Karen Frantz
GHG Monitor
1/10/14
The total cost for Mississippi Power’s flagship Kemper County IGCC project has now reached more than $5 billion—more than $2 billion above the initial expected project cost of $2.8 billion—according to a monthly report the company filed with the U.S. Securities and Exchange Commission on Jan. 3 for the project’s costs through November 2013. A spokeswoman for Mississippi Power, Amoi Geter, said the company experienced some of the biggest increases related to plant cost in the areas of direct labor, scaffolding and start-up cost. “While the total project cost estimate is higher than the previous month’s report, it is normal for a project of this size and scope to see estimated fluctuations from month to month,” she said. “Analysis of costs will remain ongoing throughout the construction period.”
The company said in the SEC filing that the project is scheduled to be in service the fourth quarter of this year, which is pushed back from the original expected in-service date, although Geter said “a considerable amount of work has been accomplished in recent months” and that the company is continuing to make “tremendous progress at the Kemper County energy facility.”
According to the SEC filing, a number of milestones have been met, including:
- The purchase of 2,968 acres for the plant site.
- Earthwork completion at the water reservoir and lignite delivery facility areas. Concrete, underground piping, electrical duct bank and structural steel work are all 99 percent complete. Process piping installation is 70 percent complete. Cable installation is 69 percent complete.
- Construction completion on three 115kV line rebuild projects. The four new 230kV lines and the mine service line are complete and energized. Construction is complete on eight substations and the Swealt-Sykes fiber line.
- Full completion of the treated effluent pipeline, natural gas pipeline, and the CO2 pipeline installation. Closeout activities remain on all three pipelines.
- Signage of long-term contracts for the sale of CO2, sulfuric acid and ammonia.
- Draglines placed in service as of Nov. 15.
“The first gasifier heat-up is the next major milestone,” Geter said. “It is currently scheduled for mid-to-late second quarter of 2014.” That is a delay from earlier projections: Previously Tom Fanning, Chairman and CEO of Southern Company, Mississippi Power’s parent company, had told investors that the company hoped to heat up Kemper’s gasifier by the end of 2013.
According to the SEC filing, the total project costs have not been reduced for Mississippi Power’s $1.14 billion estimated loss on the plant in excess of the cost cap. “Any future changes in the estimated costs to complete construction of the Kemper facility subject to the $2.88 billion construction cost cap established by the Mississippi PSC will be fully evaluated in connection with the company’s earnings in late January 2014,” Geter said. “It’s very important to note that Mississippi Power customers will not pay a penny of cost above the limit agreed to by regulators and legislators.”
