Abby L. Harvey
GHG Monitor
9/12/2014
The price tag on the Kemper County Energy Facility has increased again, this time by roughly $29 million, bringing the total cost of the first-of-its-kind project to $5.6 billion, according to a filing by Mississippi Power with the Securities and Exchange Commission last week. The reason for the latest increase, the filing says, is “related to start-up labor and materials, as well as operational resources required for operational performance and operational readiness, including costs for contract operators and training programs.”
The project remains on schedule to come into full operation in the first half of next year, spokeswoman Natalie Campen told GHG Monitor in a written response this week. “Significant milestones, including the recent commercial operation of the project’s combined cycle, have been reached in recent weeks and the project is scheduled to be placed into service in the second quarter 2015,” Campen went on to state that the latest cost increase is not out of the ordinary at this point. “It is normal for a project of this size and scope to see cost estimate changes on a monthly basis. The primary driver is expected monthly cost increases through plant in-service for start-up activities. These include: additional materials; ensuring we are ready to operate the plant and increasing the need for additional contract operators and support staff, and recruiting efforts for both; and operator training programs.”
The Kemper project has been plagued by cost overruns and delays, the most recent announced in May. Overruns at Kemper at that time comprised of $61 million tied to construction issues which were identified as decreases in construction labor productivity on the project due in large part to adverse weather, unexpected excessive craft labor turn-over and unanticipated installation inefficiencies; and $135 million related to the delay of the projected in-service date also announced in May. This is in addition to the $184 million in overruns reported previously, resulting in $409 million in total overruns thus far this year. Once completed, the facility will utilize Mississippi lignite, a low-rank brown coal, to produce electricity. The plant will employ a custom gasification system and carbon capture and storage technology to produce electricity from the coal with carbon emissions roughly equal to that of natural gas.
