Kemper Co power plant cost rises another $600M

GULFPORT, MS (WLOX) - Mississippi Power needs another $600 million to complete its controversial Kemper County power plant. Tuesday, the company announced the price tag for the lignite gasification facility has jumped to $3.42 billion.

Since Mississippi Power is bound by a settlement with the state Public Service Commission to keep the customer rate base for the plant at $2.4 billion, this latest increase will instead hit investors.

Mississippi Power customers were already expecting to see their power bills increase 15 percent over the next two years to help pay for the Kemper County plant. Tuesday's news means the company will report a first quarter loss of $540 million.

"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."

The price increase is being blamed on increased labor costs, piping and other material costs, engineering and support costs, and lower productivity.

Still, progress continues on the facility. A Mississippi Power spokesman said in the last quarter the final component of the gasifier was successfully lifted into place. The water treatment facility and combined-cycle cooling tower are also now complete.

There are currently 3,500 workers onsite and nearly 400 Mississippi companies involved in the project. Construction is now in its final year.

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