Costs and start date ignite investigation into Kemper plant

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Mississippi Power Co.’s $6.7 billion Kemper County power plant is being investigated by the federal Securities and Exchange Commission.

image002Estimated costs of the project and the expected date that service may begin are being examined. The Mississippi Public Service Commission, which regulates telecommunications, electric, gas, water and sewer utilities, said Mississippi Power Co. disclosed the investigation in its financial report required by the SEC for the first quarter of 2016, which ended March 31.

This investigation may fuel more controversy for the project that has been strongly criticized by a variety of groups — and staunchly defended by others involved with its planning and construction — for the past several years.

The state commission said Friday it was aware of the federal commission’s investigation.

“This Public Service Commission will continue to monitor the Kemper (integrated gasification combined cycle) Project and will fully examine all relevant issues in due course and take the appropriate actions to ensure that the ratepayers are treated fairly,” according to a statement released by the state agency.

The Southern Co. branch said in its filing that it believes the inquiry is focused primarily on “periods subsequent to 2010 and on accounting matters, disclosure controls and procedures, and internal controls over financial reporting associated with” Kemper, the Associated Press reports.

“As this is an ongoing investigation, please understand that we cannot provide details beyond what we have already provided,” Mississippi Power Co. spokesman Jeff Shepard said in a statement. “While we cannot predict the ultimate outcome, as we have said in our disclosures on this matter, we do not expect the investigation to have a material impact on the financial statements of either Southern Company or Mississippi Power.”

Mississippi Power Co. will spend another $61 million on the power plant, bringing its total cost to more than $6.7 billion, the company told the Associated Press April 26.

Although the facility has run on natural gas since August 2014, new cost overruns result from Mississippi Power pushing back the completion date for the entire project by an additional month to Sept. 30, the Associated Press said.

“We continue to anticipate the entire Kemper project to be placed in service during the third quarter of 2016,” said Cindy Duvall, spokesperson for Mississippi Power Co., told Mississippi Today.

An extension of the plant is designed to convert lignite, a type of coal, into a gas that will help create electricity in a process that has not been used previously.

Before certification by the Public Service Commission, the plant was scheduled to start generating power from coal in 2013. Once certified, the plant was then scheduled to start generating power in 2014.

While the natural gas portion of the plant began operating that year, harsh weather and other delays kept the extension from being completed, Shepard previously said. Other issues at the plant later included difficulties operating several rotary valves/airlocks for unloading coal and gasifier refractory issues at high temperatures.