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Released July 03, 2013 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--An innovative plan to keep an aging Midwestern coal-fired generator operating took a big step forward earlier this year, when Wisconsin utility regulators approved an asset transfer involving the Presque Isle Power Plant.
The five-unit, 344-megawatt (MW) plant is owned by Wisconsin Energy Corporation (NYSE:WEC) (WEC) (Milwaukee, Wisconsin). The utility had concluded that installing pollution-control equipment wasn't economical for the generator, which has operating units that date from the 1970s. But Wolverine Power Cooperative (Cadillac, Michigan) needed new electric generation. The two companies worked out a plan where Wolverine would invest between $130 million and $140 million to install pollution-control equipment at Presque Isle, which is located in Marquette, Michigan. In return, WEC would transfer 33% ownership of Presque Isle to Wolverine.
The Wisconsin Public Service Commission (WPSC) (Madison, Wisconsin) approved the asset transfer in mid-May. Presque Isle "is clearly needed for [WEC] to meet its customers' needs," Phil Montgomery, the commission's chairman, told The Milwaukee Journal Sentinel. "Of the alternatives, it is the best option by far for Wisconsin ratepayers to meet future air quality rules."
Other regulatory agencies must sign off on the deal, but WEC spokesman Barry McNulty doesn't expect those to be a problem. He told Industrial Info those approvals are expected later this year, perhaps in the fourth quarter. Assuming that happens, construction of pollution-control equipment could begin early next year and finish in 2016.
McNulty said WEC has not yet selected an engineering, procurement and construction (EPC) firm for the project. That, too, is expected by the fourth quarter. WEC is working with URS Corporation (NYSE:URS) (San Francisco, California) on engineering the Presque Isle project. URS has performed air quality control system (AQCS) work at other WEC generators, as well as helping switch the Port Washington Generating Station to burn natural gas instead of coal. McNulty said no equipment or technology decisions have been made for Presque Isle.
"This really is the best of both worlds," McNulty said of the asset transfer. "Wolverine needs the generation and they're bringing the cash. We will continue to operate the plant, create new construction jobs and keep the existing jobs at the plant. The project will enable the continued reliable operation of the power plant, while supporting the regional economy and protecting the local tax base."
And WEC won't have to spend one thin dime for the pollution-control equipment. That's important, because the Wisconsin utility has spent more than $3 billion in recent years to build new coal, gas and wind generation, plus install pollution-control equipment at some of its coal plants. In addition, WEC plans to convert its Valley power plant in Milwaukee to burn natural gas to meet regulations enacted by the U.S. Environmental Protection Agency (EPA) (Washington, D.C.).
Previously, WEC had decided it was not economically feasible to switch fuels or to install pollution-control equipment at Presque Isle. WEC estimated it could cost between $325 million and $900 million to install pollution-control equipment that would keep Presque Isle compliant with power plant emissions rules from the EPA, such as the Cross State Air Pollution Rule (CSAPR) and the Mercury and Air Toxics Standards (MATS) rule. Switching Presque Isle to burn natural gas was not cost-effective, because new natural gas infrastructure would have to be built to serve the plant.
Until it struck a deal with Wolverine, WEC planned to close Presque Isle, invest in new transmission lines and buy power on the market. For more on the reasons behind the asset transfer, see February 15, 2012, article - Scrubbers for Michigan's Presque Isle Power Plant? Decision Expected by Summer.
WEC and Wolverine started evaluating the feasibility of a joint venture in January 2012 and agreed to pursue the asset transfer in November 2012.
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.
The five-unit, 344-megawatt (MW) plant is owned by Wisconsin Energy Corporation (NYSE:WEC) (WEC) (Milwaukee, Wisconsin). The utility had concluded that installing pollution-control equipment wasn't economical for the generator, which has operating units that date from the 1970s. But Wolverine Power Cooperative (Cadillac, Michigan) needed new electric generation. The two companies worked out a plan where Wolverine would invest between $130 million and $140 million to install pollution-control equipment at Presque Isle, which is located in Marquette, Michigan. In return, WEC would transfer 33% ownership of Presque Isle to Wolverine.
The Wisconsin Public Service Commission (WPSC) (Madison, Wisconsin) approved the asset transfer in mid-May. Presque Isle "is clearly needed for [WEC] to meet its customers' needs," Phil Montgomery, the commission's chairman, told The Milwaukee Journal Sentinel. "Of the alternatives, it is the best option by far for Wisconsin ratepayers to meet future air quality rules."
Other regulatory agencies must sign off on the deal, but WEC spokesman Barry McNulty doesn't expect those to be a problem. He told Industrial Info those approvals are expected later this year, perhaps in the fourth quarter. Assuming that happens, construction of pollution-control equipment could begin early next year and finish in 2016.
McNulty said WEC has not yet selected an engineering, procurement and construction (EPC) firm for the project. That, too, is expected by the fourth quarter. WEC is working with URS Corporation (NYSE:URS) (San Francisco, California) on engineering the Presque Isle project. URS has performed air quality control system (AQCS) work at other WEC generators, as well as helping switch the Port Washington Generating Station to burn natural gas instead of coal. McNulty said no equipment or technology decisions have been made for Presque Isle.
"This really is the best of both worlds," McNulty said of the asset transfer. "Wolverine needs the generation and they're bringing the cash. We will continue to operate the plant, create new construction jobs and keep the existing jobs at the plant. The project will enable the continued reliable operation of the power plant, while supporting the regional economy and protecting the local tax base."
And WEC won't have to spend one thin dime for the pollution-control equipment. That's important, because the Wisconsin utility has spent more than $3 billion in recent years to build new coal, gas and wind generation, plus install pollution-control equipment at some of its coal plants. In addition, WEC plans to convert its Valley power plant in Milwaukee to burn natural gas to meet regulations enacted by the U.S. Environmental Protection Agency (EPA) (Washington, D.C.).
Previously, WEC had decided it was not economically feasible to switch fuels or to install pollution-control equipment at Presque Isle. WEC estimated it could cost between $325 million and $900 million to install pollution-control equipment that would keep Presque Isle compliant with power plant emissions rules from the EPA, such as the Cross State Air Pollution Rule (CSAPR) and the Mercury and Air Toxics Standards (MATS) rule. Switching Presque Isle to burn natural gas was not cost-effective, because new natural gas infrastructure would have to be built to serve the plant.
Until it struck a deal with Wolverine, WEC planned to close Presque Isle, invest in new transmission lines and buy power on the market. For more on the reasons behind the asset transfer, see February 15, 2012, article - Scrubbers for Michigan's Presque Isle Power Plant? Decision Expected by Summer.
WEC and Wolverine started evaluating the feasibility of a joint venture in January 2012 and agreed to pursue the asset transfer in November 2012.
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.
