October 30, 2013 9:54:45 AM
JACKSON -- Mississippi Power Co. says the expected cost of the power plant it's building in Kemper County has risen another $150 million because of schedule delays.
That pushes the total cost of the plant, a coal mine and associated pipelines to almost $5 billion. The complex was originally projected to cost about $2.8 billion.
Atlanta-based Southern Co., the parent of Mississippi Power, says it will write off the additional $150 million when it announces quarterly earnings Wednesday. It's the third straight quarter Southern has charged off Kemper costs, and shareholders will have absorbed $1.14 billion before taxes.
Also Tuesday, the completion date for what the company calls Plant Ratcliffe was pushed back until the last three months of 2014. Mississippi Power spokeswoman Christy Ihrig said it costs $15 million to $25 million for every additional month of construction, which is the main reason the cost also went up.
Mississippi Power had already announced it would miss a May 2014 completion deadline, which forced it to forfeit $133 million in federal tax credits. Because of accounting rules, the company said it didn't have to write off that amount from profit. Monitors employed by the Mississippi Public Service Commission had already warned that work was behind schedule. Tuesday, the company said the main problem was in piping connecting parts of the plant.
Mississippi Power said ratepayers wouldn't be asked to pay the latest cost increase. But there could be some more costs in play for Mississippi Power's 186,000 customers. In a report to the state Public Service Commission, the company listed an additional $79 million in financing costs and an additional $16 million in regulatory costs. In a January agreement to cap ratepayers' cost of the plant itself at $3.4 billion, Mississippi Power said it would ask customers to pay financing costs and other items through a bond issue of up to $1 billion. Customers would repay that bond issue, but Mississippi Power wouldn't make any profit, unlike on costs included in traditional rates.
Ihrig said Tuesday that the commission would decide how the extra $95 million would be paid for.
"We have some options we want to discuss with them, but we haven't discussed them," she said.
The PSC voted 2-1 in March to approve a 15 percent rate increase to start paying off the plant's debt before it begins operations, followed by an additional 3 percent increase in 2014. Mississippi Power has said it's likely in 2014 to seek an additional increase of at least 4 percent over 20 years to pay off the bonds.
Plant opponents are pressuring PSC members to rule that some or all of the spending on the plant has been imprudent, which would force Southern Co. shareholders to pay more. Louie Miller, the state director of the Sierra Club, said the club plans Wednesday to unveil three electronic billboards on the Mississippi Coast aimed at pressuring Southern District Commissioner Steve Renfroe of Moss Point, who was recently appointed by Gov. Phil Bryant.
"The swing vote on this is Steve Renfroe," Miller said.
A prudency hearing is scheduled for May.
Opponents say they don't believe Southern Co.'s claims that it will absorb additional costs, and say they believe the company hid knowledge of problems in the past.
"At the end of the day, these guys can't tell the truth," Miller said. "Why should I believe for five seconds that these guys are going to absorb all of these cost overruns?"