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Mississippi Power again delays Kemper IGCC startup for additional 30 days

MississippiPower Co. pushed the startup date for its integrated gasificationcombined-cycle project in Kemper County, Miss., back another month, saying in anOct. 3 filing that it forecasts the plant will enter service by Nov. 30.

The SouthernCo. utility increased its previous cost estimate by $33 million toaccount for $28 million related to the delay and $5 million for the necessaryrepairs and modifications to one of the facility's two gasifiers, gasifier"B," as well as improvements to coal and ash management systems.

The total project cost for the Kemper project, formallyknown as PlantRatcliffe, stands at $6.89 billion through August 2016, accordingto the monthly status report filed with Mississippi regulators. The previousreport, filed Sept.6, had maintained the goal of achieving service by the end ofOctober and increased the total project cost to $6.82 billion through July 2016.

On Sept. 16, Southern announced it has started producing syngas, derived fromon-site lignite, from its second gasifier, gasifier "A," at Kemper,describing it as a milestone for the facility.

According to the latest filing, gasifier A began the productionof syngas Sept. 13, "and has operated at nearly 100% availability atvarying levels of capacity." In late August, gasifier B was taken offlinefor inspection, and the removal of ash and ash deposits took longer thanexpected. "Additional time has been added to the schedule to allow for therestart of gasifier 'B' and for both gasifier trains to achieve the sustainedcapacity levels necessary for the initial operations and testing of the syngasclean-up systems and the production of electricity using syngas,"Mississippi Power stated in the filing.

The remaining schedule for Kemper also reflects time the utilitysees as necessary to "complete the integration of all systems necessaryfor both combustion turbines to simultaneously generate electricity withsyngas."

Next steps for Kemper include the continued operation ofgasifier A and the successful restart of gasifier B, which Mississippi Powerexpects will happen by the end of October. During the startup and commissioningprocess, the utility said it is identifying "potential improvementprojects" that could be finished after Kemper enters service. The relatedpotential costs "have yet to be fully evaluated," Mississippi Powerstated.

Any delay beyond Nov. 30 is estimated to result inadditional base costs of about $25 million to $35 million per month, butadditional costs could accrue related to addressing any further equipment ordesign issues. Costs not subject to the $2.88 billion recoverable cost capestablished by the Mississippi Public Service Commission could includeallowance for funds used during construction, which is estimated at approximately$14 million monthly; carrying costs and operating expenses; and approximately$3 million per month in consulting and legal fees.

The Kemper plant's syngas production , and its syngas productionover the ensuing months, according to Southern spokesman Jack Bonnikson,demonstrates the company's Transport Integrated Gasification, or TRIG,technology is viable. "Since then, the plant has achieved over 1,000 hoursof syngas production, validating the TRIG technology for both of thegasifiers," Bonnikson said in an emailed statement.

The Kemper plant has been producing electricity from naturalgas since August2014. In May, Southern disclosed the SEC is conducting into theKemper project related to the cost and in-service date estimates for the plant.