Southern Encounters Challenges in Starting Kemper Coal Plant

  • Plant equipment needed repairs and modifications: Southern
  • Tab for coal gasification project seen at $6.49 billion

Southern Co. is evaluating the startup schedule for its long-delayed and over-budget clean coal power plant in Mississippi after encountering challenges while testing equipment at the complex.

The company said updates to the service date of the facility in Kemper County are expected to be reported next month, according to a filing Tuesday with the U.S. Securities and Exchange Commission. Southern had previously said the complex would be operating by the first half of 2016. Additional delays would cost as much as $43 million a month. 

Southern has spent the past five years working to finish the first large-scale power plant in the U.S. to turn coal into gas to generate power while also capturing carbon dioxide and pumping it underground. The coal industry has been banking on plants like Kemper to pave the way toward cleaner-burning technologies. The project’s costs have ballooned to almost three times original estimates and it is more than two years behind schedule.

The Kemper facility is projected to cost $6.49 billion, according to Tuesday’s report. That tab includes an increase of $11.3 million in November due to some modifications, rework and repairs on some systems, the filing shows.

Testing Phase

Southern is in the operational testing phase of the project, said Jeff Shepard, a spokesman for Southern’s Mississippi Power unit, which is building the Kemper plant. 

“While these tests have confirmed the design of these first-of-a-kind systems, we have also identified some modifications, rework and needed repairs that will be implemented and retested before these systems can be placed in service," he said. “This is not unexpected for systems being commercialized for the first time."

Southern closed a penny higher at $47.37.

Southern will have to return about $234 million in investment tax credits to the Internal Revenue Service if the plant isn’t in service by April 19, 2016, the company said in September.

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