• Southern’s Kemper $6.75 billion plant producing gas from coal
  • Project has been plagued by delays and cost overruns

Southern Co. said it started producing gas from coal at its $6.75 billion Kemper power plant, a milestone in the company’s six-year effort to complete the facility plagued by delays and cost overruns.

The output, called ‘syngas,’ isn’t yet being used to produce electricity at the complex located in Kemper County, Mississippi, Southern said in a statement Friday. Southern’s Mississippi Power utility is working to get other systems operational in the coming weeks to covert the coal gas to power. The plant is expected to be fully in service by the third quarter.

The project, the first large-scale power facility in the U.S. to gasify coal and capture carbon dioxide emissions before they are released into the atmosphere, has spurred a U.S. Securities and Exchange Commission probe and a lawsuit by ratepayers. Atlanta-based Southern said last year it would have to return about $234 million in U.S. tax credits if it failed to start Kemper by April 19. The company missed that deadline, and has taken $1.5 billion in charges related to cost overruns as of March 31, according to a filing in May.

The U.S. Department of Energy provided $245 million for the project. The coal industry is counting on Kemper to prove that technologies to lower pollution from coal are viable.

Southern fell 0.4 percent to $53.39 at 1:41 p.m. in New York.

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