Wisconsin PSC signs off on sale of Presque Isle stake to Wolverine

The Public Service Commission of Wisconsin (PSCW) on June 21 issued a final decision approving the sale by Wisconsin Electric Power Co. (WEPCO) of part of the coal-fired Presque Isle plant to Michigan-based Wolverine Power Supply Cooperative.

The Presque Isle power plant (PIPP) is located in Michigan’s Upper Peninsula. WEPCO determined that continued operation of PIPP will require a significant investment in air control equipment/ Under this deal Wolverine would pay for those systems in exchange for a piece of the plant.

This deal has already gotten approvals from the Michigan Public Service Commission and the Federal Energy Regulatory Commission.

WEPCO and Wolverine have entered into an Ownership Exchange and Participation Agreement under which Wolverine will provide all of the capital to undertake an air quality control system (AQCS) project at PIPP, estimated to cost $130m-$140m, in exchange for receiving about a one-third undivided ownership interest in PIPP. WEPCO would retain two-thirds of the plant.

WEPCO and Wolverine have also entered into an Operating and Maintenance Agreement under which WEPCO will act as agent for itself and for Wolverine as co-owners of PIPP, in connection with the management, control, operation, and maintenance of PIPP, and for the planning, design, engineering, procurement, licensing, permitting, construction, completion, startup, and testing of capital projects, other than the AQCS project.

WEPCO stated that PIPP is needed to serve customers power supply needs in the greater Marquette, Mich., area. It has discussed the possibility of PIPP retirement with the Midcontinent Independent System Operator (MISO), and American Transmission Co. LLC. WEPCO filed an application with MISO in October 2011, to have MISO study the possibility of retiring PIPP. In January 2012, MISO replied that “retirement of the units prior to installation of transmission upgrades to the greater Marquette, MI area would result in violation of applicable reliability standards, creating unacceptable reliability issues.”

WEPCO told the Wisconsin commission that, in 2012, four PIPP units were committed daily for reliability. It further stated that anything less results in the potential or actual need for load reduction in the greater Marquette area to address contingency outage reliability requirements of the North American Electric Reliability Corp. WEPCO anticipates that in 2014, one of the local iron ore mines will end mining operations and reduce its electricity consumption by as much as 120 MW. After the shutdown of this mine, WEPCO believes it is reasonable to expect one less PIPP unit will be required for reliability.

WEPCO performed an economic analysis on five options for complying with more stringent air standards: new transmission lines to the Upper Peninsula of Michigan; new combined-cycle generation; conversion of PIPP boilers to burn natural gas; installation of AQCS and operation of PIPP as sole owner; and installation of AQCS and operation of PIPP as a joint venture.

Retirement of the PIPP units was not considered an option as compliance with the more stringent environmental standards cannot be accomplished by simply retiring the units due to reliability concerns. WEPCO’s analysis showed the joint-ownership option to have the lowest net present value (NPV) revenue requirement. The least costly alternative to the proposed joint ownership, emission controls installed with capital costs paid by WEPCO, is $280m NPV more expensive than the joint ownership option, the commission noted.

Various air controls in the works for these coal units

Presque Isle Units 5 and 6 are capable of firing both bituminous and sub-bituminous coal, while Units 7-9 are capable of using sub-bituminous coal. The application with Michigan regulators for new air controls for the plant was prepared such that all current fuel options have been accounted for and remain unchanged.

That is one of the points from a March 8 air permit-to-install application filed by Wisconsin Electric Power d/b/a We Energies at the Michigan Department of Environmental Quality. The proposed AQCS equipment for NOX consists of individual boosted over fire air systems on each of the five units and new Low NOX burners on Units 5 and 6. SO2 and HAP acid gas control will be accomplished via installation of three spray dryer absorbers (SDAs) on Units 5-7, and Dry Sorbent Injection (DSI) systems on Units 8 and 9. Powder activated carbon (PAC) injection for mercury (Hg) control is currently installed and used on Units 7-9 and will be added to Units 5 and 6. The existing fabric filters and booster fans currently associated with retired Units 1-4 will be reused for particulate and non-volatile metal removal following the Units 5 and 6 SDAs.

The balance of new plant equipment required for the project includes one lime storage and slurry preparation facility, one DSI storage silo, one PAC storage silo, a new ash collection system for the existing Units 7 through 9 fabric filter, which will control Units 8 and 9, and new redundant auxiliary transformers to feed the AQCS equipment. The existing continuous emissions monitors (CEMS) will be reconfigured and a mercury CEMS will also be added.

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 with a range of 78 MW to 85 MW in capacity.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.