ATLANTA (AP) — 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.