ATLANTA (AP) — The Southern Co. is taking an additional $450 million in losses on an over-budget coal-fired power plant in Mississippi.
The utility announced the pre-tax write-off Tuesday ahead of disclosing its latest quarterly earnings.
Southern Co. subsidiary Mississippi Power has struggled to control costs while building Plant Ratcliffe, a coal-fired plant in Mississippi's Kemper County.
Mississippi Power CEO Ed Holland told The Associated Press that he can't guarantee there won't be more write-offs. But Holland said he's more confident about the company's building process.
The company earlier agreed it will only seek $2.4 billion from its customers for plant construction costs. Customers will also have to pay off as much as $1 billion in bonds.
Southern Co. previously took a $540 million loss on the plant.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
Southern Co. shareholders will absorb $450 million in losses incurred while building a new coal-fired power plant in Mississippi, raising the total losses on the construction project to nearly $1 billion, the utility announced Tuesday.
The utility announced the pre-tax write-off on its massive construction project in Mississippi's Kemper County before releasing its second-quarter earnings on Wednesday morning. Company officials had earlier estimated the most recent charges would be around $160 million or more, significantly less than the losses announced late Tuesday.
The power company earlier absorbed a $540 million pre-tax loss on the plant, which Southern Co. CEO Tom Fanning described in May as a "bitter pill for us to swallow."
Those losses on Plant Ratcliffe may not be the last. Company officials said the latest write-off was the result of an ongoing review of the spending necessary to finish the coal-fired power plant. Southern Co. subsidiary Mississippi Power said it may experience additional construction costs or schedule delays, according to a federal disclosure report. Mississippi Power also cautioned there were additional risks building a plant with first-of-its-kind technology.
Southern Co. officials have struggled to contain building costs. In a settlement with Mississippi utility regulators, the company agreed to only charge its customers for $2.4 billion in construction costs. Customers will also have to pay off as much as $1 billion in bonds needed to finance the project, though Southern Co. will not make a profit off that borrowed money.
When finished, Plant Ratcliffe is designed to capture much of the carbon dioxide that is produced while burning coal to make electricity. Carbon dioxide is a greenhouse gas blamed for causing global warming. The captured gas will then be sold to companies that use it to extract oil from the ground. If successful, company executives have hoped the project will show that the United States can still rely on coal even if the country limits greenhouse gas emissions.
Created: Wed, 31 Jul 2013 03:15:15 EST
Updated: Wed, 31 Jul 2013 03:15:15 EST