Kemper Plant Commissioning Pushed to January, Costs Continue to Rise

The problematic  Kemper Project clean coal power plant being constructed by Mississippi Power will miss its next targeted start-up date of December 31 – and now will likely start operations in January 2017, according to a December 5 report in the Atlanta Business Chronicle.

Parent utility Southern Company reported in a Securities & Exchange Commission filing that the one-month extension will cost it up to $35 million in “start-up labor, materials, and fuel, as well as operational resources required to execute start-up and commissioning activities.”

All of those costs, it said, would be paid by Southern Company and Mississippi Power – not by Mississippi Power customers.

Indeed, the plant originally was estimated to cost Southern Company around $2 billion, the Business Chronicle reported, but that cost has topped almost $7 billion.

In a November 4 news release, Mississippi Power noted that “The one-month extension is needed, because on Wednesday, November 2, [we] determined that a maintenance outage on gasifier A, one of the facility’s two gasifiers, was needed [in order] to make improvements to the ash removal systems.”

That bad news was tempered by some good news: “This maintenance to gasifier A follows six weeks of successful syngas production –including generation of the plant’s first electricity with syngas,” the utility noted, adding, “During the outage for gasifier A, the company plans to bring gasifier B online in order to implement the necessary testing ahead of the production of electricity with syngas.”

However, this still may not be the end of the delays, the utility said – due to “difficulties integrating the systems required for sustained operations; sustaining nitrogen supply; [possible] major equipment failure; [and due to any] unforeseen engineering or design problems, including any repairs and/or modifications to systems and/or operational performance (including additional costs to satisfy any operational parameters ultimately adopted by the Mississippi Public Service Commission).”

Mississippi Power has received about $250 million in tax benefits associated with bonus depreciation that are dependent upon placing the Kemper Plant in service by year-end. In connection with the fourth quarter estimated tax payment, Mississippi Power will be required to repay this amount through Southern Company’s intercompany tax allocation.

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