New Rothschild biomass plant being added to We Energies portfolio

Changes in the Wisconsin Electric Power generating portfolio in the July 2013-July 2014 period include the addition of 50 MW for the Rothschild biomass facility (not available yet in July 2013) and a reduction of 176 MW related to the gas-fired Paris Units 1 and 4 (currently out of service to address environmental permitting issues).

For the purposes of the five-year plan, the utility assumes that the Paris units will be back in service by 2015, wrote Mary Wolter, Manager-Fuel Cost Planning for Wisconsin Electric Power d/b/a We Energies, in a Sept. 30 power supply cost recovery plan filed with the Michigan Public Service Commission. These plans are filed annually by utilities with service territories in Michigan and focus on the next calendar year, with some provision for the next five-year period, which in this case is 2014-2018.

There is a capacity subtraction starting in 2016 of 117 MW because of an ongoing plan by Wolverine Power Supply Cooperative to buy a one-third interest in Presque Isle Units 5-9 from We Energies. In exchange for that stake, Wolverine will pay for needed new air emissions controls for Presque Isle, which is a coal-fired plant in Michigan’s Upper Peninsula.

Wisconsin Electric Power expects to have 588 MW of capacity above the Minimum Reserve Requirement in the 2014 PSCR plan year. This has increased slightly from 581 MW in 2013. The company continues to pursue the sale of excess firm capacity to other market participants and utilities under both short- and long-term contracts, Wolter noted.

Projected costs for coal generation have decreased approximately $2.42/MWh for the 2014 plan year as compared to the 2013 PSCR plan. This is due primarily to reductions in delivered coal costs and blending of Powder River Basin coal at the Elm Road Generating Station, which is a relatively new, two-unit plant that was designed to burn Pittsburgh-seam coal from Northern Appalachia. The utility has been moving to reduce coal costs at these units by bringing in cheaper PRB coal, like it already does at the neighboring Oak Creek 5-8 coal units.

The utility is projecting coal costs at Elm Road to be $3.14/mmBtu in 2014, falling to $3.07/mmBtu in 2015, then rising to $3.10/mmBtu in 2016, $3.21/mmBtu in 2017 and $3.29/mmBtu in 2018.

The company is projecting total coal usage of 10.2 million tons in 2014 at a cost of $2.38/mmBtu.

Existing coal transportation agreements with the Union Pacific include provisions which allow a fuel surcharge on transportation rates for delivery of coal to power plants and/or to rail/boat coal transportation transfer points. The majority of the rail transportation contracts have surcharge rates that are driven by changes in the price of diesel fuel, thefuel used in the locomotives. The rail transportation contract for the Elm Road Generating Station (ERGS) is the exception; this contract has a surcharge rate that is driven by changes in the price of crude oil (historically the price of diesel fuel is highly correlated with the price of crude oil).

Wisconsin Electric Power is forecasting the use of 31.0 million MBTU of natural gas in 2014 at $4.142/MBTU, for a total estimated cost of about $128m. This includes the use of natural gas as auxiliary fuel at the company’s coal plants, gas used for the company’s combined cycle and combustion turbine generating facilities, and gas used at LSP-Whitewater under a purchase power agreement.

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.