Coal-to-gas power plant a risky venture

Mississippi project beset by lawsuits, rising costs, engineering doubts

— In the woods of east Mississippi, a subsidiary of Atlanta-based Southern Co. is pouring billions of dollars into construction of a power plant that burns coal but would emit less carbon dioxide using a process called coal gasification.

It’s a response to looming federal limits on carbon emissions that many scientists say are contributing to a warming planet.

Each day, as 2,600 construction workers toil away at Plant Ratcliffe in Kemper County, the big bet becomes more expensive.

The projected cost is at least $2.8 billion, almost half a billion dollars above original expectations, and some estimates say it will go higher.

Legal challenges by the Sierra Club have led regulators to block the company from billing customers for the costs so far, although Southern subsidiary Mississippi Power Co. got closer to that goal with a favorable lower court ruling earlier this month.

Southern Chief Executive Officer Thomas Fanning stands by the plant.

He says Southern’s own technology will mitigate its environmental impact, and he cites the need to exploit coal as a hedge against uncertainties in the future cost of natural gas, which is currently cheap and abundant.

But there are risks.

The Kemper plant is the most expensive project ever built by Mississippi Power.

The company promises completion in May 2014, but some engineers monitoring construction for state regulators warn the cost could reach $3.1 billion, and they say completion isn’t likely until November 2014 at the earliest.

Those same engineers, with the firm Burns & Roe, say the plant’s linchpin coalto-gas technology isn’t certain to work.

Fanning says some setbacks at Kemper have been seen in the company stock price.

Shares are down about 5 percent over the past year, but Southern’s stock has closely tracked shares of other big utilities in that time.

Morningstar analyst Mark Barnett says he respects Southern’s ability to manage big projects, but says Kemper might dent Mississippi Power’s finances if costs keep mounting. “This is an outsized project for such a small utility,” Barnett said.

Business, Pages 26 on 12/29/2012

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