Southern Co. losses on Mississippi plant exceed $600 million, could affect Vogtle nukes

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Officials of the Southern Co. said the energy holding company is writing off another $278 million in losses on a coal-fired power plant under construction in Mississippi, increasing the after-tax losses on that project to $611 million.

Southern disclosed that its shareholders would eat those cost overruns prior to releasing its quarterly financial results for the period ending June 30.

“The revised construction cost estimate reflects Mississippi Power’s current analysis of the cost to complete the Kemper project,” the company said in a news release. “Mississippi Power’s analysis will be ongoing throughout the project’s construction.”

Mississippi Power is building an experimental generation facility in Kemper County, Plant Ratcliffe, that would take low-grade lignite coal and gasify it, burning the gas to generate electricity.

The construction project, which was initially estimated to cost $2.4 billion, has encountered massive cost overruns. Southern Co. had already announced in May its shareholders would absorb overruns of $540 million on Plant Ratcliffe.

Those cost overruns on Plant Ratcliffe could affect a major project being handled by another Southern Co. subsidiary, Georgia Power, which is building two nuclear reactors at Plant Vogtle near Waynesboro.

Georgia Power has filed for approval of $737 million in cost overruns on the Vogtle reactors. The Public Service Commission is currently considering whether to allow the utility to pass along those overruns to its customers or require Southern Co. shareholders to absorb the costs.

At the initial hearing on the Vogtle overruns, Commissioner Tim Echols suggested that the PSC might consider an arrangement similar to the one Mississippi Power reached with that state’s PSC over the Plant Ratcliffe costs.

“That deal that was struck may be instructive for us here in Georgia,” Echols said. “I’d be interested in hearing about how a Georgia version of that might look.”

Gov. Nathan Deal also said last week it might be a “good solution” for Southern Co. to absorb the Vogtle cost overruns.

© 2013 by The Georgia Report

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Tags: cost overruns , Georgia Power , Mississippi Power , Plant Ratcliffe , Plant Vogtle , Southern Co.