Martin Schneider
GHG Monitor
4/4/2014
The cost of Mississippi Power’s Kemper County IGCC project has increased by another $177 million to $5.22 billion, according to the company’s April 2 filing with the Mississippi Public Utility Commission. The $177 million increase includes $152 million in construction costs and $25 million in start-up costs. “Additionally, management is reviewing the impact to the construction schedule and contingency for the Kemper IGCC,” the filing states. “Further changes to the construction costs and schedule may be reflected in the PSC Report through March 2014.”
The costs that Mississippi Power can recover from ratepayers for the plant have been capped at $2.8 billion, meaning the company will largely foot the bill for the costs above the cap. The project remains on track for completion in the fourth quarter of 2014, the company said.
Explaining the increase, Mississippi Power said: “In March 2014, Mississippi Power identified decreases in construction labor productivity at the Kemper IGCC due in large part to adverse weather, unexpected excessive craft labor turn-over, and unanticipated installation inefficiencies. Management is currently reviewing these additional cost pressures and has identified a minimum of approximately $177 million in likely cost increases.”
Mississippi Power added that it “could experience further construction cost increases and/or schedule extensions with respect to the Kemper IGCC as a result of factors including, but not limited to, labor costs and productivity, adverse weather conditions, shortages and inconsistent quality of equipment, materials, and labor, contractor or supplier delay, or non-performance under construction or other agreements. Furthermore, Mississippi Power could also experience further schedule extensions associated with start-up activities for this ‘first-of-a-kind’ technology, including major equipment failure, system integration, and operations, and/or unforeseen engineering problems.”
