Mississippi Power issues statement regarding Kemper County energy facility progress and schedule
GULFPORT, Miss. – Mississippi Power today announced it is extending the expected in-service date of the Kemper County energy facility until mid-March 2017. While integrated operation of the facility’s gasifiers and combustion turbines has continued for periods since late January, the schedule adjustment is needed because of issues experienced with the ash removal system in one of the gasifiers.
The Kemper facility has achieved the integrated operation of both gasifiers, including the production of electricity from syngas by both combustion turbines. The project has also captured carbon dioxide and placed it in the CO2 pipeline for use in enhanced oil recovery. Both achievements were accomplished in the past month demonstrating continued progress.
Mississippi Power also today announced that it had completed its updated economic viability analysis of the project as required in the 2012 Mississippi Public Service Commission order on remand. The purpose of the study is to measure the economics of the Kemper project compared to feasible alternatives, including natural gas combined cycle generating units.
The analysis shows that primarily a reduction in projected long-term natural gas prices, and to a lesser extent an increase in operating costs of the project, negatively impact the economic viability of Kemper. Mississippi Power continues start-up activities to complete and operate the project.
The company has revised its cost estimate subject to the cost cap for the Kemper project by $35 million since the last report to the Mississippi Public Service Commission was filed. These increased costs will be paid by Southern Company and Mississippi Power – not by Mississippi Power customers.
Cautionary Note Regarding Forward-Looking Statements
Certain information contained in this communication 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 schedule for completing construction and start-up of the integrated coal gasification combined cycle project in Kemper County, Mississippi (the Kemper IGCC). 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, 2016, 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, construction and operation 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, sustaining nitrogen supply, contractor or supplier delay, non-performance under operating 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 December 2015 rate order, and related legal or regulatory proceedings, Mississippi PSC review of the prudence of Kemper IGCC costs and approval of further permanent rate recovery plans, actions relating to proposed securitization, satisfaction of requirements to utilize 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.