Also in a statement, Ed Day, Mississippi Power's president and CEO, said Yates "continues to be one of our preferred contractors and has already received additional work independent from the joint venture for significant portions of the project. It is our intention that this re-organization of contractors will actually result in more work overall for Yates."

"We look forward to working with the owner to successfully complete the project," said William Yates, president and CEO of Yates Construction. "We will continue to step up our efforts to assist the owner as we are requested to do so."

Southern Co. "decided to consolidate one contract on the project into another contract," says Kenny Bush, spokesman for Yates Construction, Birmingham, Ala. "However, Yates still has several contracts on the project, and we expect one to be decreased and one to be increased." Performance Contractors did not return calls seeking comment.

Louie Miller, state director of the Mississippi chapter of the Sierra Club and a leading critic of the Kemper project, says the ouster of the KBR-Yates joint venture as the project's primary builder "does not bode well for a project already under siege. The PSC needs to issue a cease-and-desist order and get to the bottom of what's going on."

In Miller's view, the project is "spinning out of control."

The Kemper project has been tracked closely by credit-rating agencies, which have raised concerns about its effect on Mississippi Power's finances.

On Aug. 6, Moody's Investors Service downgraded Mississippi Power Co.'s senior unsecured rating to A3 from A2 and its preferred stock rating to Baa2 from Baa1. "The downgrade of Mississippi Power's ratings reflects higher business and operating risk and lower cash-flow coverage metrics resulting from the construction of the Kemper IGCC plant," says Moody's Senior Vice President Michael Haggarty. Fitch Ratings downgraded Mississippi Power on July 3, also citing the Kemper project and its negative effect on utility finances.

This file was updated Aug. 10 to include additional comments from Yates Construction and Mississippi Power made after the original story.