A Federal Energy Regulatory Commission official, under authority granted by the commission, on April 1 signed off on the Wolverine Power Supply Cooperative buy of one third of the coal-fired Presque Isle plant in Michigan’s Upper Peninsula.
On Feb. 22, Wolverine Power Supply Cooperative and Wisconsin Electric Power filed an application requesting commission authorization for Wisconsin Electric to transfer to Wolverine approximately 33% of the 431 MW Presque Isle plant in Marquette, Mich.
Wisconsin Electric owns or leases approximately 6,600 MW of generation capacity, including that of the Presque Isle facility, in the control area of the Midwest Independent Transmission System Operator (MISO). Thus, according to applicants, the MISO control area is the relevant market for the facility. Wisconsin Electric sells the entire output of the facility at market-based rates, and provides reactive supply and voltage control services from the facility at cost-based rates.
Wolverine is a Michigan-based, non-profit generation and transmission electric cooperative that provides wholesale service to seven distribution cooperative members. Wolverine owns approximately 726 MW of generation. Wolverine also has long-term power supply contracts for an additional 571 MW of generation, including a 100% entitlement purchase from wholly-owned subsidiary Peninsula Generation Cooperative, which, in turn, owns a minority share of the coal-fired Ohio Valley Electric Corp.
“Under the Proposed Transaction, Wolverine will acquire from Wisconsin Electric roughly a one-third ownership interest in the Facility in return for funding the purchase and installation of an Air Quality Control System (AQCS) so that the Facility would comply with environmental regulations,” noted FERC official Steve Rodgers. “According to Applicants, Wolverine will invest between $130 million and $140 million in the AQCS. Upon closing of the investment, but prior to construction, Wolverine will initially acquire a 1 MW (approximately 0.3 percent) ownership interest in the Facility. Wolverine’s ownership interest will remain unchanged until all AQCS equipment for the Facility is in commercial operation. Upon completion of the ACQS upgrades, Applicants state that they estimate that Wolverine will have an approximately 33 percent ownership interest in the Facility. In addition, Wisconsin Electric will acquire an ownership interest in the AQCS at the transaction closing date, which Applicants state will be economically equivalent to Wolverine’s ownership interest in the Facility. Upon the transfer, Wisconsin Electric and Wolverine will be co-owners of the Facility, including the AQCS.”
The applicants explain that the MISO control area has a total generation capacity of 132,274 MW. In that region, Wolverine owns approximately 1,297 MW, and Wisconsin Electric approximately 6,600 MW, including the Facility. Applicants asserted that Wolverine’s acquisition of an approximately 33% ownership interest in the facility, or about 113 MW to 142 MW, will raise Wolverine’s ownership of generation capacity up to approximately 1,439 MW, or 1.09% of MISO’s total generation, thus a de minimus amount.
Their FERC application was noticed on Feb. 25. On March 8, Michigan utility Consumers Energy filed a motion to intervene, but raised no substantive issues.
New air control systems to be retrofitted to surviving Presque Isle units
Presque Isle Units 1 and 2 were retired in January 2007, and Units 3 and 4 were retired in October 2009. What’s left in operation are: Units 5 and 6, which each have 80 MW of capacity on bituminous coal and 55 MW on sub-bituminous coal; and Units 7-9, each given with a range of 78 MW to 85 MW in capacity.
The planned AQCS projects for Presque Isle, as described in recent approval applications by the companies at both the Wisconsin and Michigan utility commissions, are:
- For SO2 control, installation of spray dryer absorbers (SDA) and powdered activated carbon on Units 5-7 and dry sorbent injection (DSI) on Units 8 and 9.
- For NOx control, individual unit boosted over-fired air systems on each of the five units.
- For particulate removal, bringing out of retirement Units 1-4 fabric filters and booster fans and reconfiguring all fabric filters to serve Units 5-9.
- Balance of plant equipment, including a lime storage and slurry preparation facility, a new ash collection system for the Toxecon fabric filter, and new redundant auxiliary transformers to feed the AQCS equipment.
Under a proposed operating and maintenance agreement, Wisconsin Electric will act as agent for itself and Wolverine, as co-owners of Presque Isle, and will be responsible for operating and maintaining the facility. Wisconsin Electric and Wolverine will share operation and maintenance costs, including fuel costs, and future capital costs (if any) in proportion to their future ownership interests.