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Oak Creek power plant gets state OK for changes enabling burning of Wyoming coal

State regulators on Thursday gave We Energies the go-ahead to make changes at its new coal plant in Oak Creek to enable it to burn coal from Wyoming.

The project is designed to reduce fuel costs and save money for utility customers over time, but it also adds $100 million in spending to a coal plant that We Energies and its partner utilities spent more than $2.3 billion to build.

The state Public Service Commission agreed with We Energies, Madison Gas & Electric and WPPI Energy of Sun Prairie in deciding that the project is cost-effective for the utility customers, given the savings that will come from running the power plant more often.

The new coal plant was designed to burn coal mined in the eastern United States, but the price of that coal has surged in recent years because of exports to China and other countries. The eastern coal burns more efficiently and produces fewer greenhouse gas emissions per unit of energy.

We Energies contends it will be able to run the power plant more often because it will be able to operate at a lower cost, placing it in a better position to be called on in the Midwest wholesale power market.

"The ratepayers of Wisconsin have invested in this plant and the best use that it could have is to be running as much as it can, and that's what this project does," PSC Commissioner Phil Montgomery said during Thursday's meeting.

Groups that advocate at the PSC, including the Citizens Utility Board and Clean Wisconsin, had raised questions about the utility's plan.

CUB said the modifications to the plant made sense but argued that the utility hadn't proved that its proposal to double the storage capacity at the Oak Creek site is needed at this time.

Clean Wisconsin argued that the project would lead to higher greenhouse gas emissions at a time when the federal Environmental Protection Agency has proposed rules designed to bring down emissions tied to global warming.

Commissioners Ellen Nowak and Michael Huebsch said Clean Wisconsin's concerns about the project and state compliance with the EPA's proposed Clean Power Plan are speculative given that the rule hasn't been finalized, is likely to be revised when it is, and faces multiple legal challenges.

"I don't think it's reasonable for us to require a utility to comply with a yet-to-be-final rule," Nowak said.

In April, the State of Wisconsin joined a lawsuit filed by coal companies as well as coal-reliant and coal-mining states objecting to the EPA rule, which is designed to reduce greenhouse gas emissions from U.S. power plants by 30% between 2005 and 2030.

The commissioners also agreed with the utilities that the project qualifies for inclusion in leases that allow the Milwaukee and Madison power companies to earn a 12.7% return on the projects.

CUB and PSC staff auditors had asked the commission to consider having this project come under a more traditional financing model that would earn a 10.2% return, but commissioners said state law was clear in requiring projects like these to qualify for the higher profit.

We Energies expects to start construction of the plant modifications this fall and make changes to the plant during regularly scheduled maintenance outages for the new coal plant's two boilers, utility spokesman Brian Manthey said.

The entire project, including the coal storage expansion, is expected to be completed in 2017, he said.

source: http://www.jsonline.com