Wisconsin Public Service seeks Fox plant approval at Michigan PSC

Wisconsin Public Service Corp. (WPS Corp) applied July 24 at the Michigan Public Service Commission for depreciation rates on its newly-acquired Fox Energy Center in Wisconsin.

On March 28, WPS Corp purchased the Fox Energy Center. Under a May 15 PSC order in connection with the purchase, WPS Corp was authorized to defer the $50m payment for early termination of the pre-existing power purchase agreement between Fox Energy and WPS Corp. The commission further authorized WPS Corp to defer all non-power supply cost requirements of owning, operating and maintaining the Fox Energy Center.

WPS Corp’s current depreciation rates for its electric and gas operations in Michigan were approved by the commission in November 2010, to reflect the depreciation rates approved by the Public Service Commission of Wisconsin (PSCW). Because a majority of WPS Corp’s electric and gas operations occur in Wisconsin, the Michigan commission has not historically set depreciation rates for WPS Corp, but has instead approved the same rates established by the PSCW, the utility noted.

On March 6, WPS Corp filed estimated depreciation rates with the PSCW. On June 11, the PSCW issued its final decision approving depreciation rates for the Fox Energy Center, effective March 28.

At this time, WPS Corp does not propose to reflect these new depreciation rates in its current Michigan electric customer rates. Instead, it will seek ratemaking recognition of these new depreciation rates in its future electric general rate case.

Integrys Energy Group (NYSE: TEG) said March 28 that subsidiary WPS Corp had closed its previously announced transaction to purchase Fox Energy Co. LLC from subsidiaries of General Electric and Tyr EnergyThe purchase included approximately $390m for the Fox Energy Center, a 593-MW combined cycle generating facility in Kaukauna, Wisc., and the $50m for the early termination of the existing tolling agreement between the entities.

Fox Energy Center is a dual-fuel facility, equipped to use fuel oil but expected to run primarily on natural gas. Adding this plant to its portfolio gives WPS a more balanced mix of electric generation, including coal, natural gas, hydroelectric, wind, and other renewable sources, Integrys noted. Like other U.S. utilities, WPS is faced with shutting down or switching to natural gas a significant percentage of its coal-fired capacity due to impending clean-air mandates.

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.