We Energies asks state to block other utilities from building new electric plants

MILWAUKEE — We Energies has so much energy available from building its own power plants over the past decade that it says other utilities in Wisconsin do not need to build their own new plants.

The Milwaukee utility says state regulators should reject $1.2 billion in spending by two other utilities to build new natural gas-fired power plants. Instead, We Energies is seeking permission to sell power to Alliant Energy Corp. of Madison, which filed plans last year to build its own new natural gas plant near Beloit.

The We Energies move, which caught other utilities and customer groups off-guard when it was first disclosed, is igniting a feud between the utilities. The Madison utility called We Energies' proposal self-serving and said it would not be a long-term fix for Alliant's power needs.

Alliant missed out on a chance to build a new coal-fired power plant seven years ago. Now, that power plant is being shuttered, and Alliant is looking to add its own cleaner natural gas-fired plant, pegged to cost $750 million.

We Energies has consistently rejected critics who claimed the utility overbuilt its system and drove up its customers' rates by opening both its natural gas plant in Port Washington and its coal plant in Oak Creek, at a cost of more than $3 billion.


The projects — built in response to power shortages the state experienced in the late 1990s — come as demand for electricity is barely growing and is not as high as it was before the Great Recession in 2008-'09.

A recent analysis, the Milwaukee utility says, finds it has more than enough power to meet its own needs, and the power needs of two other state utilities, through 2024. So much so that two major power plants, one proposed by Alliant and another proposed by Wisconsin Public Service Corp. of Green Bay, can be shelved for now, according to the analysis.

Already delayed is the WPS proposal to build a $517 million plant in Wrightstown, between Appleton and Green Bay. A month ago, We Energies and WPS became sister utilities when the Milwaukee utility's parent company completed an acquisition of WPS parent Integrys Energy Group Inc. of Chicago. That deal created Milwaukee-based WEC Energy Group Inc., now the 15th-largest investor-owned utility system in the nation, with 4.4 million customers in four states.

Alliant and its subsidiary, Wisconsin Power and Light Co., want state permission to build a $750 million natural gas-fired power plant as part of the Riverside Energy Center in Beloit. On the same site, the utility is asking to build a solar project that would be among the state's largest.

The Milwaukee utility is proposing that it be allowed to sell power to the Madison utility. The utility is asking state regulators to let it get involved in the Beloit case, in what it says is a bid to help its own customers, who could see rate relief if We Energies signs an agreement to sell power it does not need to the Madison utility. We Energies is forecasting savings in the "tens of millions of dollars."

Groups representing Wisconsin utility customers are backing We Energies, to a point.

"It is necessary, and beneficial to customers, to examine all realistic and cost effective alternatives to a capital project of Riverside's significance," the Citizens Utility Board and Wisconsin Industrial Energy Group said in a joint filing with the state Public Service Commission.

At the same time, the groups said We Energies should be required to submit its own plan soon to give ample time for experts to analyze and weigh the different alternatives.


For its part, Alliant is criticizing the We Energies move, saying the Milwaukee power provider had the opportunity to submit a bid to sell power to the Madison utility more than a year ago, when Alliant issued a request for proposals to multiple utilities so that they could be evaluated "on a level playing field."

We Energies chose not to submit a bid back then. If We Energies has ample power to supply WPL, it should have known that a year ago when bids were being sought, Alliant said.

"In reality, We Energies seeks to force a second (proposal) process in which it is the sole bidder," Alliant said.

"If (We Energies) is allowed to pitch its eleventh-hour offer for a short-term power purchase will radically and unnecessarily expand this proceeding, and set bad precedent for future proceedings," Alliant said, adding that instead of providing an alternative, We Energies' proposal "is simply an effort to derail (the Alliant) project and transfer risk to WPL customers."

However, We Energies says its alternative would "deliver cumulative, system-wide benefits for customers of both utilities totaling tens of millions of dollars when compared to building another generating facility in Wisconsin."

First, the Alliant project would require an investment of $75 million to $84 million by American Transmission Co., We Energies said, noting that customers of WPS and We Energies would have to pay nearly two-thirds of those costs.

That's because the recent merger made WEC Energy Group the dominant owner of ATC, with a more than 60% stake in the Pewaukee-based transmission line utility. Alliant is the second-biggest owner of the company, with a 16% stake.

We Energies says being able to sell its extra power would provide savings for its own customers, because they would see savings the more the utility's own power plants are called upon to run.


The Milwaukee utility rebuffed Alliant's concerns about its failure to submit a bid last year, saying that its attention at the time was focused on its planned $9.1 billion acquisition of Integrys.

"The combined capacity position of Wisconsin Electric and WPS did not become clear until the transaction closed and Wisconsin Electric began to undertake the IRP (Integrated Resource Plan) process that the Commission ordered as a condition of approving the transaction," We Energies says.

How state regulators will react to the We Energies alternative is not clear. The politically powerful utility, which includes a former legislative leader and former PSC commissioner on its management team, has won approval for big power plant projects during the Doyle administration and approval for controversial fixed charge bill increases and its big merger from a PSC whose commissioners are now appointed by Republican Gov. Scott Walker.

Alliant, meanwhile, was rebuffed when it sought to build a coal plant on the Mississippi River in Cassville, with the appointees of then-Gov. Jim Doyle, a Democrat, who cited concerns about global warming and the state being put in a position to rely too heavily on coal. Coal plants generate twice as much carbon pollution as natural gas plants.

In recent years, like We Energies, Alliant has moved to clean up its fleet of power plants, adding controls to stop smog and asthma-causing emissions at older coal plants. Alliant also is shutting down older coal plants, including the very plant it sought to expand in the last decade.

Whereas We Energies rates have surged considerably over the past decade, in part because of the newer power plants, Alliant Energy's electric rates have been more stable.

Massive reductions in energy use linked to the shutdown of the General Motors plant in Janesville and its suppliers, as well as factory curtailments in Fond du Lac and Sheboygan, hit Alliant hard in the Great Recession. However, a recovering economy and the shutdown of older coal plants prompted Alliant to again prepare to expand its fleet of power plants.

Using an argument that other utilities, including We Energies, have made in the past, Alliant says it is important to have a long-term view, given that power plants are built to last four decades or more. which Alliant says won't be met by buying power from another utility for less than a decade.


A decision by state regulators on whether to allow We Energies to make a case in the Alliant proceeding could come as soon as this week.

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