Controversial Kemper IGCC Power Project in Mississippi Set to Begin Operations in Third-Quarter 2016

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Researched by Industrial Info Resources (Sugar Land, Texas)--A day after the Fourth of July, fireworks of a another sort broke out between Southern Company (NYSE:SO) (Atlanta, Georgia) and the New York Times over the controversial coal-fed integrated gasification combined cycle (IGCC) generator project in Kemper County, Mississippi. Two years behind schedule and at least $3.7 billion over budget, Southern Company subsidiary Mississippi Power says the facility is expected to begin operations in third-quarter 2016.

The New York Times published an article this week saying the project, currently expected to cost at least $6.64 billion, has been rife with allegations of fraud and mismanagement. The project was meant to showcase "clean coal" technology, in which lignite would be used as a power source in a more environmentally benign way, according to the article. The newspaper said interviews with current or former regulators, contractors and others who worked on the project show Southern Company understated the project's cost and timetable and tried to conceal problems from regulators. The project has received hundreds of millions of dollars in federal subsidies, according to the newspaper.

The Kemper County energy facility has been using natural gas since August 2014, according to Mississippi Power. With the IGCC in place, syngas from lignite would be used as a power source, and carbon dioxide produced by the 582-megawatt (MW) plant would be used in enhanced oil field recovery operations. Syngas will power two 232-MW Siemens combustion turbine generators, with duct fired Nooter/Eriksen heat recovery steam generators and one 360-MW Toshiba tandem compound double flow steam turbine generator. For related information, see April 13, 2016, article - Southern Company Plans $17.9 Billion Capital Program for 2016-2018.

According to the New York Times, however, members of Congress have described the project "as more boondoggle than boon," and the Securities and Exchange Commission (SEC) is investigating Southern Company regarding its handling of the project.

Southern Company issued a retort to the New York Times, saying the article "provides a negative recap of previously disclosed developments that have already been addressed," and was an "apparent attempt to deliver a pre-conceived narrative." The company blasted the article as failing to provide context and key facts that "would have clearly illustrated the company's commitment to completing the project the right way for the benefit of customers. For example, faced with challenges indicative of a first-of-its-kind project, Southern Company has taken charges totaling $2.5 billion, helping ensure the project will deliver the same value to Mississippi Power customers as initially intended."

Southern Company went on to say a key source for the article, a former employee, had voiced concerns that were "unsubstantiated and not otherwise supported by the facts."

Once operational, nearly 500 permanent jobs will have been created at the plant and adjacent lignite mine, according to Mississippi Power.

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