Losses on risky projects crimp Southern Co.’s profits

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Losses on risky projects crimp Southern Co.’s profits

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Southern Co. said its net income dropped in the fourth quarter, largely because of losses at its Kemper “clean coal” plant in Mississippi, shown here. (AP Photo/Rogelio V. Solis, File)

A $200 million-plus loss on Southern Co.’s troubled Mississippi “clean coal” plant took a big bite out of its fourth-quarter profit, the Atlanta utility said Wednesday.

Southern has been saddled with big challenges at its two most ambitious projects: the Kemper plant being built by its Mississippi Power unit, and the Vogtle nuclear plant expansion near Augusta, overseen by its Georgia Power subsidiary. Both projects are years behind schedule and billions of dollars over budget.

Recently, more issues surfaced when Toshiba Corp. reported more than $6 billion in losses at its nuclear construction firm building the Plant Vogtle nuclear units 3 and 4, as well as a similar nuclear plant in South Carolina owned by SCANA.

Last week, Toshiba’s chairman resigned. The Tokyo company recently said it won’t build any more nuclear plants, and is expected to sell off its computer chip business and seek help from the Japanese government due to its heavy losses.

Southern Co. has said Toshiba’s nuclear construction firm has provided financial guarantees toward completing the Vogtle project, but critics fear Toshiba’s troubles could lead to more costly delays or bigger problems for the project.

It’s also unclear how Georgia Power’s preliminary plans for another new nuclear plant near Columbus will be affected if Toshiba is getting out of the business of building such plants.

Southern apparently included no update Wednesday in its earnings report about risks posed by Toshiba’s troubles. Likewise, the Georgia Public Service Commission had little to say about the issue during a meeting Tuesday when the board approved a semi-annual accounting of Plant Vogtle’s project costs.

The only mention came when Commissioner Lauren “Bubba” McDonald asked whether the PSC commission could re-open its decision, if needed, approving a $99 million study by Georgia Power of the Stewart County site for a possible future new nuclear plant.

“Toshiba was not a concern at that time,” McDonald said, when the PSC approved the study last July.

PSC staff told the commissioners that they can re-consider their decision on the study because they reserved that right, but no action was taken.

Meanwhile, Southern said Wednesday that delays in getting its Kemper plant in Mississippi running properly cost the company $206 million during the fourth quarter. Net income was $197 million, a 27 percent decline from its $271 million profit in the year-earlier quarter.

Kemper, a new type of plant, is designed to use so-called “gasifiers” to turn low-grade coal into cleaner-burning gas. But the gasifier units have run only intermittently, and the project has been hit by multiple lawsuits alleging fraud and a Securities and Exchange Commission probe into possible improper disclosures by Southern.

Southern’s fourth-quarter profit dipped despite a $110 million boost from its $8 billion acquisition of Atlanta natural gas utility AGL Resources, completed last year.

For the full year, Southern said its net income was $2.45 billion, up 3 percent from a $2.37 billion profit in 2015.

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