Coal plant settlement uncertain
Nov 28 - Milwaukee Journal Sentinel
The fate of a settlement aimed at resolving litigation over We Energies'
new coal-fired power plant in Oak Creek is up in the air after
conservation groups refused to revise the deal to address concerns
raised by state regulators.
At stake is whether the Sierra Club and Clean Wisconsin will give up
their right to challenge environmental permits issued for the $2.3
billion project, the largest construction project in state history.
The groups had agreed to drop all litigation last year, after We
Energies committed to fund environmental projects in Lake Michigan and
to expand production of renewable energy through biomass and solar power
projects.
Under the settlement, We Energies and the other co-owners of the new
power plant -- Madison Gas & Electric Co. and WPPI Energy -- agreed to
spend $4 million a year for 25 years on projects to improve water
quality in Lake Michigan. Another $5 million would be allocated for a
new nonprofit group focused on voluntary efforts to reduce emissions
linked to global warming.
PSC commissioners Mark Meyer and Lauren Azar had said earlier they were
reluctant to increase prices for We Energies customers now to fund the
Lake Michigan projects. They want to address the matter in a future
proceeding.
The groups objected, saying a delay prevents them from challenging an
environmental permit that's up for renewal in March, We Energies said in
a filing with state regulators this week.
In the filing, We Energies and the other co-owners provided alternatives
that would keep the Lake Michigan settlement costs from hitting
consumers' electric bills come January. Those changes reduce the total
cost of the settlement to ratepayers by $3 million to $7 million, but
would allow the utility to start recovering the costs from its customers
in 2011 or 2012.
PSC Chairman Eric Callisto said funding for projects in Lake Michigan
should be approved, arguing that the agency needs to address the threat
that environmental groups could revive lawsuits challenging the Oak
Creek project. He proposed removing some of the funding for the global
warming initiative as a compromise.
At a meeting in December, PSC commissioners will now have to weigh the
possibility that the environmental groups would revive their lawsuits
and win -- potentially adding more than $1 billion to the cost of the
power plant -- against the $98 million to $102 million cost of the
settlement.
"It's not insubstantial, but I think it's a fair risk reduction cost for
what's at issue," Callisto said during the PSC's Nov. 12 meeting.
The discussion about the coal plant settlement came as the commission
weighed how much to increase electric rates in 2010 for We Energies' 1.1
million electric customers.
The commission authorized an increase of nearly 5%, although bills will
rise more because there will be fewer credits available to distribute to
customers next year from the 2007 sale of Point Beach nuclear plant.
Main reasons for the price hike: costs to build the coal plant project,
transmission line costs, employee pension costs, and a loss of sales
linked to factory closings and the recession.
The commission estimates that a typical residential customer would see a
$6 increase on monthly bills in January. It's expected bills would rise
again in 2011, when Point Beach credits would no longer be available.
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