March 17, 2014

AT THE MAJOR CCS PROJECTS: KEMPER, EDWARDSPORT

By ExchangeMonitor

Tamar Hallerman
GHG Monitor
10/26/12

AT KEMPER: MISS. POWER SAYS PROJECT COSTS, SCHEDULE STILL ON TARGET

Mississippi Power said its Kemper County integrated gasification combined cycle project is on schedule and on budget in its most recent report to the state’s public service commission. The utility, a subsidiary of the Atlanta-based Southern Company, announced late last week that it is on track with construction and plans to bring the 582 MW carbon capture and storage project online in May 2014. This comes despite the fact that the utility has been blocked by Mississippi regulators from raising rates on its nearly 200,000 customers to pay for construction until a legal challenge from the Sierra Club is resolved. In a release late last week, the utility said it told the Mississippi PSC that construction is more than 70 percent complete and that it recently began installation of the plant’s gasifier and CO2 absorbers. It added that the natural gas and effluent water pipelines, as well as critical transmission facilities, were completed on time or ahead of schedule.

Mississippi Power said that initial plant start-up could begin as early as next summer. “With engineering and procurement nearing completion, construction progressing on schedule and key startup milestones approaching quickly, Mississippi Power’s projections are that cost and schedule targets are achievable,” Tommy Anderson, vice president of generation development for Mississippi Power said in a statement. “As the project enters the peak construction phase, completion of design and on-time delivery of plant components is critical to ensuring the project remains on schedule and construction crews are working as efficiently as possible.” 

Miss. Power Expects Project to Stay At or Below $2.88 Billion

Mississippi Power said that despite the project being nearly $500 million over budget, the Kemper facility remains “on target” to stay at or below its $2.88 billion rate recovery cap. URS Corp., Kemper County’s independent construction monitor, indicated in its most recent publically-released construction report this summer that the project is nearing that $2.88 billion cap. The project, which has a $270 million grant from the Department of Energy, plans on capturing 65 percent of the plant’s emissions and piping the CO2 to nearby depleted oil fields for enhanced oil recovery.

In an interview last week, Chris Hobson, senior vice president for Research and Environmental Affairs at Southern Company, said the utility is confident that its subsidiary can get the project online on time and on budget. “There are challenges every day to a project this size, but yes we are confident that we are managing those challenges and that construction will be successful and that operation will be successful and I think that ultimately everything will work out fine,” he said last week. “The only challenge around the project in Mississippi is how you recover the cost…but those are just details. We’re not concerned about the project itself.”

 

AT EDWARDSPORT: DUKE BEGINS START-UP AT INDIANA IGCC FACILITY

Duke Energy began start-up tests at its recently-constructed Edwardsport integrated gasification combined cycle facility in southwest Indiana this week, the utility said. Duke said “extensive testing” is underway to prepare for commercial operations at the 618 MW facility, set to begin commercial operations next year. The utility said in a release that construction at the facility is “virtually complete” and that it has already produced electricity onsite using natural gas, adding that it will soon test the coal gasification equipment. Duke declined to comment for this article.

Plant start-up offers a major victory for the project, which has experienced several engineering, construction, legal and regulatory challenges over the last several years. The Edwardsport plant, which replaces three old, smaller coal units mothballed last year, has come in roughly $1.3 billion over budget and now carries the price tag of $3.3 billion. In May, Duke announced a settlement agreement with Indiana’s consumer regulatory group that would establish a $2.59 billion rate recovery cap for the project—roughly $700 million less than the amount requested by Duke—while essentially tossing out two pending phases of a case against the utility. In addition to cost overruns, Duke faced a case in front of the state’s public utility commission alleging ‘fraud, concealment and gross mismanagement’ regarding the Edwardsport project. Petitioners argued that Duke deliberately played down initial cost estimates for the project in order to gain regulatory approval from the Commission. Duke also faced accusations of illegally meeting with previously-serving utility board commissioners in the lead-up to rate recovery proceedings.

 

 

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