Miss. Power Delays Kemper IGCC Plant (Corrected)

“Abnormally wet weather” and “lower-than-planned construction labor productivity” have forced Mississippi Power to push back commercial startup of its integrated coal gasification combined cycle (IGCC) project in Kemper County, Miss., to later in 2014 from the originally scheduled in-service date of May 2014.

The company said in a stock filing on Tuesday that it would complete specific revisions to the schedule and resulting changes to the construction cost estimate later this month. Missing the May 2014 startup deadline means the Southern Co. subsidiary will have to repay $133 million in allocated federal tax credits, it said.

“This is the first time that the project schedule has been revised,” noted Mississippi Power spokesperson Keith Guillot. “Until Wednesday’s announcement, it was believed the May 2014 completion date was achievable.”

A settlement reached with state regulators in Januaryallows Mississippi Power to seek higher customer rates for rising costs to build the plant, though it also sets a cost cap of $2.88 billion. But the company has seen cost overruns of nearly $1 billion for the 582-MW facility. In its most recent monthly status report to the Mississippi Public Service Commission, Mississippi Power puts total project costs at $4.75 billion. Total plant costs subject to the state-set cost cap amount to $3.87 billion.

Southern Co., which is also building two new nuclear reactors at Plant Vogtle in Georgia, in an Aug. 6 financial quarterly report estimated it would likely lose $990 million in the first half of this year as a result of revisions to estimated construction costs for the IGCC facility above the $2.88 billion cost cap announced earlier this year.

Separately, that report also acknowledges that “there can be no assurances” that the [Department of Energy] will issue loan guarantees for Georgia Power’s Plant Vogtle nuclear expansion, and notes that the conditional loan guarantee commitment was set to expire on Sept. 30. Southern Co. has previously said that it if it does not secure a federal loan guarantee of $3.46 billion (about 70% of project costs), it will finance the construction of the two reactors “through traditional capital markets financings.”

Mississippi Power has already received DOE grants of $245 million in the construction of the Kemper IGCC project, and the DOE will grant the plant an additional $25 million once it begins initial operations.

According to the company, the Kemper County facility has reached several major construction milestones, including the first fire of the facility’s two combustion turbines. The facility will use the turbines coupled with a steam turbine to form the combined cycle unit. In the first week of August, the company completed the first fire of the plant’s auxiliary boiler, which will be used to heat water into steam for use in the startup of the facility.

Filings show that concrete work at the plant is 98% complete, underground piping is 99% complete, electrical duct bank installation is 99% complete, and structural steel erection is 99% complete. Workers are halfway finished with process piping and cable installation.

Also in early August, the final 230 kV transmission line was energized and is now capable of receiving electricity from the plant. Five new transmission lines and five new substations are being built to carry electricity from the Kemper facility to Mississippi Power customers.

The company says more than 6,000 workers are onsite building the plant.

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)

CORRECTION: This story was corrected on Oct. 4 to reflect that this is the first time the project schedule for the IGCC project under construction in Kemper County, Miss., has been revised. POWERnews regrets that error.

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