Southern Co.’s Kemper County Energy Facility carbon capture and storage project in Mississippi, originally billed at $2.4 billion, now has a projected price tag of $6.74 billion after a new budget overage of $19 million, the company reported Wednesday in a monthly filing with the Securities and Exchange Commission. The price increase is “related to operational readiness and challenges in start-up and commissioning activities, including an $8 million change in the estimate reported last month for contingency, as well as the additional cost of repairs and modification to the lignite dryers and refractory lining inside the gasifiers,” according to the filing.
Regardless of the ever-increasing estimated cost, the company holds that the plant will reach full operation by the third quarter of this year. Extending the in-service date beyond Aug. 31 is estimated to result in additional costs of roughly $25 million to $35 million per month to cover startup labor, materials, fuel, and “operational resources” needed for startup and commissioning.
The report, which covers costs through the end of April, also says the Department of Energy on April 8 provided $137 million to the project that will be used to “reduce future rate impacts for customers.”
The project, a new-build, post-combustion CCS facility near the city of Meridian, has been producing energy with natural gas since August 2014. Once fully operational, the plant will use Mississippi lignite, a low-rank brown coal, to produce electricity. It will employ a custom integrated gasification combined cycle (IGCC) system and CCS technology to produce electricity from the coal with carbon emissions roughly equal to that of natural gas. The CCS and IGCC portions of the plant are not online.
The Kemper project is currently the subject of an SEC investigation launched in early May. “Southern Company and [subsidiary] Mississippi Power believe the investigation is focused primarily on periods subsequent to 2010 and on accounting matters, disclosure controls and procedures, and internal controls over financial reporting associated with the Kemper IGCC,” according to a May 5 Southern Co. filing.
