The Wisconsin Power and Light unit of Alliant Energy (NYSE:LNT) is pursuing an approval at the Wisconsin Public Service Commission for the acquisition of the Riverside Energy Center, which is a 600-MW combined cycle facility located in Beloit, Wisc.
Riverside Energy Center LLC, a wholly-owned indirect subsidiary of Calpine Corp. (NYSE:CPN), owns Riverside. Wisconsin Power and Light currently has a tolling agreement with Riverside Energy Center LLC under which WPL has a right to toll about 500 MW of capacity from Riverside. The Riverside tolling agreement provides WPL with an option to purchase Riverside for $392.2m, provided that WPL notifies Riverside Energy Center LLC of its exercise of this option by May 31, 2012. WPL said it now wants to buy the plant under the terms of that option.
“WPL’s economic modeling of the Riverside acquisition and comparison of the acquisition to other alternatives demonstrates that the purchase of Riverside is the most cost-effective alternative for meeting long-term capacity and energy needs of WPL,” said a Nov. 30 application for approval filed by the utility at the PSC. “WPL’s purchase of Riverside will help to ensure that WPL has sufficient capacity and energy to economically meet its future demands while maintaining comparable reliability as realized with the current Riverside [tolling agreement].”
WPL compared the purchase of Riverside to either relying on the market for energy and capacity or purchasing other combined cycle units in the Midwest ISO marketplace. When compared to these alternatives, the purchase of Riverside proves to benefit WPL customers by a minimum of $130 million – and potentially in excess of $500 million – over the economic study period, the utility said.
WPL currently utilizes 500 MW of Riverside’s capacity in an intermediate or load following mode on an economic basis under the tolling agreement. The facility is located within the Midwest ISO footprint and is connected to a 138-kV transmission line.
Riverside is a key resource in WPL’s generating portfolio providing energy at a cost above baseload coal units but below peaking natural gas-fired units, the application noted. It is also the only natural gas-fired intermediate load following resource in WPL’s fleet. Riverside provides WPL an intermediate generating resource to supply energy throughout the year when needed.