Southern Company said it injected $1 billion in additional capital into its Mississippi subsidiary after it decided last week, under pressure from state regulators, to pull the plug on a troubled “clean coal” plant.
The Atlanta utility holding company’s shares have dropped about 7 percent since the Mississippi Public Service Commission told Mississippi Power last month that the utility should absorb $6.5 billion in losses and cost overruns at the first-of-its kind Kemper plant.
The stock price decline over the past two weeks has wiped out roughly $3.7 billion of Southern’s stock market value.
In a monthly filing on the status of the Kemper plant, Southern said $3.4 billion of the Kemper plant’s costs are not yet reflected in its Mississippi customers’ rates. If the Mississippi regulator does not allow Mississippi Power to recover those costs, Southern said it will have to recognize a related charge against its second-quarter income.
The Mississippi regulators also recently told the utility that the Kemper plant should only burn natural gas, prompting Southern’s decision last week to suspend efforts to operate a coal “gasification” unit at the plant. The $7.5 billion plant was designed to convert cheap lignite coal into synthetic gas, but it has never run properly.
Mississippi Power used the $1 billion equity contribution from its parent company to prepay $300 million on a $1.2 billion unsecured loan, to repay $591 million on a loan from Southern, and $10 million on bank loans, Southern said last week in the filing.
Georgia Power, Southern’s largest subsidiary, faces similarly big headaches with its project to build two new nuclear reactors at Plant Vogtle near Augusta.
The Vogtle expansion is over three years behind schedule and more than $3 billion over budget. More costs and delays are expected after the project’s key contractor, Westinghouse Electric, filed bankruptcy in late March.
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VIDEO -- What Westinghouse’s troubles mean for Plant Vogtle: