Integrys Energy Group (NYSE: TEG) subsidiary Wisconsin Public Service (WPS) has agreed to buy Fox Energy Co. LLC, with that $440m purchase including $390m for the Fox Energy Center, a 593-MW combined cycle power plant in Kaukauna, Wisc.
It also includes $50m for the early termination of the existing tolling agreement between the entities. Fox Energy, which began commercial operation in 2005, is owned by Tyr Energy and GE Energy Financial Services, a unit of General Electric (NYSE: GE).
The transaction is expected to close on or around April 1, 2013, Integrys said in an Oct. 1 announcement. The agreement is subject to the approval of the lenders that currently provide project financing for the sellers. The transaction is also subject to state regulatory approvals, including cost recovery, federal regulatory approvals, and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
“This deal makes sense for our customers on several levels,” said WPS President Chuck Cloninger. “The acquisition will add diversity to our generation fleet, enhance supply and pricing options for the company, and allow us to better manage our generation assets and the overall cost of energy for our customers’ benefit.”
Fox Energy Center is a dual-fuel facility which will be able to use fuel oil but is expected to run primarily on natural gas. Adding this plant to its portfolio will give WPS a more balanced mix of electric generation, including coal, natural gas, hydroelectric, wind, and other renewable sources.
WPS applied Sept. 26 at the Michigan Public Service Commission to implement a Power Supply Cost Recovery (PSCR) plan and establish a PSCR factor for the calendar year 2013. The company serves a small part of Michigan’s Upper Peninsula.
In that filing, WPS said it has generating facilities with a current capacity of about 2,112.5 MW. It owns and operates eight coal-fired units with a total capacity of 1,178.8 MW and jointly owns three coal-fired units with assigned capacity to WPS of 429 MW, with those units operated by Wisconsin Power and Light. WPS also has 454.1 MW of simple cycle gas-fired combustion turbines, 40 MW of hydro and about 10.6 MW (108 MW nameplate capacity) of wind generation.
The PSCR filing said that under the Fox Energy Center power purchase deal, in 2013 the utility is forecasting 500 MW of capacity from this 2 x 1 combined cycle facility, with 759,763 MWh of energy, at an approximate total cost of $76,114,486.
Integrys is a diversified energy holding company with regulated natural gas and electric utility operations (serving customers in Illinois, Michigan, Minnesota, and Wisconsin), an approximate 34% equity ownership interest in American Transmission Co. (a federally regulated electric transmission company operating in Wisconsin, Michigan, Minnesota, and Illinois), and nonregulated energy operations.