Mississippi Power continues evaluating Kemper schedule
Current review shows entire project in service after mid-April
Revisions to current cost estimate of $15 million subject to cost cap
GULFPORT, Miss., Sept. 29, 2015 /PRNewswire/ -- Today Mississippi Power filed its monthly Kemper County energy facility project status report for August with the Mississippi Public Service Commission.
The company is further evaluating the project's schedule as a result of ongoing start-up, commissioning and operational readiness activities. As previously announced, Mississippi Power expects the entire project to be placed in service during the first half of 2016. This is now anticipated to take place after April 19.
The company has also revised its cost estimate subject to the cost cap for the Kemper project to include approximately $15 million in cost increases primarily related to additional resources in support of startup and commissioning activities, as well as operational readiness. Customers will not pay for this increase.
"The power plant portion of the project is already in service and has been providing safe, reliable electricity for our customers for more than a year," said Mississippi Power President and CEO Ed Holland. "Our November rate hearing before the PSC is only asking for cost recovery for this portion."
The company's current cost estimate for the Kemper project includes costs through March 31, 2016. As previously disclosed, any extension of the projected in-service date past March is estimated to result in approximately $25-$30 million per month above the project's cost cap. Customers will not pay for costs above the cost cap.
"As we've said many times before, the review of the project's schedule and cost estimates will be ongoing," said Holland. "Customers will not pay a penny more for the cost of the project than what is approved by the PSC."
Additionally, approximately $13 million per month in financing costs and $7 million per month for items such as operating expenses and carrying costs are expected to be incurred. These costs are not capped and are eligible for rate recovery, if approved by the Public Service Commission.
An in-service date beyond April 19 would require the company to return to the Internal Revenue Service approximately $234 million of Phase II investment tax credits which were received for the Kemper project. Southern Company is expected to support Mississippi Power's cash needs in returning the funds to the IRS.
Specific updates to the projected in-service date and related cost estimates are expected to be included in next month's PSC report to be filed by the end of October.
Mississippi Power, a subsidiary of Southern Company (NYSE: SO), produces safe, reliable and environmentally responsible energy for more than 186,000 customers in 23 southeast Mississippi counties. Mississippi Power has been recognized throughout the utility industry for excellence in storm restoration and recovery efforts and as a leader in safety. Visit our websites at mississippipower.com and mississippipowernews.com, like us on Facebook, follow us on Twitter, LinkedIn, Google+ and YouTube.
Cautionary Note Regarding Forward-Looking Statements
Certain information contained in this release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning the projected cost and schedule for the completion of construction and start-up of the integrated coal gasification combined cycle project in Kemper County, Mississippi (the "Kemper IGCC") and the repayment of investment tax credits. Mississippi Power cautions that there are certain factors that could cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Mississippi Power; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Mississippi Power's Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: changes in tax and other laws and regulations to which Mississippi Power is subject as well as changes in application of existing laws and regulations; the ability to control costs and avoid cost overruns during the development and construction of facilities, which include the development and construction of generating facilities with designs that have not been finalized or previously constructed, including changes in labor costs and productivity, adverse weather conditions, shortages and inconsistent quality of equipment, materials, and labor, contractor or supplier delay, non-performance under construction or other agreements, operational readiness, including specialized operator training and required site safety programs, unforeseen engineering or design problems, start-up activities (including major equipment failure and system integration), and/or operational performance (including additional costs to satisfy any operational parameters ultimately adopted by the Mississippi Public Service Commission ("PSC")); the ability to construct facilities in accordance with the requirements of permits and licenses, to satisfy any environmental performance standards and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction; advances in technology; actions related to cost recovery for the Kemper IGCC, including the ultimate impact of the 2015 decision of the Mississippi Supreme Court, the Mississippi PSC's August 2015 interim rate order, and related legal or regulatory proceedings, Mississippi PSC review of the prudence of Kemper IGCC costs and approval of permanent rate recovery plans, actions relating to proposed securitization, the ability to utilize bonus depreciation, which currently requires that assets be placed in service in 2015, satisfaction of requirements to utilize investment tax credits and grants, and the ultimate impact of the termination of the proposed sale of an interest in the Kemper IGCC to South Mississippi Electric Power Association; and the ability of counterparties of Mississippi Power to make payments as and when due and to perform as required. Mississippi Power expressly disclaims any obligation to update any forward-looking information.
SOURCE Mississippi Power
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