By THOMAS CONTENT tcontent@journalsentinel.com, Journal Sentinel
Friday, March 19, 2004
Wisconsin Energy Corp.'s Pleasant Prairie power plant will undergo a $325 million environmental cleanup that may be paid for through a special charge on electric bills.
The project was approved last week, and the utility is now considering whether to finance it through a new funding mechanism created by a bill signed into law by Gov. Jim Doyle on Monday.
An equipment upgrade is expected to sharply reduce pollution from the coal-fired Pleasant Prairie plant, which opened in the 1980s.
The project, approved last week by the state Public Service Commission, will target sulfur dioxide and nitrogen oxide.
Once completed, the project will mark the first step by We Energies to add environmental controls to its fleet of coal-fired plants under a proposed settlement of alleged violations of the federal Clean Air Act.
Larry Salustro, the utility's senior vice president and general counsel, said that in the coming months the company will consider whether to use the new financing mechanism, dubbed environmental trust financing.
We Energies would have to ask the Public Service Commission to authorize a special charge on ratepayers' bills. The money would be used to pay off bonds that the utility would sell.
Backed by the ratepayer fee, the bonds would be expected to get a high credit rating -- lowering the utility's borrowing costs. In return, ratepayers would save money because the law requires the utility to forgo any profit from making environmental upgrades to its plants.
We Energies wants to pass on the cost of the plant upgrade to its customers. Using the environmental trust financing could lower that cost as much as 30%, Salustro said.
The Pleasant Prairie project was one of two approved by the commission, which also endorsed a $55 million pilot program to reduce mercury emissions from the utility's Presque Isle plant in Marquette, Mich. The projects represent changes that We Energies said it would make to settle charges that it violated the clean air law.
In an agreement pending before a federal judge in Milwaukee, the utility agreed to pay $3.25 million in civil penalties while committing to $600 million in plant upgrades.
That agreement is opposed by a group of environmental and ratepayer groups that say it doesn't go far enough to improve air quality, particularly in Milwaukee -- home to a coal plant in the Menomonee Valley.
Burning coal is an inexpensive means of generating electricity, but it's the most polluting. Coal plants emit sulfur dioxide, which contributes to acid rain, and nitrogen oxide, which contributes to smog. The pollutants cause respiratory problems and exacerbate asthma in children.
The opponents say the settlement assesses too small a penalty "for all of those years of failing to meet their obligations" under the Clean Air Act, said Eric Uram, regional representative for the Sierra Club in Madison.
The financing proposal met some opposition when it was introduced in January, amid concerns about whether utility ratepayers should shoulder the cost of environmental upgrades required to meet air- pollution standards.
But the law essentially leaves unchanged the commission's authority to decide whether the project sought by the utility is in the public interest and should be paid for by electricity customers. As a result, the Customers First! coalition of municipal utilities and customer groups supported the plan.
KEY POINTS
What: Equipment and controls to emit less sulfur dioxide and nitrogen oxide.
Where: We Energies' plant in Pleasant Prairie.
Cost: $325 million.
When: To be finished by late 2006.
Who pays: Special charge on utility bills is possible.