You cannot go almost $4 billion over budget without drawing some attention.
It was recently reported that the United States Securities and Exchange Commission has launched an investigation into the rising cost of the Mississippi Power Kemper coal gasification facility, just 65 miles from Kosciusko. The plant was approved a $2.9 million operating budget, but after years of overruns, the budget now exceeds $6.7 billion.
In a filing last week with the SEC, the unit owned by Southern Co. said it believes the inquiry is focused primarily on “periods subsequent to 2010 and on accounting matters, disclosure controls and procedures, and internal controls over financial reporting associated with” Kemper.
Southern Co. did its best to hide the investigation, burying it on page 25 of its 303 page 10Q quarterly report filed last Thursday. However, news sources found it anyway and as a result the company shares dropped by as much as 2 percent in a matter of minutes.
The Kemper County plant is supposed to gasify lignite coal and burn the resulting gas, eliminating much of the carbon dioxide and other chemicals generally produced from coal plants. However, the plant has been running off natural gas for more than a year.
Due to the problems, customers could be asked to pay as much as $4.3 billion for the plant after Mississippi Power already raised rates on its 186,000 customers by $126 million.
At least Southern Chief Executive Tom Fanning has said that the Kemper project will use coal for the first time this summer after more than two years of delays.
The SEC investigation could bring to light even more problems, such as whether the company knew the Kemper Project would be the subject of endless delays and if the company lied to regulators about the plant’s construction schedule. The plant was originally set to be in service by May 1, 2014.
I understand that new technology is expensive, but it is ridiculous and is costing Mississippi countless dollars. The company started building the plant before doing the engineering, a recipe for disaster. It was desperate to meet deadlines for expiring federal tax credits and now the customers are paying for it.
