Mississippi Power revises cost estimate on Kemper County energy facility, will not seek recovery of increase from customers
GULFPORT, Miss. – As Mississippi Power approaches the final year of construction on the Kemper County energy facility and the plant design nears completion, the company has revised its cost estimate from approximately $2.88 billion to approximately $3.42 billion, both net of Department of Energy grants and cost cap exceptions.
The company will not seek to recover the increase from customers.
“While we are disappointed that costs have increased, we believe we have done the right thing by remaining accountable to our customers,” said Ed Day, president and CEO of Mississippi Power. “Equally important is keeping the promise we made in the settlement agreement with the Mississippi Public Service Commission to limit the total rate base for the plant to $2.4 billion, net of Department of Energy grants and cost cap exceptions.”
Mississippi Power continues to make tremendous progress on the facility; however, the company has recognized additional cost pressures, including labor costs, piping and other material costs, engineering and support costs, and productivity decreases.
There are currently 3,500 workers on-site and nearly 400 Mississippi companies involved in the project. A considerable amount of work has been accomplished this past quarter with the final component of the gasifier safely and successfully lifted into place, and the water treatment facility and combined-cycle cooling tower completed.
The project is a massive pioneer effort on the cutting edge of technology and is expected to offer significant long-term benefits to customers.
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. Recognized throughout the utility industry for excellence in storm restoration and recovery efforts, Mississippi Power is the 2013 winner of the Edison Electric Institute’s Emergency Assistance Award. Visit our website at www.mississippipower.com, Follow us on Twitter, or like us on Facebook.
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 cost and schedule for the completion of the construction of the Kemper project and expected benefits to customers. 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 year ended December 31, 2012, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory changes, as well as changes in application of existing laws and regulations; current and future litigation, regulatory investigations, proceedings, or inquiries; available sources and costs of fuels; state and federal regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and other cost recovery mechanisms; ability to control costs and avoid cost overruns during the development and construction of facilities, including the development and construction of facilities with designs that have not been finalized or previously constructed, to construct facilities in accordance with the requirements of permits and licenses, and to satisfy any operational and environmental performance standards, including the requirements of tax credits and other incentives; advances in technology; state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and other cost recovery mechanisms; regulatory approvals and legislative actions related to the Kemper project, including Mississippi Public Service Commission approvals and legislation relating to cost recovery for the Kemper project, the ability to complete the proposed sale of an undivided interest in the Kemper project to the South Mississippi Electric Power Association as contemplated by Mississippi Power’s proposed rate recovery plan, satisfaction of requirements to utilize investment tax credits and grants, and the outcome of any proceedings regarding the Mississippi Public Service Commission’s issuance of the certificate of public convenience and necessity for the Kemper project; 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.