in gross proceeds. The offering is expected to close May 11.

The proceeds from the stock offering will be used to fund a portion of the company's pending acquisition of AGL Resources, Southern Co. said. Proceeds also may be used for investment by the company in its subsidiaries or the payment of a portion of the company's outstanding short-term indebtedness.

Southern Co. said that as of March 31, its current liabilities exceeded current assets by $2.4 billion, primarily because of long-term debt that is due within one year.

The company reiterated that Mississippi Power does not intend to seek any rate recovery from its customers for expenses that exceed the $2.88 billion cost cap, net of the initial Department of Energy grants and cost-cap exceptions.

The cost cap was put in place by the state Public Service Commission when the cost of the plant, lignite mine and related facilities began to escalate. The latest cost estimate is $6.58 billion for the facility that originally was expected to be built for about $2.4 billion.

The company said it received $137 million in DOE grants for Kemper on April 8, "Which are expected to be used to reduce future rate impacts for customers."

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