Federal securities investigators are looking into how Southern Co. handled its disclosures of cost overruns at a troubled Mississippi power plant that aims to make coal a “clean” fuel for generating electricity.
The U.S. Securities and Exchange Commission “is conducting a formal investigation of Southern Company and Mississippi Power concerning the estimated costs and expected in-service date of the Kemper” plant, Southern Co. disclosed in a filing Thursday.
The Atlanta-based utility also is the parent company of Georgia Power, which is laboring with its own troubled project, an expansion of the Vogtle nuclear plant near Augusta. The project is billions of dollars over budget and years behind schedule.
Southern said it believes the investigation of the Kemper project covers the period after 2010 and focuses on “accounting matters, disclosure controls and procedures, and internal controls over financial reporting” related to the plant.
The company said it and its subsidiary Mississippi Power are “cooperating fully” with the SEC.
The advanced plant is designed to convert low-grade lignite coal into a gas to fuel turbine electric generators. It is also supposed to remove carbon dioxide and other pollutants in order to meet tougher federal air pollution standards that are causing utilities to shut down older coal-burning plants.
But so far, the eastern Mississippi plant has been racked with multiple cost overruns and delays that have put it two years behind schedule and pushed its estimated price tag up to $6.7 billion — more than double its original cost estimate.
For now, the plant’s three turbines are running on natural gas instead.
It was unclear when the probe began.
“The company started to pick up indications that public awareness of the investigation had matured to a point that, in our judgment, it should be disclosed,” Mississippi Power Co. spokesman Jeff Shepard said in a statement Thursday. “As this is an ongoing investigation, please understand that we cannot provide details beyond what we have already provided.
“While we cannot predict the ultimate outcome, as we have said in our disclosures on this matter, we do not expect the investigation to have a material impact on the financial statements of either Southern Company or Mississippi Power.”
Last month, Mississippi Power said it would spend another $61 million on the Kemper project, pushing its total cost above $6.7 billion.
Southern Chief Executive Officer Tom Fanning said last week that the Kemper project will use coal for the first time this summer after more than two years of delays. The plant, which has been burning natural gas to produce electricity, will fully convert to coal in the third quarter, Fanning said.
— The Associated Press contributed to this report.
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