We Energies strikes deal with Wisconsin environmental groups

Daily Reporter (Milwaukee), Aug 7, 2008 by Sean Ryan

Neither Clean Wisconsin nor We Energies wants to see what would happen if the utility shuts down the Oak Creek power plant's $100 million cooling system and builds a new one.

The two parties last week agreed to a $105 million settlement in a lawsuit filed by Clean Wisconsin and the Sierra Club that challenged the legality of the 27-foot diameter, 9,000-foot-long, water-intake pipe We Energies built to cool two new generation units in Oak Creek. If the state Public Service Commission approves the deal, We Energies and two other utilities with a stake in the plant will contribute $4 million in rate payments a year to a nonprofit controlled by the utilities, Clean Wisconsin, Sierra Club and the Wisconsin Department of Natural Resources.

The promise of future collaboration on environmental projects is much better than a court ruling in Clean Wisconsin's favor that would delay the plant's opening and force We Energies to build a new cooling system -- probably cooling towers -- said Mark Redsten, executive director of Clean Wisconsin.

"We wanted to make sure that there's no pyrrhic victory," he said.

In documents filed with the DNR, We Energies estimated it would cost $300 million to build cooling towers and reconfigure the two new generation units in Oak Creek, said Barry McNulty, We Energies spokesman. He said the utility's reasons for settling were similar to Clean Wisconsin's: If the plant opening is delayed over the cooling system issue, We Energies would have bought power, and ratepayers would have shouldered additional costs, he said. The first unit is scheduled to open in 2009 and the second in 2010.

"We wanted, obviously, to have some certainty for our customers that we would in fact be able to operate the expansion at Oak Creek," McNulty said.

The settlement also requires We Energies, Madison Gas and Electric Co., and Wisconsin Public Power Inc., which will buy electricity from the plant, to pursue renewable-energy projects. Government mandates probably would have led the utility to do many of the projects anyway, but the settlement will ensure they happen and require they get done sooner, Redsten said.

The utilities agreed to buy or build 15 megawatts of solar power and to request PSC permission to build a facility to generate 50 megawatts of biomass-fueled electricity. We Energies agreed to decommission two coal-fired units at its Presque Isle, Mich., plant in 2010, earlier than the December 2012 closing date it promised the PSC.

The plant's closure and the generation of electricity with biomass could fit together, McNulty said, since some equipment at Presque Isle could be used to burn biomass for electricity once it no longer burns coal.

"If we identify some equipment that could be used for biomass at that site, we're going to hold onto that and make that happen," he said. "I don't know if it would be the future plans for that entire site."

The nonprofit organization that will be created will decide how to spend the $4 million per year promised by the three utilities. But McNulty said some possibilities would include dealing with polluted storm-water runoff, blocking invasive species, habitat destruction remediation or scientific research on the Lake Michigan ecosystem.

Since the annual payments would come from ratepayers, the deal could have an impact on rates if the PSC approves it, McNulty said.

Redsten said the settlement should mean the end to Clean Wisconsin and the Sierra Club's long efforts to block the new power plant in Oak Creek. However, if the PSC does not approve the deal, the settlement will let the parties back out of the agreement, he said.

"We're excited about working together with the owners of Elm Road on this effort," he said. "We feel that a lot can be accomplished."