| HOUSTON, April 29
HOUSTON, April 29 Southern Co will take a
$235 million charge in the first quarter and delay the startup
of its $5.5 billion coal-gasification power plant in Kemper
County, Mississippi, the company said in a filing with
regulators on Tuesday.
Southern Co, based in Atlanta, is scheduled to release its
first-quarter earnings on Wednesday.
Southern has previously taken $729 million in charges
related to more than $1 billion in cost overruns at the
582-megawatt Kemper County plant, one of only two integrated
gasification combined-cycle (IGCC) plants in the nation.
Mississippi Power, Southern's smallest utility, owns the
facility and plans to complete the gas-fired, combined cycle
portion of the project this summer.
However, the in-service date for Kemper's complex
gasification system has been delayed to the first half of 2015,
one year later than initially planned.
"The company remains focused on working safely and
tirelessly to complete the facility and bring it online for the
benefit of customers for decades to come," Mississippi Power
said in a statement.
The power industry has been closely watching progress at the
Kemper plant. Because it will be able to capture carbon dioxide
emissions, the Kemper plant has been cited as a model for future
coal-plant design by the U.S. Environmental Protection Agency
which has proposed strict limits on carbon pollution from
coal-fired power plants.
However, Southern officials have asked the EPA to refrain
from using Kemper as a standard for the industry because of its
Southern blamed the latest cost overrun on lower
construction productivity due to adverse weather at the site,
unexpected worker turnover and installation "inefficiencies"
related to the complex piping in the gasification system.
Earlier this year, Southern reported additional construction
costs of $184 million. On Tuesday, the company revised its cost
estimate by another $61 million and added $135 million related
to the delay in the expected in-service date.
With the $380 million increase, Kemper's price tag now
exceeds $5.53 billion, more that twice the $2 billion figure
announced when the plant was proposed.
Mississippi Power can only recover $3.8 billion of Kemper
costs through customer rates and the sale of securitized bonds.
Customers began paying higher rates related to the plant last
year after a lengthy battle with state regulators.