Abby L. Harvey
GHG Monitor
3/6/2015
Southern Co. this week reported an additional $26 million in cost overruns at the Kemper County Energy Facility, being built by subsidiary Mississippi Power, bringing the total cost of the project currently to nearly $6.2 billion. The latest increase is due, in part, to a recent Mississippi Supreme Court decision requiring that some funds collected through rate increases in the past be returned to ratepayers, Southern Company spokesman Jeff Shepard told GHG Monitor this week. “One half of this increase is attributable to the latest Supreme Court ruling which will cause the company to accrue additional interest on the regulatory assets that were deemed allowable in the [Public Service Commission]’s 2012 order. The balance of the increase is related to a true-up of projected interest associated with the already in-service combined cycle that is providing energy benefits to our customers,” Shepard said. Regardless of the additional cost, the project is due to reach a significant milestone this month with the first firing of the plant’s gasifier, Shepard said.
Under the recent Mississippi Supreme Court decision, Mississippi Power will have to return to ratepayers $257 million collected in rate increases. The decision reverses a 2012 Public Service Commission rate order that approved retail rate increases for roughly 186,000 ratepayers of 15 percent effective in March 2013, and 3 percent effective January 2014. The state Supreme Court found that the Public Service Commission violated the Base Load Act by not determining that the costs for Kemper were prudently incurred.
Once completed, the Kemper facility will utilize Mississippi lignite, a low-rank brown coal, to produce electricity. The plant will employ a custom integrated gasification combined cycle (IGCC) system and carbon capture and storage technology to produce electricity from the coal with carbon emissions roughly equal to that of natural gas. After several reported delays, the plant is expected to reach full operation in 2016. “Progress continues as approximately 2,500 workers focus on the start-up phase of the project, as well as on one of the plant’s most significant milestones to date – the first fire of the gasifier this month,” Shepard said.
