Regulators have approved plans for three Wisconsin utilities to spend nearly $90 million on pollution controls required to continue burning coal at a power plant slated for conversion to natural gas.
Completed in 2011 at a cost of more than $2 billion, the Elm Road Generating Station in Oak Creek is jointly owned by We Energies, Madison Gas and Electric and WPPI Energy, a Sun Prairie-based cooperative that provides power to 51 municipal utilities.
In order to comply with federal regulations, the plant needs a new treatment system to remove toxic metals from water dumped into Lake Michigan.
But since applying for a permit in February, We Energies announced that it is phasing out coal and plans to convert the 1,268-megawatt plant to burn natural gas.
Gale Klappa, CEO of We Energies’ parent company, told investors last month that the utility has tested burning a mix of coal and gas at the Elm Road plant and within the next two years hopes to invest about $150 million in technology that would allow it to run on 30% gas.
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Klappa said the company’s coal use would be “immaterial” by the end of 2030.
Under federal Environmental Protection Agency rules that took effect in December, the new treatment system must be in place by the end of 2023 so long as any coal is burned.
Designed to reduce arsenic, mercury, selenium and nitrate flushed into the lake, the treatment system would use microorganisms to digest organic matter in the wastewater, forming a sludge that can then be filtered out and put in a landfill.
The state Public Service Commission approved the investment with the condition that the utilities submit an annual report that includes any additional investments associated with burning natural gas at the plant.
While in favor of tighter pollution regulations, Clean Wisconsin argues it’s a mistake to spend more money on equipment that will be obsolete in just 12 years.
“Coal-fired power plants stopped being a good investment long ago,” the group wrote. “(I)t makes no sense to pour yet more ratepayer dollars into coal generation when the market and applicable climate policies ... dictate a shift away from coal as soon as possible.”
Clean Wisconsin also suggested the utilities could have moved to install the upgrade when the rule first went into effect nearly five years ago, “which would have provided more environmental protection for the high price of the upgrades.”
The Citizens Utility Board acknowledged that the treatment system is a reasonable approach to complying with the law but is “troubled somewhat” by the announcement of plans to switch fuels and asked that regulators explore the impact of coal phaseout on the economics of the project.
We Energies spokesperson Brendan Conway said the project is required to meet “near-term federal regulations” at generators that “will continue to serve our customers reliably for decades.”
Earlier this year, regulators authorized MGE and Alliant Energy to install a $19.2 million ash handling system at the Columbia Energy Center, which is scheduled for retirement by the end of 2024. The system, designed to keep toxic chemicals from leaching into groundwater, was needed to comply with a different EPA rule.
Nevertheless, Alliant says replacing the plant with solar and other renewable generation resources will save customers some $250 million in avoided repairs and maintenance costs.
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