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No cost increase or delays in Kemper plant’s July report

The Kemper energy plant has begun producing electricity via syngas, a major milestone to getting the plant fully operational using lignite. Mississippi Power said it hopes to get the second gasifier producing energy by the end of September.
The Kemper energy plant has begun producing electricity via syngas, a major milestone to getting the plant fully operational using lignite. Mississippi Power said it hopes to get the second gasifier producing energy by the end of September.

July was a good report to the Public Service Commission on the status of the Kemper County energy plant, said Jeff Shepard, spokesman for Mississippi Power, with no cost increase and no change to the anticipated end-of-October start date.

The report was released Tuesday and shows the plant’s cost, originally expected to be $2.4 billion, stands at $6.7 billion.

July was a big month for the plant — gasifier B started producing syngas July 14. The gasifier operated on lignite more than 60 percent of the time for the next six weeks, Mississippi Power said, before it was taken offline for inspection and what the company said “is expected to be minor repairs and maintenance.”

The next milestone is to get both gasifiers producing electricity.

“By the end of September, we expect to produce syngas on the second gasifier,” Shepard said. The completion of repairs and the successful restart of gasifier B also is scheduled for the end of September.

“If these milestones are not achieved by these dates, the Oct. 31, 2016, expected in-service date and related cost estimate for the Kemper IGCC may require further revision,” the report said.

The cost of Kemper would continue to increase by an estimated $25 million to $35 million a month beyond Oct. 31, an expense Shepard said would be absorbed by Mississippi Power. These costs include AFUDC — allowance for funds used during construction — which is about $14 million per month, as well as carrying costs and operating expenses on Kemper IGCC assets placed in service and consulting and legal fees of $3 million each month.

The company said additional costs or extensions of the Oct. 31 start date could come from “the results of the gasifier “B” inspection; difficulties integrating the systems required for sustained operations; major equipment failure; unforeseen engineering or design problems including any repairs and/or modifications to systems; and/or operational performance (including additional costs to satisfy any operational parameters ultimately adopted by the Mississippi PSC).”

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