June 14, 2008

Power Plant Cost to Top $1 Billion


The cost to build a new coal-fired power plant in Cassville or Portage has soared because of higher construction prices, Alliant Energy Corp. said Friday.

The 300-megawatt power plant, which would generate enough power to supply 150,000 homes, is now projected to cost $1.1 billion if it is built in southwestern Wisconsin and $1.2 billion if it is built in Portage, the utility said.

The cost of building power plants has risen in recent years as the prices of steel, concrete and other materials have escalated, Alliant Energy spokesman Rob Crain said.

Earlier this year, the utility projected that the plant would cost $850 million to $950 million, but costs have continued to rise. The new figures were included in documents filed with state and federal regulators.

Opponents say the plant is too expensive in terms of the price that would be paid by Alliant ratepayers and costs to the environment, because coal-fired power plants contribute more greenhouse gases than other forms of power generation.

"You're talking about an extremely expensive plant, with fuel costs rising and capital costs rising and carbon costs rising, you're talking about a huge increase in rates for Alliant's ratepayers in Wisconsin," said Mark Kresowik, corporate accountability representative with the Sierra Club in Madison.

Alliant Energy is the parent company of Wisconsin Power & Light Co., an electric and natural gas utility serving parts of southern and eastern Wisconsin, including parts of Dane, Kenosha, Jefferson, Fond du Lac, Walworth, Dodge and Sheboygan counties.

In an interview Thursday with the Journal Sentinel editorial board, WPL President Barbara Swan said the utility projects that its customers would see increases of 5% to 6% a year through 2015 to pay for the coal plant as well as a series of environmental and clean- energy initiatives announced by the company.

If state regulators endorse the coal plant, Alliant committed this week to:

- Increase spending on energy efficiency by 50%, to $60 million a year;

- Expand the amount of wind power the company would generate for Wisconsin customers by 50%, to 300 megawatts;

- Shut down its oldest coal-fired boiler, a 75-megawatt generator, by 2013; and

- Produce 20% of the electricity from the new Cassville plant by burning renewable resources such as switchgrass, wood chips and cornstalks.

Those initiatives, the company said, would offset the amount of carbon dioxide that is projected to be generated by the new Cassville coal plant.

Announcement that the costs have escalated comes one month after an analysis of the plant by state energy and environmental regulators concluded that Alliant's proposal was "not the least- cost option" for the utility's customers.

Groups opposed to the plant, including the Citizens Utility Board ratepayer group, have called on the utility to beef up spending on energy efficiency and renewable energy instead of building a more costly coal plant.

Alliant said analyses by both the utility and the state Public Service Commission have identified a need for a new power plant, given rising demand for energy.

The commission will likely vote on the issue by the end of this year.

Crain said the utility's customers have benefited over the years through the company's energy-efficiency projects, which generated savings in energy use equivalent to the amount of power that would be generated by the new coal plant.

Construction costs are going up for all kinds of power plants, he added.

"If this were a natural gas plant, we'd have the same cost increases with concrete and steel," he said. "This is a construction materials issue."

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