FILE – In this Nov. 13, 2012 file photo, worker vehicles fill the parking lots at Mississippi Power’s Kemper County energy facility near DeKalb, Miss. Southern Co. reported a nearly 13 percent drop in its third-quarter earnings Wednesday,Oct. 30, 2013, citing cooler-than-expected weather across the Southeast and continued construction losses at a Mississippi power plant. (AP Photo/Rogelio V. Solis, File)
ATLANTA (AP) — Southern Co. reported a nearly 13 percent drop in its third-quarter earnings Wednesday, citing cooler-than-expected weather across the Southeast and continued construction losses at a Mississippi power plant.
The company is being forced to write off $93 million in after-tax charges to cover the soaring costs of building the power plant in Mississippi’s Kemper County. It marked the third-straight quarter Southern Co. has announced losses on the unique plant, which is designed to capture some of the carbon dioxide produced when using coal to create electricity.
Those losses have pushed the cost of the project from $2.8 billion to almost $5 billion. Southern Co. CEO Tom Fanning said that he could not definitively rule out future cost increases.
The Atlanta power company reported earnings of $852 million, or, 97 cents per share. That was down from $976 million, or $1.11 per share, a year earlier.
Southern Co. faced questions from Wall Street on the losses, including from an analyst who asked Fanning on whether the company failed to account for the risks involved in simultaneously building first-of-their-kind coal and nuclear plants. Southern Co. previously agreed with Mississippi regulators to cap its construction costs on the coal plant, a decision that has hurt shareholders.
“We made a strategic mistake back then,” Fanning said, referring to the Mississippi project. “We committed to do a deal at a price cap without enough engineering being done.”
The utility is exploring whether it can sell its technology for carbon-capture coal plants in Poland, China, Pakistan, Indonesia and Australia, Fanning said.
He was more upbeat about progress building the company’s new nuclear plant in eastern Georgia. But there are cost pressures there, too. Southern Co. agreed earlier this year to withdraw its request for a $737 million increase in its $6.1 billion construction budget. Instead, the company will delay any request for a budget increase until its first reactor comes online, possibly around January 2018.
Separately, the companies building and designing the nuclear plant want Southern Co. to pay hundreds of millions of dollars in expenses largely incurred when the licensing process took longer than expected. Southern Co. says it is not responsible for those charges.
The company’s per-share earnings removing one-time items were $1.08, which was short of Wall Street expectations. Revenue, at $5.02 billion, was also shy of most projections and down from last year’s $5.05 billion. The company’s stock ended Wednesday down 49 cents, or 1.2 percent, at $41.90.
Fanning blamed cool temperatures and heavy rainfall. Southeastern utilities typically see demand surge during hot summers, when customers run their air conditioners to stay cool. He said metro Atlanta normally experiences 100 hours in the summer when temperatures top 90 degrees. This summer, there was only one hour.