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Mississippi Power says Kemper project 'not currently fully operational'

Mississippi Power Co. once again missed the in-service date for its Plant Ratcliffe facility in Kemper County, Miss., setting up what could be another extension to finish the $7.3 billion project.

The Southern Co. subsidiary previously said that the integrated gasification combined-cycle project would be placed in service by the end of May. But in a May 31 news release, Mississippi Power said the facility "is not currently fully operational."

Mississippi Power was expected to send its monthly Kemper status report to state regulators on June 1, but did not do so, saying in the release that "the company continues to assess the project's schedule and cost." Mississippi Power will instead file that report with the state's Public Service Commission on June 5, along with making a rate filing for the project.

The company did not provide a target operational date in the release, as it has done in previous status reports.

In a June 1 note, Jefferies LLC analysts floated the possibility of Mississippi Power abandoning construction of the coal gasifier component of the Kemper project to help secure its stock price.

"While not ideal, should the company determine that the project will not continue, we believe this will help remove the Kemper uncertainty that has impacted the stock over the past [three] years," Jefferies analyst Anthony Crowdell wrote.

"Jefferies believes we are getting close to the 'fish or cut bait' time. Kemper (and Vogtle) continue to distract from a solid utility story and we believe the rate filing on Monday will get investors on a path toward Kemper certainty," the note continued.

Mississippi Power has delayed its in-service date for Kemper several times to address problems with its gasifier "A," which had leaks in March. The company said it took necessary corrective actions.

A company report for March filed with the PSC said there will be a $38 million cost estimate increase, including $22 million to extend Kemper's projected schedule, $8 million for startup fuel and $8 million for the most recent outage.

Excluding initial Energy Department grants and cost cap exceptions, the total estimated cost of the project as of March 31 was $5.75 billion. Mississippi Power said in the filing that it does not intend to seek rate recovery for any Kemper costs that exceed its $2.88 billion cap. The total project cost through March is $7.30 billion.