Report: Mississippi Power's Kemper plant set for full operation in November

Dive Brief:

Mississippi Today toured the Kemper coal gasification facility and reports the plant is almost fully operational —but debate over costs and the prudency of constructing the new generation will likely be debated for some time.
Once fully operational, the Mississippi Public Service Commission will then undertake prudency hearings to determine how much of the project's cost overruns will be paid for by customers.
Originally slated to cost $2.8 billion, Mississippi Power began development in 2008 but costs have ballooned the price tag to almost $7 billion. It will be one of two coal gasification facilities in the country.

Dive Insight:

Getting the Kemper facility fully online is only half the battle for Southern Co., Mississippi Power's parent company. While construction is winding down and the plant's operations ramping up, news site Mississippi Today reports there is almost certainly more debate ahead.

Last month, Southern announced the plant had begun producing syngas using the second gasifier, a major milestone. But while the plant operators are touting those milestones, the plant has also come under scrutiny over its costs overruns and multiple delays. In May, the SEC launched an investigation into the rising costs of the Kemper project.

The project was originally supposed to cost about $2.9 billion, with a deadline to come online set for 2014. But construction delays and cost overruns have plagued the project. The project was set to come online by the end of this month, but Mississippi Power pushed back the date to N

Earlier this year, Southern Company informed federal regulators that costs had risen by $18 million. The parent company will have to cover part of the $2.5 billion in costs exceeding the $4.2 billion that will be shouldered by Mississippi Power customers. Southern is now looking at a $38 million before-tax write off from Kemper. But that didn't stop costs from rising again.

Last month, an SEC filing revealed further delays added $33 million in costs related to $5 million for repairs, modifications and mechanical improvements and $28 million linked to the schedule extension.

The Kemper plant began generating gas power last year, using natural gas rather than synthetic gas. Located in Kemper County, the 582-MW facility would be the first Mississippi Power baseload plant built in more than 30 years. Along with Duke's Edwardsport plant in Indiana, it is one of just two coal gasification plants in operation in the United States today.