When does the Kemper power plant open? Deadline missed

Published 10:14 pm Friday, December 2, 2016

JACKSON, Miss. (AP) — Mississippi Power Co. says it’s likely to again delay its Kemper County power plant, pushing completion of the $7 billion plant past the previous deadline of Dec. 31.

“While it remains possible to meet that projected in-service date, based on the current status of start-up and commissioning activities, Mississippi Power now expects that the Kemper IGCC will be placed in service during January 2017,” wrote Southern Co., the Atlanta-based parent of Mississippi Power, in a Friday stock filing .

The plant and associated coal mine were originally supposed to be finished in May 2014 and cost $2.9 billion at most, with earliest estimates lower. Customers are already paying for more than $1 billion in assets that are generating power using natural gas and could be asked to pay as much as $4.2 billion overall, if regulators approve. Shareholders have absorbed more than $2.6 billion in losses.

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The announcement came even though Mississippi Power told Mississippi Public Broadcasting earlier this week that it was still on track to meet the Dec. 31 start date.

“There’s no one more upset about the schedule delays and the costs increases than the people at Mississippi Power,” spokesman Jeff Shepard said.

The company said the delay would increase the overall price by at least $6 million that shareholders would absorb. However, additional charges from delays could fall on customers. For example, in September, when losses to the company rose by $25 million, Mississippi Power recorded another $20 million in costs in an account customers could be liable for.

All three members of the Mississippi Public Service Commission said Friday that they’re likely to question those amounts, saying customers shouldn’t have to pay for company mistakes.

Kemper is designed to remove carbon dioxide from synthetic gas made from lignite coal, cutting carbon dioxide emissions. It’s been making power using natural gas since 2014 and has now made electricity by burning synthetic gas from each of two gasifiers. But the company must still put the first gasifier back online, start a chemical plant to strip out carbon dioxide, and synchronize both gasifiers so they can run simultaneously.

Kemper critics say the company is compressing the time needed to fine-tune operations. Shepard said the end is in sight, though.

“We’re confident we’re getting close to full operation,” he said.

Mississippi Power had said it would lose $250 million in federal bonus tax depreciation credits it had already claimed if the start date pushed past Dec. 31. However, Friday, the company said the impact would be small because it would repay Southern Co. by borrowing money from the parent. Shepard said Southern Co. wouldn’t repay the IRS because it plans to claim an operating loss on its 2016 taxes. Shepard said Mississippi Power could re-claim the credits next year, repaying the internal loan.

Bonus depreciation reduces a company’s income taxes.