- The U.S. Securities and Exchange Commission has launched an investigation into the rising cost of Mississippi Power's Kemper coal gasification facility, which was approved at $2.9 billion but, after years of overruns, now exceeds $6.7 billion, the Atlanta Journal Constitution reports.
- Mississippi Power parent company Southern Co. has confirmed the federal investigation; the company has said it does not believe it will result in a material impact to its bottom line.
- The investigation appears to be focused primarily on periods subsequent to 2010 and on accounting matters, disclosure controls and procedures.
You can't go almost $4 billion over budget without drawing some attention. In a Form 10-Q filed with the SEC, Southern revealed the agency is "conducting a formal investigation ... concerning the estimated costs and expected in-service date of the Kemper IGCC."
"Southern Company and Mississippi Power believe the investigation is focused primarily on periods subsequent to 2010 and on accounting matters, disclosure controls and procedures, and internal controls over financial reporting associated with the Kemper IGCC," according to the filing. "The ultimate outcome of this matter cannot be determined at this time; however, it is not expected to have a material impact on the financial statements of Mississippi Power."
Despite the assurances, shares dipped around 2% on the news, the Atlanta Journal Constitution reported.
"The company started to pick up indications that public awareness of the investigation had matured to a point that, in our judgment, it should be disclosed," Mississippi Power Co. spokesman Jeff Shepard told the newspaper. "As this is an ongoing investigation, please understand that we cannot provide details beyond what we have already provided."
The Kemper facility began generating gas power in 2014, but is not expected to begin burning the synthetic gas until summer. Located in Kemper County, Miss., the 582-MW facility would be the first Mississippi Power baseload plant built in more than 30 years and is one of two coal gasification plants in operation in the United States today, along with Duke's Edwardsport plant in Indiana.
The pricetag on the facility continues to rise. In April, the Constitution reported Mississippi Power indicated costs would be increasing an additional $61 million.