Scrubbers for Michigan's Presque Isle Power Plant? Decision Expected by Summer

---

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The proverb "One man's trash is another's treasure," is playing out in the Upper Midwest as two utilities try to determine if it is cost-effective to install pollution-control equipment at an aging, coal-fired generator on the shores of Lake Superior.

The 431-megawatt (MW) Presque Isle Power Plant, located in Marquette, Michigan, is owned by Wisconsin Energy Corporation (NYSE:WEC) (WEC) (Milwaukee, Wisconsin). Its five units all came online in the 1970s. Because WEC has built more than 2,680 MW of new coal, gas and wind generation in the last few years, the utility planned to close Presque Isle by 2017 or 2018, spokesman Brian Manthey told Industrial Info. WEC decided installing pollution-control equipment at the plant, or switching it to natural gas, was not economically feasible.

"We had planned to retire Presque Isle rather than convert it or install emissions controls there," he said. Manthey explained that keeping the plant compliant with recent power plant emissions rules from the U.S. Environmental Protection Agency, such as the Cross State Air Pollution Rule (CSAPR) or the Mercury and Air Toxics Standards (MATS) rule, would have required installing flue gas desulfurization (FGD) and selective catalytic reduction (SCR) equipment to reduce sulfur dioxide (SO2) and oxides of nitrogen (NOx). Installing that equipment at Presque Isle would cost between $325 million and $900 million, based on WEC's recent costs to install emissions control equipment, he estimated.

"Fuel switching to natural gas was cost prohibitive, because there's no natural gas infrastructure around the plant," he continued. "That, plus the fact that there is considerable generation available in the Midwest, led us to conclude the cost-effective step was to close Presque Isle and have new transmission lines built to better serve Michigan's Upper Peninsula."

"With or without Presque Isle running, the Upper Peninsula needs more transmission," the WEC spokesman said. "The area is extremely transmission-constrained. Last May, thousands of customers in the Upper Peninsula suffered a blackout after a thunderstorm took down one transmission line while a second line was out of service. That tripped off a coal-fired unit. Customers were out of power for the better part of a day."

Enter Wolverine Power Cooperative (Cadillac, Michigan), which wants to acquire new base-load electric generation capacity. Last month Wolverine signed a letter of intent to evaluate the formation of a joint venture to invest in environmental improvements at Presque Isle. The study, expected to be completed this summer, will assess the viability of Wolverine acquiring a significant percentage, perhaps up to 60%, of Presque Isle, and shouldering a proportional share of the emissions control equipment the plant will require to continue operating.

"Wolverine continues to seek cost-effective base-load power supply to serve our member-cooperatives," Eric D. Baker, president and chief executive of Wolverine, said in a January 11 statement. "The prospect of investing in Michigan to upgrade the Presque Isle units appeals to us."

"We are pleased to announce this undertaking with Wolverine," Allen L. Leverett, executive vice president of We Energies, said in the same statement. We Energies is a subsidiary of WEC. "Presque Isle is important to the Upper Peninsula of Michigan and we want to develop a life-extension option that is economically beneficial for customers. We look forward to working with Wolverine, and ultimately bringing forward a solution for regulatory approval."

Independent of this potential joint venture, We Energies and Wolverine say they agree on the need to identify transmission solutions for the Upper Peninsula of Michigan to ensure electric reliability and support future economic growth.

Wolverine is in the market for base-load generation, because a power-purchase contract that supplies most of its base-load generation is due to expire soon, Nancy Tanner, Wolverine's director of communications and member relations, told Industrial Info.

View Plant Profile - 1518863

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.