The Kemper Counter Energy Facility will not reach full operation by the end of September, as had been reported by the project owner Mississippi Power just two weeks ago. The project is now expected to hit that milestone by the end of October, a delay that will cost the company $43 million, Mississippi Power spokesman Jeff Shepard told GHG Daily this week.
The project, a new-build, post-combustion CCS facility near the city of Meridian, has been producing energy with natural gas for two years. 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 carbon emissions roughly equal to that of natural gas. The CCS and IGCC portions of the plant are not yet online.
The project was initially billed at $2.4 billion and would have reached full operation in May 2014 under its original timeline.
The $43 million cost estimate increase is due to “the one-month schedule extension; testing on the syngas cleanup area and reaching sustained operations on both gasifiers and integrating all systems necessary to generate electricity,” Shepard wrote. This new cost spike brings the total estimated price tag of the project to more than $6.8 billion.
“It’s very important to the company our customers are reassured the additional amount will not be paid for by our customers,” Shepard wrote.
Shepard declined to say how much of the new overage is related to the extension itself and separate from the additional cost for testing.
According to Mississippi Power’s latest monthly status update, submitted July 26 to the U.S. Securities and Exchange Commission, “[a]ny extension of the in-service date beyond September 30, 2016 is currently estimated to result in additional base costs of approximately $25 million to $35 million per month, which includes maintaining necessary levels of start-up labor, materials, and fuel, as well as operational resources required to execute start-up and commissioning activities.” That filing also held that the project would be fully operational by Sept. 30.
The SEC is investigating the project over the constant delays and cost increases. Parent company “Southern Company and 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,” a quarterly filing with the SEC submitted Monday says.
It hasn’t been all bad news lately for Mississippi Power. The Kemper project reached an important milestone in July, successfully creating syngas from lignite for the first time, significantly advancing toward generation on coal. However, to date, this milestone has only been reached on one of the facility’s two gasifiers. “Next step will be making electricity with that gasifier. We expect to reach that milestone in the coming weeks. Remember, we still have to do all of that again on the second gasifier, so work progresses and continues on that now as well,” Shepard wrote.
In the coming months, Mississippi Power will also work to complete commissioning activities related to the gas cleanup area, including the carbon capture portion of the plant.
