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Kemper Project Loses Millions in Tax Credits Over Missed Deadline
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Kemper Project Loses Millions in Tax Credits Over Missed Deadline


On September 30, Mississippi Power Co.'s Kemper County Energy Facility coal gasification plant suffered another setback as the company revealed it will miss one more key date and will have to return roughly $234 million in federal tax credits.  In a document filed with the Securities and Exchange Commission, the company said the facility will start up after April 19, 2016. That was the main deadline the project needed to meet to keep the Phase II investment tax credits.  This is the second time the company has had to forfeit or return federal tax credits for the next-generation coal project


Kemper, once hailed as a flagship project for clean coal in the United States, will use integrated gasification combined-cycle technology, presenting a path forward for coal at a time when natural gas, climate concerns and changing demand patterns all are taking punches at the market.  But the project has faced scheduling delays and cost overruns.  Kemper has been running on natural gas for more than a year with the remaining technology going through its startup phases right now.  Challenges with startup and testing have been key in pushing back the schedule.  With workers are preparing to test the gasifier soon, Mississippi Power will have a better idea of when the plant will come online. 


The total cost of Kemper, including the nearby lignite mine and CO2 pipeline, is now reaching $6.3 billion.  Customers are protected from some of the cost increases because of a cost cap, but the utility is allowed to seek recovery for more than $4.1 billion.  Mississippi Power's parent, Atlanta-based Southern Co., has written off more than $2 billion in excess costs and stands to take additional charges in the coming months. Any extension past an in-service date of March 31, 2016, adds $25 million to $30 million to Kemper's cost cap.  Customers will not have to pay for that.  But it also adds roughly $20 million of financing costs, operating expenses and carrying costs that Mississippi Power could ask to recover.
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