By Editors of Power Engineering
Moody’s announced it will review Mississippi Power Company’s bonds for a downgrade due to continued delays and cost overruns at its first-of-its-kind 582-MW Kemper County gasification plant.
The report noted nine schedule extensions of the in-service date so far, as well as an increase in costs from $2.88 billion to over $7 billion in the rationale for its possible downgrade. Kemper County is now expected to enter service in late February.
Additionally, Mississippi Power announced it will update the plant’s project economic viability analysis due to low natural gas prices and higher-than-expected production costs. This review will be completed by the end of the month.
A downgrade would move the bonds into junk status, also known as non-investment grade. Moody’s previously cut Mississippi Power’s bond rating to near-junk in 2015.
Parent organization Southern Company would not be impacted by any potential move, as Moody’s noted Mississippi Power is one of Southern’s smaller subsidiaries, Kemper is having a “manageable” impact on Southern’s consolidated financials, and the purchase of AGL Resources, now Southern Company Gas, has strengthened the company.
However, Moody’s said Southern’s rankings could be negatively affected if there are further delays at Georgia Power’s Votgle project, or if there are ratings pressures at one of its larger subsidiaries.