Mississippi Power ups Kemper cost by $110 million through mid-2016

The Kemper County energy facility
The Kemper County energy facility SUN HERALD

Mississippi Power said Tuesday it is still reviewing the construction, commissioning and startup schedule for the lignite portion of the Kemper County energy plant and still anticipates it will be operational by mid-2016, but at a higher cost.

The company added $20 million to the estimated cost in its September report filed Tuesday with the state Public Service Commission.

Mississippi Power also revised its cost estimate that projected costs through March 31. The report said it expects about $90 million for startup costs for April, May and June, for a total of $110 million when combined with September's additional expense.

All of that is included under the PSC's cost cap and will be paid by the company.

"These costs are in addition to previous adjustments made in the July and August reports, bringing the total adjustments subject to the cost cap for the third quarter to approximately $150 million," the company said in a press release. "Customers will not pay for any of this increase in capped costs."

These latest increases bring the total projected cost of the plant to $6.42 billion. Any extension of the start-up beyond June 30, 2016 will result in an additional $25 million to $30 million a month, the company said.

Mississippi Power also said Tuesday it has begun testing the first of two coal-gasification units, or gasifier, at Kemper, which the company said is its most significant milestone to date. Sand is injected into the gasifier under operational conditions of heat and pressure before it is tested with lignite.

"The testing of the gasifier at Kemper is a huge step toward achieving full operation of the project in the first half of 2016," said Ed Holland, chairman and CEO of Mississippi Power. "This is one of the most important steps toward completion of the project. It demonstrates the first gasifier and related systems are working as designed to support the project's generating capability of producing syngas from lignite."