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Mississippi Power says Kemper will cost more, take longer

Mississippi Power on Tuesday added two months and $110 million dollars toward getting the lignite portion of its Kemper County power facility operational.
Mississippi Power on Tuesday added two months and $110 million dollars toward getting the lignite portion of its Kemper County power facility operational. MISSISSIPPI POWER

Mississippi Power on Tuesday added two months and $110 million toward getting the lignite portion of its Kemper County power plant operational.

In the December report to the state Public Service Commission, Mississippi Power increased its cost estimate by $110 million. The company said $40 million of that is for charges related to startup and commissioning activities in December, including repairs and modifications to the refractory lining inside the gasifiers, and $70 million for the extension of the expected start date from the end of June to the end of August.

The company says it expects the lignite startup by Aug. 31.

The project, originally was expected to cost about $2.4 billion, now stands at $6.64 billion.

Should the company not make the deadline, the cost will continue to soar.

Any extension beyond Aug. 31 is estimated to result in additional costs of $25 million to $35 million per month, the report said.

Southern Co., parent company of Mississippi Power, filed the report with the PSC and Securities and Exchange Commission ahead of announcing quarterly and year-end earnings Wednesday.

The PSC report said, "As a result of this revised cost estimate, Southern Co. and Mississippi Power recorded total pre-tax charges to income for the estimated probable losses on the Kemper IGCC of approximately $183 million ($113 million after-tax) during the fourth quarter 2015."

Mississippi Power continues to say in its monthly report it will not seek any rate recovery from customers that exceeds the $2.88 billion cost cap put in place by the PSC, net of the Department of Energy grants and excluding the cost cap exceptions.

One of those exceptions is Allowance of Funds Used During Construction for borrowed money, which currently runs $13 million per month.

The combined-cycle portion of the Kemper plant has been operational since August 2014, fueled by natural gas. Spokesman Jeff Shepard said about 2,300 workers are on site focusing on construction, startup and operation of the combined cycle and the mine.

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