Surprising Setback

In a surprising setback for Wisconsin Energy Corp., a Dane County judge has rejected the state Public Service Commission's approval of two natural gas-fired power plants in Port Washington.

The ruling by Judge Moria Krueger requires state regulators to do more extensive analysis comparing the natural gas plants with alternative forms of generating power.

Utility industry officials said they are concerned that the decision could affect the state's ability to meet electricity demand in coming years.

Electricity use in Wisconsin hit an all-time high in August, and demand is expected to grow even more this year as the economy continues to recover, said David Benforado, executive director of Municipal Electric Utilities of Wisconsin, a consortium of community- owned utilities.

"If this decision results in a delay of the Port Washington units, that would be very unfortunate and risky," Benforado said.

What remained unclear Thursday was how the Dane County decision would affect the plants. Construction began last summer on the first phase of the $640 million project, which calls for the natural gas plants to be built on the site of an aging coal-fired power plant in downtown Port Washington.

Wisconsin Energy contends that the ruling does not require Wisconsin Energy to stop building the power plants, which are scheduled to open in 2005 and 2008.

"Our understanding is that this issue involves the need for the PSC to rectify their order by providing additional information to the court, and barring any other requirements, construction continues," said Richard Cieslak, a Wisconsin Energy spokesman.

However, Robert H. Owen Jr., a Middleton-based wind-energy consultant who brought the lawsuit, disagreed. "Their lawyers need to consider the implications of this decision because the judge has said there's no permit," Owens said. Of the utility, he said: "They are a party to this action, they have this decision. They violate it at their peril."

No environmental analysis

The Port Washington units were approved by the PSC in December 2002. The commission did not conduct a full environmental analysis of the project -- typically required of plants the size of those being built in Port Washington. The commission determined the project would create an environmental benefit because the coal plants were being shut down and replaced with cleaner-burning natural gas-fired plants.

Krueger sided with Owen, who contended that the commission should have evaluated the environmental impact of the natural gas plant more thoroughly.

"To be complete, the environmental analysis must also evaluate emissions from the new plant as though there were no old plant on the site," Krueger wrote. "It is misleading to conclude that because applicants' new plant is better than the old, its emissions need not be analyzed standing on their own."

The precedent this ruling could set, if it stands, is of concern for Wisconsin's environment, Benforado said.

"If this order stands, what incentive will existing utilities in Wisconsin have to retire old coal plants?" he said. "This order is telling the PSC to disregard the fact that a dirty old coal plant is going to be retired and in place of this dirty old coal plant two clean- burning natural gas plants will come online."

Lee Cullen, an attorney for the Customers First! Coalition, said the environmental review regulations need to be complied with. At the same time, he added, "These gas plants do replace one of the oldest and dirtiest coal plants in the state, and it's also true that any substantial delay here will only increase costs for ratepayers."

Clean Wisconsin, the state's largest environmental group, did not oppose the Port Washington project.

Owen's was the only lawsuit challenging the plan.

Owen said it was his hope that the PSC would conduct a more extensive analysis of the project -- an evaluation that would include the viability of wind-power generation given the significant spikes in natural gas prices in recent years.

The PSC is "very disappointed in the ruling," spokeswoman Linda Barth said. "We're looking at this court decision and its consequences. We're disappointed because we felt we dealt with this issue correctly."

Barth said the commission was also studying whether Wisconsin Energy can proceed with construction at the plant. The commission has three months to decide whether to appeal the judge's decision.