Kemper County IGCC Costs Rise and Delays Loom—Again

In what has become a regular occurrence with the Kemper County integrated gasification combined cycle power plant, Mississippi Power announced in a filing with the Securities and Exchange Commission on April 1 that costs have risen from the most recent projections and further delays in its in-service date are possible.

Though the $18 million in additional expenses are a relative pittance next to the roughly $6 billion the plant is projected to cost, the filing indicates that the Southern Co. subsidiary is still struggling to keep control of budgets for the innovative plant, which will fire local lignite that has been converted to syngas. Just last month, the utility said the plant would come online by August 31, pushing back an earlier date in the first half of 2016. That delay added $110 million to the total.

The most recent filing pushes the bill to $6.66 billion. The plant was originally estimated to cost $2.2 billion in 2004, but costs began spiraling out of control almost immediately, especially once construction began in 2010 and the company discovered that many of the original designs needed major changes. Those problems appear to be continuing, as Mississippi Power said the April 1 update is “related to operational readiness and challenges in start-up and commissioning activities which includes the cost of repairs and modification to the refractory lining inside the gasifiers.”

An aerial of the Kemper Co. energy facility taken in July 2014. Courtesy: Mississippi Power

An aerial of the Kemper Co. energy facility taken in July 2014. Courtesy: Mississippi Power

Those refractory linings appear to have been ongoing trouble spots, according to statements Mississippi Power representatives have given to POWER in the past, with the gasification process causing unexpected cracking and erosion.

The company has previously said that each month of delay costs around $25 million to $35 million. The project is now nearly three years behind schedule. Because the ratepayer share of the plant is capped at $2.88 billion, the repeated overages are coming out of the company’s pocket.

—Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine).