TheSEC is conducting a formal investigation of Mississippi Power Co.'s integrated gasificationcombined-cycle generation project in Kemper County, parent company disclosed in Form10-Q May 5. The investigation concerns the estimated costs and expectedin-service date of the controversial plant, formally named .
"SouthernCompany and Mississippi Power believe the investigation is focused primarily onperiods subsequent to 2010 and on accounting matters, disclosure controls andprocedures, and internal controls over financial reporting associated with theKemper IGCC," the company stated in its Form 10-Q. "Southern Companyand Mississippi Power are cooperating fully with the SEC. The ultimate outcomeof this matter cannot be determined at this time; however, it is not expectedto have a material impact on the financial statements of Mississippi Power."
Southern spokesman Tim Leljedal said in an emailed statementthat the company, "startedto pick up indications that public awareness of the investigation had maturedto a point that, in our judgment, it should be disclosed. As this is an ongoinginvestigation, please understand that we cannot provide details beyond what wehave already provided in our 10-Q. While we cannot predict the ultimateoutcome, as we have said in our disclosures on this matter, we do not expectthe investigation to have a material impact on the financial statements ofeither Southern Company or Mississippi Power."
Asof March 31, Mississippi Power estimated a total cost for the Kemper project of$6.72 billion, according to anApril 26 filing, with plans for the facility to be fully online,producing power fueled by gas derived from onsite lignite, during the thirdquarter. Kemper has been producing power from conventional natural gassince August 2014.
Costsat the Kemper facility have been climbing steadily for years from an initialcost estimate approved by Mississippi regulators in 2012 of $2.4 billion, netof $245 million of grants from the U.S. Department of Energy, and excludingcertain other costs. At that time, the Mississippi Public Service Commissionapproved a construction cost cap of up to $2.88 billion, with the plantprojected to enter service in May 2014. In its , Southernrecorded an after-tax charge of $33 million related to revised schedule andcost estimates at Kemper.
Inthe Form 10-Q, the company also stated anappeal of a rate order granted to Mississippi Power by anintervenor in the case, Greenleaf CO2 solutions LLC, was dismissed by theMississippi Supreme Court on May 5.