Wisconsin court clears way for besieged Elm Road coal-fired power plant

Wisconsin court clears way for besieged Elm Road coal-fired power plant

new york (Platts)--29Jun2005


The Wisconsin Supreme Court Tuesday overturned a lower court decision that
rejected a permit for a 1,230-MW, coal-fired power plant being developed by We
Energies. The Supreme Court upheld the Wisconsin Public Service Commission's
decision to issue the permit to Milwaukee-based We Energies "in all respects,"
the ruling said.

On Nov. 29, Dane County Circuit Court Judge David Flanagan vacated the
certificate of public convenience and necessity granted by the PSC in November
2003. The judge said that the application for the $2.15-bil Elm Road project
at its Oak Creek plant was incomplete when the commission deemed it complete
Nov. 15, 2002. Also, the final PSC order was faulty on several counts, the
judge ruled.

But the Supreme Court disagreed. "We uphold the PSC's determination that [We
Energies'] application was 'complete.'" The court said the application was
judicially reviewable, that the PSC reasonably concluded that We Energies'
application contained two distinct site alternatives, that the application
contained all necessary information relating to Dept. of Natural Resources
permits, and that it contained all necessary information relating to
transmission line agreements.

The court also found PSC approval was not contrary to law or unreasonable and
did not exceed its authority. We Energies spokesman Thad Nation told Platts
shortly after the ruling was released that the company was pleased and would
now sit down with Bechtel Corp. to renegotiate their contract, which expires
on Friday, to build the plant. He said the negotiations would not add cost to
the project but extend the dates.

The contract includes a 45-day mobilization call for Bechtel to get materials
and workers to the site. "We'll be looking to put that call into place as soon
as possible," Nation said. "We'll be moving just as quickly as we can."
The first 615-MW unit is scheduled to be in service in the summer of 2009 and
the second similarly sized unit in 2010. The plant will use Powder River Basin
coal.

The suit was brought by Clean Wisconsin, an environmental group, manufacturer
S.C. Johnson & Son and independent power producer Calpine Corp.

"This is a sad day for the citizens of Southeast Wisconsin. I respect the
Supreme Court's decision, but I am disappointed in the impact it will have on
our region," said Fisk Johnson, S.C. Johnson chairman and CEO. "I feel
strongly that building additional pulverized coal facilities is an unwise
choice. The people of Southeast Wisconsin, our economy, and our health deserve
much better. We continue to believe in cleaner energy alternatives, which keep
costs down and the environment healthy. S.C. Johnson will review the court's
decision and consider our legal options."

Katie Nekola, energy program director for Clean Wisconsin, said the decision
was a setback, but noted that her group and S.C. Johnson still have pending
challenges to the project?s air and water pollution permits. "We remain very
concerned about the impacts to Lake Michigan from the damaging and outmoded
cooling water system they have proposed, and will continue to fight for the
best environmental controls on this plant."

Meanwhile, legislation passed by both the Wisconsin Assembly and Senate, which
could have allowed Elm Road to proceed if the Supreme Court had upheld the
lower court ruling, is now on the governor's desk awaiting his signature. 
Nation said it was unclear whether Tuesday's ruling applied only to Elm Road
or to other projects as well.

The bill is designed to repair problems that Flanagan found with We Energies'
proposal. In particular, it would allow two "contiguous or proximate"
alternate sites for a proposed power plant if one of those sites is an
environmental brownfield or an existing power plant site, as is the case with
Elm Road. Current law requires two alternate sites. Flanagan said the Elm Road
proposal amounted to two different configurations on the same site rather than
two alternate sites, but the Supreme Court disagreed. 

The bill would also eliminate the requirement that a utility receive all its
environmental permits before it receives a PSC construction permit.

This story was originally published in Platts Coal Trader
http://www.coaltrader.platts.com

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