August 7, 2008

Utilities, Opponents Reach $105 Million Deal Over Power Plant

By Thomas Content, Milwaukee Journal Sentinel

Aug. 7--After eight years of squabbling and legal battles with utilities, opponents of an Oak Creek power plant reached agreement on a $105 million deal that will provide money to deal with invasive species and other problems in Lake Michigan and expand renewable energy in Wisconsin.

The deal also means We Energies won't have to build cooling towers -- which could have cost ratepayers an estimated $300 million to $400 million -- for the coal-fired power plant under construction in Oak Creek. The plant is expected to open late next year.

The agreement unveiled Wednesday gave We Energies and its two utility partners in the Oak Creek project what they sought: the opening of the $2.3 billion power plant won't be held up by a protracted court fight.

"We need to put this behind us," We Energies spokesman Barry McNulty said of the protracted dispute with Clean Wisconsin and Sierra Club.

The groups had long criticized the Oak Creek power plant as moving Wisconsin in the wrong direction in its reliance on coal. Group spokesmen said the deal provides much-needed money to boost water quality in Lake Michigan and provides specific steps to boost supply of electricity from wind turbines, solar panels and non-food crops such as switchgrass.

"In an ideal position we wouldn't be building new coal plants, but it's time to bury the hatchet and see what's the best way to mitigate what is already constructed," said Bruce Nilles, national clean coal campaign director with the Sierra Club. "There are tremendous opportunities to restore Lake Michigan that should go a long way to help mitigate additional electric generation on the lake."

Under the agreement, the environmental groups have agreed to stop their litigation opposing construction of the water intake system that We Energies will deploy to draw 1.8 billion gallons of Lake Michigan water per day for cooling at the new power plant.

Signing on to the deal are Madison Gas & Electric Co. and Sun Prairie-based Wisconsin Public Power Inc., co-owners of the Oak Creek power plant.

Key elements of the deal, some of which require state Public Service Commission approval, include:

--The utilities agreed to support legislation that would require Wisconsin to generate 10% of its electricity from renewable power by 2013, and 25% by 2025. The renewable standard is a key strategy recommended by the state's global warming task force.

--$100 million collected from customers of the three Wisconsin utilities would be allocated over 25 years for projects to improve Lake Michigan's water quality, to address problems including invasive species, runoff pollution, toxic loadings and habitat destruction.

--The three companies would contribute $5 million for businesses and communities exploring voluntary initiatives to reduce emissions linked to global warming.

--The utilities would seek to expand the state's solar energy production by 15 megawatts.

--We Energies will propose to build a 100% biomass power plant of up to 50 megawatts in Wisconsin, and will consider building another biomass plant in Michigan's Upper Peninsula.

--We Energies will seek to invest in energy efficiency projects for public buildings in the state, in line with a recommendation of the state's global warming task force.

--All three utilities have agreed to provide information to customers to help track utility greenhouse gas emissions.

--We Energies plans to shut down two of its oldest boilers at the coal-fired power plant in Marquette, Mich., by the end of 2012.

"The settlement is the best possible outcome for this dispute," said Katie Nekola, energy program director at Clean Wisconsin. "It offers significant benefits for Lake Michigan, and it helps also protect ratepayers in the sense that it avoids further costly delays in getting the plant running, and also avoids expensive cooling towers."

We Energies customers would be asked to fund roughly $73 million -- or nearly $3 million a year for 25 years -- for the Lake Michigan projects, if authorized by the Public Service Commission. Customers of Madison Gas & Electric would be responsible for $8.3 million and Wisconsin Public Power would also pay $8.3 million.

Is it a better deal for customers than not settling with the environmental groups?

"Absolutely," said McNulty of We Energies, "because it provides certainty that we will be able to operate the permitted facility and continued litigation provided added risk with dramatically more potential costs to customers."

Gov. Jim Doyle praised both sides for reaching a deal.

"The disputes over this matter are complex, have been hard fought and have consumed a great deal of time and resources for all involved," he said in a statement.

The dispute over the We Energies coal plant, which the utility first proposed in 2000, has persisted even after S.C. Johnson & Son Inc. bowed out of the fight several years ago. The company's chairman emeritus, Sam Johnson, was the most prominent and vocal critic of building the coal plant until he passed away in 2004.


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