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Costs rise another $177 million at Kemper plant

 

Jeff Amy/The Associated Press

 

JACKSON -- The Southern Co. says it will cost at least another $177 million to finish the power plant it's building in eastern Mississippi's Kemper County, pushing the total cost above $5.2 billion. 

 

The Atlanta-based parent of Mississippi Power Co. said Wednesday that poor weather, unexpected turnover of construction employees and installation inefficiencies contributed to the extra costs. The utility is dividing the costs between $152 million for construction and $25 million for additional startup costs. 

 

Mississippi Power says it will pay the additional money -- not its 186,000 customers from Meridian to the Gulf Coast. 

 

Spokesman Jeff Shepard wrote in an email that the company has had to take more time or labor than expected to do things such as install pipes or electrical equipment "due to the complexity of the structure, tightness of the workspace and the increased focus on critical startup system priorities to maintain our schedule goals." Independent monitors have long noted the difficulty of cramming more workers into the small spaces in parts of the plant. 

 

Shepard also wrote that some workers have left the project to go work on other large projects being built along the Gulf Coast. 

 

"We are aggressively working to rehire and/or attract new craft labor to complete the Kemper project and believe we have an effective plan in place as we move forward," he wrote. 

 

The plant and associated lignite coal mine were originally supposed to cost $2.8 billion. The company said the Kemper plant, which it calls Plant Ratcliffe, will enter commercial operation late this year. 

 

The utility has now absorbed $1.3 billion in cost overruns, as well as $133 million in federal tax credits that the company is foregoing. 

 

As part of a settlement between the Public Service Commission and Mississippi Power, bills for customers have already gone up by 18 percent over two years. Mississippi Power has said it's likely to seek an additional increase of at least 4 percent over 20 years to pay off $1 billion in bonds that the Legislature is allowing the company to issue as part of the settlement. Customers would pay for part of the overruns in that bond issue, but Mississippi Power wouldn't make any profit, unlike on costs included in traditional rates.

 

 

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