Abby L. Harvey
GHG Monitor
10/3/2014
Mississippi Power reported an additional $59 million in overruns for Kemper County Energy Facility in a filing with the Securities and Exchange Commission this week. The latest increase, when added to previously reported overruns, results in an $88 million increase in the project’s since the company’s last quarterly filing with the SEC. This week’s filing attributed the latest overrun to “construction, start-up and operational readiness activities, including additional related contingency as well as additional property taxes and insurance.” More specific information on the delay and an updated cost estimate for the project will be released by the company by the end of the month, the filing says.
In addition, the launch date for the Kemper plant has been further delayed, according the filing. “Management of Mississippi Power is reviewing the project schedule for the Kemper IGCC as a result of matters related to start-up activities and operational readiness, including specialized operator training, and currently expects that the Kemper IGCC will be placed in service later during 2015 than the previously scheduled in-service date of the second quarter 2015,” the filing states.
The Kemper project has been plagued by cost overruns and delays, with the current estimated total cost at approximately $5.6 billion. The last reported overrun totaled approximately $29 million in additional costs “primarily related to state-up labor and materials, as well as operational resources required for operational performance and operational readiness, including costs for contract operators and training programs.” Overruns comprised of $61 million were reported in May and were attributed to construction issues which were identified as decreases in construction labor productivity on the project due in large part to adverse weather, unexpected excessive craft labor turn-over and unanticipated installation inefficiencies; and $135 million related to the delay of the projected in-service date also announced at that time. Once completed, the facility will utilize Mississippi lignite, a low-rank brown coal, to produce electricity. The plant will employ a custom gasification system and carbon capture and storage technology to produce electricity from the coal with carbon emissions roughly equal to that of natural gas.
