Southern Company's $540M hit

April 25, 2013 | By Barbara Vergetis Lundin

Mississippi Power parent company Southern Company will absorb $540 million in costs from the Kemper County Coal Plant, an experimental plant under construction that has experienced several months of delays. Due to the delays, the plant has overshot original project cost estimates by $1 billion, facing customers with $3.4 million to $4 million in capital cost recovery.

Several weeks ago, Mississippi Power filed a cost report with the state Public Service Commission (PSC), reporting that the Kemper project was on time and would come in at a mandated cost cap of $2.8 billion. However, a more recent Southern Company filing with the SEC shows that the project in nearly $600 million over budget.

Earlier this year, Mississippi Power and the state Public Service Commission made an agreement to limit how much the company could raise electric rates to pay for the Kemper plant, but only if the state legislature passed a law allowing Mississippi Power to issue bonds worth up to $1 billion, to be paid for by customers through a fee on their monthly bill. The result is that Mississippi Power's customers will be charged for the plant through increases in their electricity rates and through additional fees, totaling as much as $4 million.

The plant, which uses untested and experimental technology, will still be under construction for another year, during which time costs could continue to rise.

For more:
- see this timeline
- see the filing

http://www.fierceenergy.com/story/southern-companys-540m-hit/2013-04-25