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Southern Co.’s forfeits tax benefit, coal unit delayed

Reuters reports that Southern Co.‘s $5 billion project to build one of the first coal-fired power plants that captures carbon dioxide emissions will be delayed beyond May, missing out on $133 million in tax incentives, the company said in a filing.

Rainy weather in the summer and low labor productivity will delay completion of the plant in Kemper County, Miss., until later in the year, Southern said on Wednesday, despite raising the project’s budget in July to meet the May deadline, according to the report.

Southern’s smallest utility unit, Mississippi Power, is building the 582 MW integrated gasification combined-cycle (IGCC) plant near oil fields. However, the plant’s location led Southern last month to caution regulators not to use it as a standard for future coal-fired plants, Reuters said.

“The expected extension of the schedule beyond May 2014 reflects Southern Company’s and Mississippi Power’s current analysis of the time needed to complete the construction and start-up activities of the Kemper IGCC,” the companies said in a filing with the Securities and Exchange Commission.

The delay means Mississippi Power will not be eligible for $133 million in investment tax credits and potential future tax credits, according to the report.

Cost overruns have increased the plant’s price tag twice this year to nearly $5 billion, more than twice the initial estimate. As a consequence, two executives involved with the project have been replaced, Reuters said.

Southern can recover $3.8 billion in related costs from Mississippi Power’s 185,000 customers. Reuters reports that Southern anticipates no change to customer rates proposed under a plan approved earlier this year by the Mississippi Public Service Commission.

In July, Southern increased the project’s budget by $450 million to keep it on schedule. Before that, it raised the budget by $540 million for additional piping systems, the report said.

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