Miss. Power says more overruns likely at Kemper

Published on NewsOK Modified: July 1, 2013 at 9:20 pm •  Published: July 1, 2013

JACKSON, Miss. (AP) — Mississippi Power Co. warned Monday that costs are still increasing at the power plant it's building in Kemper County.

The unit of Atlanta-based Southern Co. told stockholders that an ongoing review of costs at the coal-fired plant has initially identified at least another $160 million in cost increases.

Mississippi Power spokeswoman Amoi Geter said Southern Co. shareholders would absorb any cost increases. The parent company was hit with $540 million in charges in April, although the after-tax cost to shareholders was lower. In a January settlement with Mississippi regulators, the company agreed to shield customers from further cost increases.

The overruns could push the cost of the plant, adjoining lignite mine and associated pipelines to $4.45 billion. That's more than $1.1 billion above original estimates.

In a report to the Mississippi Public Service Commission, Mississippi Power wrote that among the "cost pressures" were problems with the productivity of construction labor, supplies that the company is ordering to have on hand during the plant's start-up phase, and projected costs for fuel that the plant will burn during start-up.

"Management has reviewed a portion of these items on a preliminary basis and has identified a minimum of $160 million in likely cost increases," the company wrote in its report to the commission. "Further material cost increases may be identified as management completes its review."

When asked whether the company has control of the project, Geter replied, "We still believe the 2014 completion date is achievable." She declined to answer additional questions, citing the preliminary status of the review. Though the company disclosed the projection to stockholders, it didn't actually include the $160 million in a table of projected costs, instead footnoting the review.

Northern District Commissioner Brandon Presley, a consistent opponent of the plant, said the additional cost overruns are "very disturbing."

Continue reading this story on the...