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Cost recovery for the Kemper County Integrated Gasification Combined-Cycle plant

Bates White's Energy Practice's work on a case in Mississippi came to a successful close when the Mississippi Public Service Commission approved a settlement among Mississippi Power Company, the Mississippi Public Utilities Staff, and several stakeholders regarding cost recovery for the Kemper County Integrated Gasification Combined-Cycle (IGCC) plant. This plant, which had an original estimated cost of $2.88 billion, was meant to use a first-of-a-kind “clean coal” technology to produce power, including carbon capture and sequestration. However, the project suffered from numerous delays and large capital cost overruns; moreover, the plant never worked as designed. Bates White conducted a prudence review of all costs incurred by the utility on the plant. Through multiple rounds of expert testimony, we recommended that the utility be held to the promises made in its original filing seeking approval to build the Kemper project. Pursuant to the settlement, Mississippi Power Company will take a write-down of $6.4 billion against Kemper's total cost of $7.5 billion, while ratepayers will pay the remaining $1.1 billion over time for the portion of Kemper that will operate on natural gas.

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