Kemper Project costs increase by $62 million; now up to nearly $6.5 billion - Watchdog.org
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Kemper Project costs increase by $62 million; now up to nearly $6.5 billion

By   /   December 2, 2015  /   No Comments

Photo by Mississippi Power

GASIFIER: This photo shows the gasifier which turns lignite coal into synthesis gas. The combined cycle plant, which contains the electricity-generating turbines, has been running on natural gas since last August.

Mississippi Power announced a $62 million cost increase related to continuing construction of the oft-delayed Kemper Project power plant, according to an 8-K filing with the Securities and Exchange Commission on Tuesday.

The company expects the controversial “clean coal” power plant which converts lignite coal into a gas to fuel the facility’s electricity-generating turbines  will be fully operational by the first half of 2016.

Related: Cost of Kemper Project lost in the numbers

The total cost of the plant is up to $6.488 billion. The company blamed the increases on “additional resources needed for commissioning, start-up and testing activities as well as operational readiness, including resources related to completing additional required punch list items.” 

Merriam-Webster, defines punch list as “usually minor tasks to be completed at the end of a project.” The company says it won’t seek, in the form of further rate increases, to collect all costs in excess of the $2.88 billion cap, part of an agreement reached with the PSC designed to limit further rate increases on the utility’s 187,000 customers in south Mississippi.

The company files monthly status reports with the Mississippi Public Service Commission, and the October report filed Tuesday marked the third consecutive report with a cost increase. September’s increase was $110 million.

Related: Regulators mull objections over Mississippi Power rate increase

The combined cycle plant, composed of the electricity-generating turbines, has been operational since August 2014 on natural gas. Several parties in the battle over potential rate increases — including Greenleaf CO2, Chevron and several federal agencies including the U.S. Air Force — have filed objections with the PSC over a potential deal that would increase rates to cover the utility’s costs on the parts of the plant already in operation. The utility is seeking a rate increase of $126 million per year or about $1.1 billion total, while the intervenors would like to reduce that figure to $614 million, the estimated cost of a new natural gas plant in Mississippi, according to data from the federal Energy Information Administration.

Originally, the utility sought $159 million per year, the same rate approved by the PSC in August as an emergency rate increase — to cover costs on the combined cycle. This was also an 18 percent increase — the same amount overturned by the Mississippi Supreme Court. The company said it would run out of money in November if an emergency rate increase wasn’t granted; the Mississippi Supreme Court threw out its previous 18 percent increase.

Related: Ten reasons the Kemper Project is bad for consumers

Thomas Blanton, the former Democratic candidate for the Southern District PSC seat, filed a lawsuit that resulted in the Mississippi Supreme Court ordering the company to refund $350 million in rate increases to help fund Kemper construction.

Related: Kemper Project makes for an expensive natural gas plant

The court ruled the company could not collect rate increases before the PSC decides, in a prudency hearing, whether the spending on construction was justified. If the commission rules the utility’s spending was justified, it could then pass costs onto customers via rate increases.

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Steve Wilson is a writer and a journalist whose work has appeared on Fox News, the Huffington Post and the Daily Signal. He serves as the Mississippi reporter for Watchdog.org. Beginning his career as a sports writer, he has worked for the Mobile Press-Register (Ala.), the LaGrange Daily News (Ga.), Highlands Today (Fla.),McComb Enterprise-Journal (Miss.), the Biloxi Sun Herald(Miss.) and the Vicksburg Post (Miss.) His bachelor's degree is in journalism with a minor in political science from the University of Alabama. He served four-plus years in the United States Coast Guard after his high school graduation and is a native of Mobile, Ala. Steve can be reached at [email protected]