Abby L. Harvey
GHG Monitor
10/2/2015
Mississippi Power, a subsidy of Southern Co., this week reported an additional $15 million in cost overages at the Kemper County Energy Facility in its monthly status report to the U.S. Securities and Exchange Commission. The report attributes the extra $15 million in the total estimated cost to “additional resources in support of startup and commissioning activities as well as operational readiness.” The latest overrun puts the project’s projected price tag at $6.27 billion, well above the initial cost estimate of $2.4 billion.
The plant, once completed, will use Mississippi lignite, a low-rank brown coal, to produce electricity. It 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. The project’s captured CO2 will be used in enhanced oil recovery.
The company has also announced an updated project schedule, with full operation now expected after April 19, 2016. This is problematic for two reasons. First, the current cost estimate for the project includes costs only through March 31, 2016. “Any extension of the projected in-service date past March is estimated to result in approximately $25-$30 million per month above the project’s cost cap,” according to a Mississippi Power press release.
Second, an in-service date beyond April 19 would require the company to return to the Internal Revenue Service approximately $234 million of Phase II investment tax credits it received for the project. “Southern Company is expected to support Mississippi Power’s cash needs in returning the funds to the IRS,” according to the release.
Southern Co. CEO Praises Ongoing Work at Kemper
Regardless of the project’s long history of delays and cost overruns, Southern Co. Chief Executive Officer Tom Fanning this week lauded the ongoing effort. “This plant will take a resource that otherwise goes unused in Mississippi, a native, American resource, creates tax base, creates jobs, and with [enhanced oil recovery], we’ll produce two million barrels of oil a year that otherwise goes untouched, and we produce electricity in the cleanest fashion,” Fanning said at an event hosted by the Bipartisan Policy Center this week.
He added that the technology at Kemper has wide-reaching prospects overseas. “Remember energy security breeds national security breeds economic security. Where do you think Poland that gets something like 90 percent of their energy from coal would view this technology?” Fanning said. “Coal will be burned around the world. … So, how do we use it effectively in a clean, safe, reliable, affordable fashion? I’m proud to say we’re developing real solutions, not rhetoric, to try to make that happen.”
