Bad News Thursday: Mississippi Power Kemper Plant hit with “Tube Leaks”. Gasifier offline until further notice

RFP was Johnny on the spot with today’s 8K issued by Southern Company:

In its Kemper County Integrated Coal Gasification Combined Cycle Project Monthly Status Report through January 2017, Mississippi Power disclosed that gasifier “B” required an outage to remove ash deposits from its ash removal system and it expected the remainder of the Kemper IGCC would be placed in service by mid-March 2017. Mississippi Power has completed the outage work for gasifier “B” and is in the process of resuming production of electricity using syngas on gasifier “B.” On March 9, 2017, Mississippi Power experienced certain tube leaks in one of the syngas coolers for gasifier “A” and commenced an outage on gasifier “A” to perform necessary corrective actions. As a result, Mississippi Power no longer expects the remainder of the Kemper IGCC will be placed in service by mid-March 2017. Specific updates to the schedule and cost estimate for the Kemper IGCC are expected to be reflected in the Kemper IGCC Project Monthly Status Report through February 2017, which Mississippi Power expects to file by early April 2017.

Further cost increases and/or extensions of the expected in-service date may result from factors including, but not limited to, difficulties integrating the systems required for sustained operations, sustaining nitrogen supply, major equipment failure, unforeseen engineering or design problems including any repairs and/or modifications to systems, and/or operational performance (including additional costs to satisfy any operational parameters ultimately adopted by the Mississippi PSC). Mississippi Power is also identifying potential improvement projects that ultimately may be completed subsequent to placing the remainder of the Kemper IGCC in service. If completed, such improvement projects would be expected to enhance plant performance, safety and/or operations. As of December 31, 2016, approximately $12 million of related potential costs has been included in the cost estimate for the Kemper IGCC, as discussed above. Other projects have yet to be fully evaluated and may be subject to the $2.88 billion cost cap. Any further changes in the estimated costs of the Kemper IGCC subject to the $2.88 billion cost cap, net of the Initial DOE Grants and excluding the Cost Cap Exceptions, will be reflected in Southern Company’s and Mississippi Power’s statements of income and these changes could be material.

Extension of the in-service date beyond March 15, 2017 is currently estimated to result in additional base costs of approximately $25 million to $35 million per month, which includes maintaining necessary levels of start-up labor, materials, and fuel, as well as operational resources required to execute start-up activities. However, additional costs may be required for remediation of any further equipment and/or design issues identified.

The bloodbath continues.