GULFPORT, Miss., June 5, 2017 /PRNewswire/ -- Mississippi Power today filed a rate plan with the Mississippi Public Service Commission that would allow current rates for recovery of portions of the Kemper project to remain in place. If approved, the filing will not increase customer bills. Also today, the company submitted its monthly status report for the project.
Mississippi Power is not filing for a full rate review on recovery of the project's costs at this time. The company and the Mississippi Public Utilities Staff have been discussing the status of the project and the nature and timing of a rate filing to address recovery of the remainder of the Kemper project costs not currently in rates. Mississippi Power continues to develop a traditional rate case and a rate mitigation plan to address these costs; however, the timing of that filing is uncertain.
The component of the Kemper project currently being recovered in rates includes a portion of the project's combined cycle generating plant, which has been supplying approximately one-third of the electricity used by Mississippi Power customers since August 2014. The plant has primarily been using natural gas as fuel, but has also been using syngas from the project's gasifiers during testing and operation at periods throughout the year.
Mississippi Power said it expects the facility to be in service by the end of June. The schedule adjustment is needed due to required maintenance activities conducted during May that extended the time necessary to establish sustained, integrated operation of both the project's gasifiers for syngas production used to produce electricity.
The Kemper project has achieved periods of integrated operation of both gasifiers and combustion turbines and has been producing sulfuric acid and ammonia as well as capturing and transferring CO2. The project has operated a total of approximately 200 days using lignite.
Based on the experience gained from lignite operations and syngas production, Mississippi Power has completed its evaluation of certain additional improvement projects related to plant performance, safety and operations. These projects are anticipated to be completed over the next several years after the plant is placed in service.
The company's April report to the Mississippi Public Service Commission reflects capped cost increases of approximately $186 million. These costs are subject to the cost cap and will be paid by Southern Company and Mississippi Power – not by Mississippi Power customers. The costs include a net adjustment of approximately $22 million related to the schedule extension to the end of June and approximately $164 million related to the operational improvement projects.
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 cost and schedule for the completion of construction and start-up of the integrated coal gasification combined cycle project in Kemper County, Mississippi (the Kemper IGCC), expected post-in-service costs, Mississippi Power's rate filing and future regulatory filings. 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, including potential tax reform legislation, 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, continued issues with ash removal systems or syngas coolers, 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 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 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 (now known as Cooperative Energy); 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.