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URS Corporation

600 Carondelet Street New Orleans, LA 70130-3587

Tel: 504.586.8111 Fax: 504.522.0554 www.urscorp.com

Confidential

IM Monthly Report

Mississippi Public Service Commission

Kemper IGCC Project March, 2017

http://www.urscorp.com/

IM March 2017 Report Mississippi Public Service Commission Kemper IGCC Project

URS / Covington / Nicholson Confidential Page 1

Executive Summary

URS Corporation (URS), later acquired by AECOM, was requested by the Mississippi Public Service Commission (MPSC) to provide Independent Monitoring services for the Kemper Integrated Gasification Combined Cycle (IGCC) Project located in Kemper County, MS. The scope of services includes monthly reporting by URS (AECOM) and its subcontractors, the Independent Monitor (IM), of the status and prudency of the on-going engineering, procurement, construction and startup activities performed by Mississippi Power Company (MPC or the Company), its parent Southern Company and subsidiary Southern Company Services (SCS), and its subcontractors on the project. This IM Monthly Report provides the results of this assessment for the reporting period of March, 2017, and review of the project status reported by MPC for the period from January to March, 2017 (Production Meeting Reports February 22 and March 23, 2017, January and February 2017 PSC Reports, and Kemper County IGCC Weekly Executive Summary, Metrics and Control Meeting Reports through April 4, 2017). During this reporting period, the IM has conducted weekly status review meetings with MPSC staff. Several meetings, teleconferences and reviews were also conducted with MPC and SCS staff, as described below (refer to other Report Sections where referenced for more details):

March, 2017 – Accounting audit of financial records from end of December, 2016 through end of January, 2017 held at MPC offices in Gulfport, MS (Appendix C).

March, 2017 – Daily monitoring of on-going site construction and startup activities at the jobsite (Appendix E).

Week of March 13, 2017 – Review of gasifier startup activities held at the jobsite (Section 1.10).

March 13 and 14, 2017 – Review of project EPC status and COD Criteria held at the jobsite (Appendix D).

Project Status through February, 2017 (Unless Noted Otherwise) Engineering - The gasification island design performed by KBR, and the SCS design of the combined cycle island and the balance of plant (BOP) work, is 100% complete for base scope. All major Revision 0 design packages have been issued for construction. Remaining effort will be focused on resource pool and scope addition activities, including:

Resource pool support activities.

E&CS and MPC Management of Change (MOC) process implementation and training.

Design revisions from support requests, updated vendor information, and scope additions/OCR’s.

Supporting closeout of punch list items.

Activities to support Project Close-Out. Procurement - All major equipment and commodity orders have been placed. Major equipment deliveries are complete. Remaining effort will be focused on final construction and startup needs including procurement of miscellaneous items as identified (scope additions). During March,



there were five (5) new awards issued for 1) Ash Dewatering Pad Sump Pumps for RP #3634, 2) Dryer Inlet Chute for RP #4143, 3) PU0045 Kickback Cooler for RP #3728, 4) Sintered Metal Cones for RP #3945, and 5) 1.7 Million Gallon Lake Tank and Associated Equipment Rental. In addition, there were five (5) new vendor recommendations approved for 1) Ash Conditioner Surfactant Test for RP #3897, 2) PDAC to Gasifier Actuated Ball Valve for RP #4138, 3) Actuators for Trueline Slidegate Valves for RP #4105, 4) DVC Positioner for PV-30850 for RP #4036, and 5) Specialty Flanges for RP #4097. Construction – Overall base plant construction is 100% complete (as of November 13, 2016). Remaining work includes ongoing punchlist and scope addition activities. The schedule for scope additions, as of 3/28/17, is included in Appendix E. Transmission – Right of way acquisition and construction is complete for all 11 line segments and all 8 substations. MPC will continue to monitor transmission right of ways for any needed restoration and maintenance. Supply Chain – Right of way acquisition and construction is complete for all 3 pipelines. Long term sales or supply contracts have been signed with the City of Meridian (water supply), Tennessee Gas Pipeline (NG supply), Denbury Resources (CO2 sales), Air Liquide (nitrogen supply from onsite Air Separation Unit), and Martin Product Sales (sulfuric acid and ammonia sales by truck). The CO2 contract provides for termination by Denbury at its discretion if CO2 deliveries do not occur by July 1, 2017. Initial CO2 sales to Denbury and sulfuric acid sales to Martin Products were achieved in February. Liberty Mine - Current land control is 100% complete for the initial five year permit area. Construction activities are complete. Mine is operating and stockpiling/delivering lignite. Total actual spending for the mine development through February, 2017, including mine Allowance for Funds Used during Construction (AFUDC), was unchanged at $232.0M, which is the forecast final cost. Mississippi Economic Impact IM has reported for each contract and purchase order whether MS bidders were involved, and if so, status and basis of the award decision (refer to Appendix F). Through February, 2017, contracts totaling $2.172 billion have been awarded to MS companies, and total MS spending is $2.156 billion (about 30% of the total, including uncapped costs). MS workforce contributed 249 construction jobs and 402 plant/mine jobs in February. A total of 569 MS Companies have provided construction, equipment, material or professional services for the Project. Key Concerns The following Project Execution related concerns have been reported with associated resolution status:

Differential settlement and/or slope movement during initial loading of lignite stockpile in the storage dome - Survey benchmarks will be monitored for settlement and slope stability during initial stockpile placement. IM suggests MPC consider development of mitigation plans in the event excessive settlements and/or slope movements are



discovered, and staging of the initial placement of the lignite stockpile. Initial stockpile of 10,000 tons was increased to 32,000 tons in January (32% capacity).

Venturi scrubber solids carryover issues – new duplex strainers will be installed on all 6 trains; the first set of strainers are scheduled for installation in August of this year unless a 21 day window becomes available sooner; the Recovered Water Candle Filters are not able to handle the full flow, so bypass flow is being routed to gasifier sumps and temporary tanks for solids collection and disposal; a trial coal fines removal system has been installed consisting of polymer (flocculent) injection, system testing in progress, concentrated polymer is attaching to the filter material in the Recovered Water Candle Filters, 2 new larger polymer tanks with agitators were brought in and the polymer will be diluted before being injected into the process. Larger pumps will also be needed.

Plugging issues at the roll crushers - new 7 blade feeders will replace the existing 8 blade feeders in the roll crusher rotary inlet air locks (4 of 6 complete); will also install auto lube systems and shaft modifications.

Lignite dryer solids accumulation – revised grid plate design has been installed in feed zones on all six dryers and is being monitored for process optimization.

Lignite dryer weigh belt feeder plugging – coal fines growth from the walls requires on-going maintenance to clean out; periodically damages the belt feeder; will install air rappers on discharge chutes.

Pulverizer wind box erosion – leaks are being repaired as identified; long term solution needed.

Gasifier B refractory repairs – post shutdown inspection found damaged refractory in the lower mixing zone (see CCAD below); repairs have been completed.

Syngas cooler tube leaks – Gasifier A was shutdown on 3/9 due to hot spots detected in the superheater section caused by leaking tubes; a total of seven (7) tubes were capped and three (3) refractory repairs were completed; Root Cause Analysis and long term solution in progress.

CFAD and CCAD Systems (Continuous Fine and Coarse Ash Depressurization) - replacing damaged PLD’s when available. Gasifier B was shut down on 2/20 due to inability of CCAD system to remove ash from the Seal Leg due to pieces of refractory found blocking the grate, blockage was removed and gasifier brought back on line. Both the CFAD and CCAD systems are experiencing leaks due to internal erosion of the pipe and or fittings from high velocity solids; leak on April 5 resulting in 30 minute release was isolated and is being repaired; long term solution needed.

Ash moisturizer system – modifications on all 4 ash moisturizers have improved operation; dust suppression still an issue at times during unloading for disposal; these systems continue to be monitored.

Syngas Scrubber water bypass – operational improvements are being evaluated to reduce load on sour water system; may require chimney tray redesign.

Sour Water System – inconsistent inlet composition causing control issues; considering addition of online analyzers.

Process Water System – current 5 million gallon storage is insufficient; installed new 1.7 million gallon temporary tank; considering additional permanent tankage.

Nitrogen Plant – capacity is insufficient to support simultaneous startup of both gasifiers; existing plant can only make 1% of output as liquid; supplemental nitrogen is



being brought in by truck to support startup; will install additional liquid nitrogen storage tank; considering adding liquefier or increasing plant capacity.

Contractor Hotline MPC has established a toll free telephone number for contractors or others to provide

observations of any concerns with improper activities associated with the project. Comments

are collected by a third party and reported to MPC for follow up investigation and action. The IM

is copied on all correspondence and will report status of all cases. There were no new concerns

filed this reporting period (March, 2017).

A summary of the twenty six (26) claims received to date and their status, including corrective

actions taken, is included in Appendix I.

Project Document Status

The overall status of the project document reviews are summarized in Appendix B to this monthly report. Most of the RFI’s have been posted, reviewed and closed (14 open items remaining). Primary concerns noted by the engineering disciplines are summarized below:

Accounting – MPC posted response to new RFI requesting MPC post In Service Date process for 1) categorization of on-going costs (capped or uncapped); and 2) accounting records showing how these costs are being booked, under IM review.

Scope Additions – MPC has posted updated list through January, 2017 for approved items ($156 million) and through February 22, 2017 for pending items (20 items); March update is pending; weekly updates are being provided to the IM Site Team for all FCR’s, OCR’s and Resource Pool Listings.

Process and Technology – new RFI was submitted in March requesting Root Cause Analysis for recent syngas cooler tube leaks along with long term action plan, schedule and cost.

Operations and Maintenance – new RFI was submitted requesting Action Plan to address recurring piping and equipment leaks resulting from internal erosion from high velocity solids (ash and coal) to ensure long term safe and reliable operation of these systems.

Project Cost and Schedule In the February, 2017 PSC Report, MPC reported a delay in forecast in service date from

mid-March to end of April, 2017, and an increase in forecast capped cost of $70.2 million

now at $5.712 billion, including a decrease in base contingency of $0.7 million now at

$15.2 million and no change in Schedule Risk at zero. Forecast capped cost increase

was due to schedule delay ($45 million), startup fuel ($15 million), and outage work and

operational maintenance and improvement costs ($10 million). Forecast uncapped costs

increased in February by $28.6 million now at $1.526 billion, due primarily to increases in

AFUDC costs ($23.6 million).



Total capped spending for the plant through February, 2017, with deduction for Department of Energy (DOE) funding, was $5.583 billion. Overall plant EPC remained at 99% complete. Uncapped spending through February was $1.470 billion. Refer to Appendix G for the PSC Report Summary. As of April 4, 2017, the current working schedule indicates TOD of 4/12/17, which is a 518 day slip from the November 2014 rebaseline date, and a 36 day slip from the 2/28/17 report. TOD is driven by reheating of Gasifier ‘A’, resuming coal feed and sending syngas to CT-A, joining CT-B in two-train integrated operations. Overall project execution status was reviewed on March 14, 2017 at the jobsite. Refer to Appendix D for meeting attendance. Primary concern is additional schedule slippage and associated cost increases, and unknown startup and technology risks.

Additional schedule slippage – MPC has reported a delay in COD to end of April, 2017. MPC will continue to evaluate startup schedule and remaining risks associated with on-going issues noted under key Project Execution and Process and Technology concerns herein, and as reported by MPC (see Appendix H).

Associated cost increases – While increases in the indirect project costs due to schedule delays are capped and therefore being absorbed by the MPC shareholders, the rate payers are also at risk for alternative power generation and AFUDC costs, to the extent these are allowed by the MPSC.

Unknown startup, operation and technology risks – emergent issues, primarily equipment reliability, associated with sustained integrated operation of both gasifiers at design capacity, sustained electrical production on both combustion turbines at rated capacity, sustained production of by products at design rates and quality, and overall plant process control integration.

Accounting Topp McWhorter Harvey, PLLC (hereinafter referred to as “TMH”) has completed the accounting audit of the special-purpose Historical Schedules of Capped and Uncapped Plant Costs of the Project for the historical project-to-date and month-to-date periods ended January 31, 2017, and the examination of special-purpose Forecasted Schedules for the period beginning February 1, 2017, through the completion of the Project.

On April 3, 2017, the Company filed their February 2017, monthly Form 8K with the SEC which increased its Capped Plant Cost Current View (forecast) for the Kemper IGCC Project to approximately $5.712 billion, net of DOE grants and Cost Cap Exceptions. The Company’s Monthly Status Report through February 2017, increased its Current View (forecast) of Total Exemptions and Exceptions (Non-Capped Cost) to approximately $1.526 billion. The total Current View (forecast) for Capped Plant Cost and Total Exemptions and Exceptions (Non-Capped Cost) in the Company’s Monthly Status Report through February 2017, is $7.237 billion. The Company’s Monthly Status Report on Form 8-K dated March 16, 2017, disclosed that the Company had experienced certain tube leaks in one of the syngas coolers for gasifier “A” and



commenced an outage on gasifier “A” to perform necessary corrective actions. The Company has completed the outage on gasifier “A”, including necessary corrective actions, and now expects that the remainder of the Kemper IGCC will be placed in service by the end of April 2017. The schedule reflects the time expected to restart gasifier “A” and establish integrated operation with gasifier “B”, which remained in operation during the outage. The Company has revised its previous cost estimate, which included projected costs through March 15, 2017, to include projected additional schedule costs through April 30, 2017. Accordingly, the February Monthly Status Report contains an increase in the cost estimate subject to the cost cap for the Kemper IGCC of approximately $70 million, including approximately $45 million related to extending the projected schedule through April 30, 2017, $15 million related to start-up fuel, and $10 million primarily related to outage work and operational maintenance and improvements. Further cost increases and/or extensions of the expected in-service date may result from factors including, but not limited to, difficulties integrating the systems required for sustained operations, sustaining nitrogen supply, major equipment failure, unforeseen engineering or design problems including any repairs and/or modifications to systems, and/or operational performance (including additional costs to satisfy any operational parameters ultimately adopted by the Commission). The Company is also identifying potential improvement projects that ultimately may be completed subsequent to placing the remainder of the Kemper IGCC in service. If completed, such improvement projects would be expected to enhance plant performance, safety and/or operations. Any further changes in the estimated costs of the Kemper IGCC subject to the $2.88 billion cost cap, net of the Initial DOE Grants and excluding the Cost Cap Exceptions, will be reflected in the Company’s statements of income and these changes could be material. Any extension of the in-service date beyond April 30, 2017 is currently estimated to result in additional base costs of approximately $25 million to $35 million per month, which includes maintaining necessary levels of start-up labor, materials, and fuel, as well as operational resources required to execute start-up activities. However, additional costs may be required for remediation of any further equipment and/or design issues identified. Any extension of the in-service date would also increase costs for the Cost Cap Exceptions, which are not subject to the $2.88 billion cost cap established by the Commission. These costs include AFUDC, which is currently estimated to total approximately $16 million per month, as well as carrying costs and operating expenses on Kemper IGCC assets placed in service and consulting and legal fees of approximately $3 million per month. The ultimate outcome of this matter cannot be determined at this time.

As reported beginning with the Form 10Q for the first quarter ended March 31, 2016, through the 10-K for calendar year ended December 31, 2016, the Company disclosed that the Securities Exchange Commission (SEC) is conducting a formal investigation of Southern Company and Mississippi Power Company concerning the estimated costs and expected in-service date of the Kemper IGCC Project. Southern Company and Mississippi Power Company believe the investigation is focused primarily on periods subsequent to 2010 and on accounting matters, disclosure controls and procedures, and internal controls over financial reporting associated with the Kemper IGCC Project. The ultimate outcome of this matter cannot be



determined at this time; however, it is not expected to have a material impact on the financial statements of Mississippi Power Company. Discipline Summaries Environmental / Permitting CCE has completed its review of additional environmental/permitting documentation provided by MPC. The IM’s review of these documents has not identified any major concerns or issues. However, there will be additional monitoring reports (Mitigation Action Plan, Wetlands Mitigation and Water Quality and Macroinvertebrate Monitoring Reports) prepared by MPC and LF for the MDEQ and the Corps of Engineers. These documents and reports should be provided to and reviewed by the IM to insure that the permit requirements for the IGCC Plant Site and Linear Facilities and for the Liberty Mine continue to be met (see Appendix B, RFI 2-698).

IM is monitoring status of approvals for the one (1) remaining plant permit:

Title V Operating Air Permit Modification – Application was submitted on 8/18/14; MDEQ

issued construction permit. The plant will operate under the current construction permit

until the Title V Operating Permit is issued.

Process and Technology

Implementing site monitoring plan for gasifier startup by IM gasification technology specialist. Last site visit was conducted week of March 13 (see Section 1.10). IM submitted new RFI requesting Root Cause Analysis of the recent tube syngas cooler tube leaks along with long term action plan, cost and schedule (see Appendix B). . The following process and technology concerns are described in Section 1.10:

Syngas Cooler Superheater Tube Leaks - At this time it is unknown if more tubes may start leaking in the future with additional time in service. Based on tube leaks experienced to date and the limited number of total operating hours on both Syngas Coolers, the IM Team believes there is a high probability that additional tube leaks will develop. Ultimately, if too many tubes must be plugged due to new leaks developing, the Superheaters will have insufficient surface area to achieve the design level of heat removal and superheated steam production. If that point is reached, then it is possible that one or both Syngas Coolers will need to be replaced or, at least, the Superheater sections replaced, which could result in a significant cost impact and extended shutdown period for required repair or replacement.

The IM Team will continue to monitor the performance of the vibration reduction system, as reported by Plant Operations, during final startup / commissioning and initial normal operation of the Kemper IGCC facility.

The long-term viability of the modified refractory system design in repaired areas and of the original refractory system design in remaining areas of both gasifiers.

Clinker formation (fused ash) has now occurred in the lower Riser sections of both Gasifiers following temperature excursions in the Mix Zone. The root cause(s) of the



temperature excursion event in Gasifier B in August and the trips of Gasifier A in late October due to high temperatures in the Lower Mix Zone need to be thoroughly investigated. Mitigation actions should then be developed and implemented to prevent a recurrence of such events during subsequent commissioning activities and long-term operations.

The single-point-of-failure trip of the Nitrogen Plant that occurred in early January 2017, which subsequently caused Gasifier B and its Recycle Gas Compressor to trip, needs to be resolved and eliminated.

Continuous, stable operation of the Airlocks/Rotary Valves upstream and immediately downstream of the Coal Dryers and of the Coal Dryers themselves for weeks/months at full design rates must be achieved before concluding that full functionality of the Coal Preparation System has been demonstrated.

Trouble-free operation of the Venturi Scrubbers is required to enable the coal feed system for either gasifier train to operate continuously at full design coal feed rate. The IM Team will continue to monitor the progress, testing and performance of the multiple modifications to the Venturi Scrubber – Recovered Water Filter system and any future modifications that Plant Operations may implement to this part of the coal feed system.

Key Technical Milestones Not Yet Achieved as of 03 APR 2017

Resume operation of Gasifier A following recent repairs to the Train A Syngas Cooler

exchangers and PDAC Coal Feeders.

Resume simultaneous operation of Gasifier Trains A and B with clean syngas from AGR

Trains A and B composing at least some fraction of the gas going to combustion turbines

CTA and CTB in co-fire mode with recycled syngas going back to Gasifiers A and B.

Achieve the scheduled/targeted 4 days of continuous, simultaneous operation of both

Gasifiers with 100% of the on-spec syngas produced by both Gasifiers going to CTA and

CTB operating on 100% syngas (no co-firing) near, but not above, the current maximum

capacity limit (80%) imposed by combustion turbine vendor in co-fire mode.

Successfully run both CTA and CTB turbines on syngas (co-firing with natural gas is

acceptable) for the minimum testing time required by turbine vendor prior to next

borescope inspection and complete that inspection with no concerns noted by vendor.

Demonstrate ability to export on-spec CO2, ammonia, and wet sulfuric acid products at

near design rates for some to-be-determined minimum period of time while remaining in

compliance with regard to plant environmental emissions limits.

Achieve and reliably sustain full design coal feed rate (~400 kpph) to each Gasifier for a

to-be-determined minimum period of time while continuing to produce on-spec syngas,

CO2, ammonia and WSA products.

Achieve full design power production of 524 MW based on 100% syngas flow to both

CTA and CTB (no co-firing with natural gas) plus design steam turbine operation for a to-

be-determined minimum continuous period.

Demonstrate ability to operate both Gasifiers reliably over an extended period without:

o Forming ash clinkers or fused ash on walls of the Gasifier or experiencing

refractory damage requiring a shutdown to repair, OR



o Experiencing difficulties continuously withdrawing ash from each Gasifier through

its associated CCAD system and reliably discharging it from the Ash Moisturizers

Demonstrate ability to reliably operate the Venturi Scrubber - Recovered Water Filter

System in both Trains A and B with any equipment modifications/additions as may be

required, such as the new Venturi Scrubber Duplex Strainers and the new Recovered

Water Polymer Addition System, while continuously removing coal fines at the target

efficiency level and recovering design quantities of clean water needed for downstream

operations.

Lignite Delivery Facility

LDF construction is 100% complete. The levels in Crushed Coal Silo’s 4, 5 and 6 are being maintained at 400 tons while silo’s 1, 2 and 3 continue to be monitored ahead of coal feed. Approximately 32,000 tons of coal is being maintained in the dome to support coal feed. Mobile coal screening equipment continues to screen the coal at the coal storage pile before it is sent to the truck dump. Processing the coal/water mixture from the north and south Gasifier sumps at the south modular tanks continues. The dewatered sludge from the filter presses at the LDF is being hauled to the GAMU (Gasification Ash Management Unit) for disposal.

Procurement IM reviews of Procurement Activities are complete. Most known key Contracts and Purchase Orders, including construction and Liberty Mine facilities, have been included, totaling about 700 items (excluding O&M Service Contracts, MS Tier II contractors, and Transmission). Refer to the IM July 2016 Monthly Report (Appendix F), for the final update of completed reviews. Site Activities

Significant Technical Events which Occurred in March 2017

MAR 1: Coal feed rate to Gasifier A reduced from 420 kpph at 520 psig to 320 kpph at

400 psig at 1:30 am.

MAR 1: Bottom flange removed from Riser to remove ash in the bottom of the Riser.

MAR 1: Small pieces of refractory found blocking the grate in Gasifier B Seal Leg were

removed. Scaffolding was erected in Riser of Gasifier B in preparation for refractory

repairs to Lower Mixing Zone. Thus far, no clinkers or ash fused to hard face refractory

have been found, but ten feet of ash remain to be removed from bottom of Gasifier B

Riser.

MAR 1: Gasifier A tripped due to computer error but was back on line within 1 hour. Coal

feed rate stable at 200 kpph at 385 psig.

MAR 1: To date CTA has operated 455 hours on syngas producing 34,260 MWHs while

CTB has operated 543 hours on syngas producing 32,397 MWHs.

MAR 2: Pressure in 61-mile-long CO2 product pipeline reaches 1700 psig with CO2

being supplied from Train A CO2 Compressor (CO-1080) at 250 to 295 kpph.



MAR 3: Completed installation of new 1.7 million gallon modular tank for additional water

storage from the Reclaim Sump, which will be used until the proposed permanent 3.5

million gallon storage tank is approved and built.

MAR 4: Plant unable to remove ash from Gasifier A via CCAD system.

MAR 5: Coal feed to Gasifier A suspended due to inability to remove coarse ash from

Gasifier via the CCAD system and, subsequently, AGR Train 1 was shut down due to

curtailment of syngas production from Gasifier A. At this point, neither Gasifier is

operating as Gasifier B has been shut down since 20 FEB 2017 due to difficulties

removing ash through the Gasifier B CCAD system. In addition, both AGR trains and

both CO2 Product Compressors are now off-line. CTA and CTB are both now firing only

on natural gas.

MAR 5: Inspection of Gasifier A CCAD system revealed that the internal

screens/baskets on two of the four PLDs (Pressure Letdown Devices) had come loose

causing plugging. Maintenance replaced damaged PLD #3 with the last spare PLD of a

new design with improved screen welds and replaced damaged PLD #4 with a flanged

spool piece fabricated with 5” thick wall pipe until a new PLD can be installed.

MAR 8: Coal feed was reestablished to Gasifier A at a rate of 100 kpph at 197 psig.

MAR 8: The new Recovered Water Polymer Addition system was tested for first time

using water supplied by train 5 Coal Dryer.

MAR 9: Operations detected steam coming out of the Train A HP Flare and two hot

spots were detected via heat sensitive paint on the Superheater II exchanger (HX-1213)

of Train A Syngas Cooler. At least two heat exchanger tube leaks were suspected. The

Train A Gasifier was not immediately shut down in order to complete testing to confirm

earlier CCAD system repairs had restored ability to remove coarse ash from Gasifier A.

MAR 9: The 4th 7-blade Rotary Inlet Valve internal was installed on coal feed train 4 this

week (instead of train 1 as previously reported).

MAR 9: Pressure testing of Gasifier B completed.

MAR 11: Restoration of ash inventory in Gasifier B completed with Standpipe level at 60

feet.

MAR 12: Heating of Gasifier B was initiated first with one then both Startup burners then

switching to DDI valves when temperatures reached 1200 F.

MAR 14: Coal fire incident reported and resolved at Ash Moisturizer A, which was not in

service at the time.

MAR 15: Coal feed to Gasifier B was initiated at 80 kpph at 165 psig while flaring syngas

at the inlet to the Syngas Scrubber. Gasifier tripped due to high pressure caused by a

closed XV valve in the WGS plant area. Coal feed was reestablished at 9 pm.

MAR 16: Coal feed rate to Gasifier B was increased to 225 kpph at 390 psig.

MAR 16: CO2 Product Compressor was put back in service.

MAR 16: CTB returned to co-fire mode at 60% syngas at 2:30 am producing 155 MW.

MAR 16: Two leaking tubes identified on Syngas Cooler HX-1213 via borescope.



MAR 17 & 18: Gasifier B operation quickly restored after brief trips on both these dates

due to false vibration signal from AGR Train B.

MAR 18: CTB operated at 100% syngas for two hours prior to AGR vibration trip.

MAR 20: Gasifier B tripped due to an issue with the coal feed PDACs but coal feed was

quickly restored.

MAR 22: Gasifier B tripped early in the morning due to an IGV issue on Process Air

Compressor 3 and was again brought back on line within an hour. CTB had been

operating at 100% syngas producing 100 MW but was shut down following PAC-3 trip.

CTA, which had been firing natural gas, tripped due to low NOx pressure.

MAR 23: A total of four tubes were found leaking in the Gasifier A south Syngas Cooler

Superheater II exchanger (HX-1113). A total of three new tube leaks were found in the

Gasifier A north Syngas Cooler Superheater II exchanger (HX-1213).

MAR 24: Repairs were completed Gasifier A Syngas Cooler Superheater II exchangers

HX-1113 and HX-1213, including plugging all leaking tubes, repairing refractory and

weld patching the holes cut in the exchanger shells to access/inspect the leaking tubes

and repair the eroded holes in the refractory caused by the high-pressure steam leaks.

MAR 27: A hot spot was detected in Gasifier B Train 5 PDAC Feeder, which was later

determined to be due to a bent diverter plate that was impeding coal flow.

Mar 28: Bearing repair work completed on Ash Moisturizer C.

MAR 29: Tube cleaning in the north and south Gasifier A Economizers (HX-1214, HX-

1216, HX-1114 and HX-1116) was completed.

MAR 29: To date CTA has operated 513.8 hours on syngas producing 38,769 MWHs

while CTB has operated 797.3 hours on syngas producing 56,421 MWHs.

MAR 29: Holes in Gasifier B Train 6 Coal Pulverizer Windbox were repaired.

MAR 29: CTA, which was firing natural gas because Gasifier A has been down due to

repairs to the Syngas Cooler, went down for minor maintenance.

MAR 30: Missing refractory in void space of Gasifier A Trains 5 and 6 PDACs were

repaired.

MAR 30: Additional testing of new Recovered Water Polymer Addition system indicated

that concentrated polymer was plugging the Recovered Water Candle Filters.

MAR 30: CTB was co-firing at 56% syngas and producing 185 MW.

Startup

At the end of February, total startup employee staffing was at 65, including 7 SCS startup employees, 55 supplemental, and 3 OPCO’s staff; plus 330 contractor craft support (grand total of 395 – an increase of 75 from end of January).

Startup Issues / Focus Areas (as of March 19, 2017) o Gas turbines on syngas – demonstrated transitions between natural gas and

syngas without turbine trips; working toward full load on syngas. o Refrigeration – working with manufacturer on oil supply capacity issues; able to

reduce from 5 to 4 compressors in single gasifier operation.



o Lignite preparation equipment commissioning – modifying dryer feed zones to improve material distribution and prevent plugging; managing treatment of venturi scrubber recovered water for reinjection in syngas scrubbers; demonstrate adequate throughput to support sustained gasifier operation.

o Wet Sulfuric Acid – combustor repairs completed; acid gas line to combustor cleaned; produced and delivered on spec sulfuric acid.

o Ash Removal – replacing damaged PLD’s when available. o Compressors – Train A CO2 product compressors final testing complete (TP

1070), Train B in progress; started charging CO2 to pipeline on 1/12, Denbury accepted product 2/27; Train A EAC started on CT bleed air.

o Sour Water – temporary acid injection system installed; installation of permanent system in progress; replaced H2S stripper reboiler; cleaned sour water tank and drum.

Through March 26, 2017, startup progress was 96.0% complete overall (0.1% increase

from February 19) vs. planned 100%.

o 968 TOP’s have been commissioned out of a total of 968 (100% complete). 41%

(398 of 968) have been turned over from startup to operations (mostly CC and

associated BOP).

o Startup test packages are 98% complete (94 of 96 complete). Both of the

remaining 2 test packages are currently in progress and neither are required prior

to TOD.

o Overall, I/O checks are 100% complete for base scope. New scope accounts for

all of the remaining points that require testing.

o Startup to Operations punchlist summary for base scope (excluding scope

additions) shows a decrease in remaining open items from 1,823 on February 19

to 785 on March 26 (none of these are high priority).

o MPC reported the following startup achievements in March:

On Train A – achieved full integrated operation with 100% syngas firing the CT, 100% CO2 in the pipeline, 100% sulfuric acid going to the product tank and 100% ammonia going to the product tank.

Completed Gasifier ‘B’ outage and resumed operation. Resumed sending syngas from Gasifier ‘B’ to the CT. Gasifier ‘A’ Syngas Cooler leaks repaired. Ammonia byproduct generation meeting specifications for sale.

Operations and Maintenance

Overall 285 of the planned 309 permanent employees are on staff (335 of 309 including

contractors). Current supplemental contract staff will be considered for remaining 24 permanent

positions.

Process Safety Management (PSM) program development:



All 14 PSM elements are complete (ready for chemicals).

IM has requested final PSM Audit Report showing completion of all open actions noted

in the March 2016 Draft Report.

CC Operation:

2017 year to date EFOR on natural gas is 0.64% through March 29, 2017.

Through March 29, 2017, CTA has operated 514 hours on syngas producing 38,769

MWHs while CTB has operated 797 hours on syngas producing 56,421 MWHs.

Gasifier Operation:

Through March 29, 2017, syngas production has totaled 1,597 hours (66 days) on Train

A and 2,450 hours (102 days) on Train B.

Integrated Operation:

Through the end of March, both trains have operated simultaneously while producing

electricity from syngas on both turbines for a total of 78 hours (maximum continuous

integrated run time of 54 hours from January 29 - 31).

Land

IM Review of Documents and Purchases from the Kemper County Courthouse,

Lauderdale County Courthouse and Update on the Lawsuit Concerning the Kemper IGCC

Power Plant Site and Liberty Mine, Kemper County, Mississippi

In the February 2017 report, the IM reported that there were no purchases or leases in Kemper

County, MS., one new purchase of mining land in Lauderdale County, MS., no new coal leases

in Lauderdale County and the Appeal to the Mississippi Supreme Court filed in the Kemper

County lawsuit.

In this March 2017 report the IM will discuss that there were two new purchases of coal mining

land in Kemper County, MS., a Proof of Death and Heirship dealing with one of the purchases,

three new coal leases in Kemper County, three new property purchases of coal mining land in

Lauderdale County, MS., and filings dealing with the appeal of the Kemper County lawsuit to the

Supreme Court of Mississippi.

The IM has reviewed the above described information and determined the following:

MPC purchased two new tracts of land in Kemper County, MS. in the last month totaling

22.88 acres, more or less, located in Section 33, Township 9 North, Range 15 East.



MPC purchased 10.0 acres from Ferleisi Bray and 12.88 acres from Roland H.

Flanagan, Sr.

MPC filed one Proof of Death and Heirship regarding the Flanagan purchase in Kemper

County, MS.

MPC acquired three Coal Leases on three tracts of land in Kemper County, MS. totaling

24.8 acres, more or less, in Sections 27 & 33, Township 9 North, Range 15 East.

MPC has purchased interests in five tracts of land from three parties in Lauderdale

County, MS. containing 23.21 net acres under 65.0 gross acres of land in Parts of Lots

6, 7, 10 and 15 Section 4, Township 8 North, Range 15 East.

The Kemper County Lawsuit proceeds with filing of the court record and the payment of

costs of Appeal with the Supreme Court of Mississippi.

There have been no other lawsuits filed in Kemper County, MS. in the last month.