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UTILITIES | $370M PROJECT

Regulators approve $370M natural gas storage project despite concerns of fossil fuel investment

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Rejecting concerns about continued investment in fossil fuel infrastructure, Wisconsin utility regulators have approved plans for a $370 million natural gas storage project in southeastern Wisconsin designed to provide fuel when demand spikes.

We Energies and Wisconsin Gas say the dual facilities in Jefferson and Walworth counties are needed to improve reliability and resilience in light of anticipated growth in demand. They estimate the cost will be at least $224 million less than the alternatives.

The Public Service Commission approved the projects despite opposition from some local residents and the Sierra Club, which argued the utilities’ growth projections are overblown and “irreconcilable” with state and national carbon reduction commitments. The group argued it would be more cost-effective to reduce demand.

Compliance with the Paris climate agreement — an effort to stave off the most catastrophic impacts of climate change — will require a reduction in gas use, and the groups note that Gov. Tony Evers’ climate task force recommended against building any new fossil fuel infrastructure.

Commissioners largely rejected those arguments, taking a narrower view of their mandate of ensuring safe, reliable and affordable energy service.

Chair Rebecca Valcq, an Evers appointee, said there’s no evidence that demand reduction is a viable alternative and that fossil fuels will continue to be part of the state’s energy mix — “at least for now.”

Rebecca Valcq

Valcq

“I don’t see natural gas going away,” Valcq said. “Our obligation is to the residents of this state to ensure they have reliable power. It is not appropriate for us to sit back and wait and see if something materializes.”

Commissioner Ellen Nowak, appointed by former Gov. Scott Walker, accused the Sierra Club of presenting “false choices.”

“We need to have all available types of energy generation at our hands,” Nowak said. “I do not believe we should ever be eliminating any type of resources.”

The project consists of two storage facilities in Ixonia and Bluff Creek where natural gas would be chilled to minus-260 degrees to reduce its volume. Each system would hold a billion cubic feet of gas for times of high demand, when it would be heated and vaporized.

LNG storage tank rendering

A drawing provided by WEC Energy Group depicts one of two planned facilities where liquified natural gas will be stored for use when demand spikes, which the company says will be cheaper than reserving additional pipeline capacity or buying gas when spot prices are high.

The utilities say the facility will eliminate the need to contract additional pipeline capacity that would only be needed a few days a year or to pay a premium when demand is high, as it was during a cold snap last winter that caused spot prices to jump by up to 10,000%.

Wisconsin’s geology does not allow for underground storage, and the utilities’ underground storage site in Michigan is dependent on pipeline capacity for delivery.

The project is expected to raise revenue requirements by 4.4% to 4.5% once the facilities are completed by 2024, but the utilities said rate increases will be offset by the savings they produce.

Liquified natural gas storage facilities map

Commissioner Tyler Huebner supported the Ixonia facility, which would serve Wisconsin Gas customers in Milwaukee, but said the value of the We Energies project was questionable.

Huebner, another Evers appointee, said he wants to see more data from utilities, such as how many electric heat pumps would need to be installed to reduce demand.

“Is there some other solution? I want to see that from our applicants going forward — a portfolio of options ... as opposed to a facility that’s one size,” Huebner said. “Once it’s there, it’s there. It’s in the rate base.”

WEC spokesperson Brendan Conway said the decision will “allow us to keep our customers warm on the coldest days of the year with a safe, affordable and reliable heating supply” while saving ratepayers money in the long run.

Opponents panned the decision, saying any new investments should reduce carbon emissions.

“Investing hundreds of millions of dollars into fossil fuels will only harm our planet and worsen conditions for those on the front lines of the climate crisis here in Wisconsin,” said Marco Marquez, state program manager with Action for the Climate Emergency.

The approval comes days after the utilities’ parent company, WEC Energy Group, announced it would stop burning coal by 2035, converting the state’s largest coal-fired power plant to burn natural gas, a move that drew mixed reviews from environmental and consumer advocates.

Ellen Nowak

Nowak

“Today is again another recognition that natural gas is here to stay,” Nowak said. “We need it.”

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