GULFPORT, Miss. (AP) -- Mississippi Power Co. said Tuesday that customers won't have to pay more to cover its Kemper County plant's cost, which has risen from $2.88 billion to about $3.42 billion.
"While we are disappointed that costs have increased, we believe we have done the right thing by remaining accountable to our customers," Ed Day, president and CEO of Mississippi Power, said in a statement.
"Equally important is keeping the promise we made in the settlement agreement with the Mississippi Public Service Commission to limit the total rate base for the plant to $2.4 billion, net of Department of Energy grants and cost cap exceptions."
Mississippi Power said its expenses have risen including labor costs, piping and other material costs, engineering and support costs and productivity decreases.
The Public Service Commission approved a 15 percent rate increase in March, to be followed by a 3 percent rate increase in 2014. The higher rates will allow the company to start paying off debt related to what it calls Plant Ratcliffe even before it begins operations, scheduled for next year.
The plant will take lignite, a form of soft coal, crush it and turn it into a gas before burning it to generate electricity. The plant is designed to strip out carbon dioxide and other hazardous gases from the gasified lignite.
Mississippi Power said the final component of the gasifier has been successfully lifted into place and the water treatment facility and combined-cycle cooling tower have been completed.
That rate increase resulted from one prong of a settlement of litigation over the Kemper plant.
Under another part of the agreement, lawmakers passed a bill allowing Mississippi Power to issue up to $1 billion in bonds to pay off accumulated interest and some costs that overrun the $2.4 billion level on the plant itself.
Mississippi Power has 186,000 customers in 23 counties from Meridian to the Gulf Coast. It is a unit of Atlanta-based Southern Co.