Wisconsin Electric seeks approval of ‘special’ power deals with iron ore companies

Wisconsin Electric Power d/b/a WE Energies on March 20 asked the Michigan Public Service Commission to approve 2015–2019 Large Curtailable Special Contracts with Tilden Mining Co. LC and Empire Iron Mining Partnership.

Empire Iron Mining Partnership operates an open pit iron ore mine and related ore processing facilities in Marquette County, Michigan, and Tilden Mining operates an open pit iron ore mine and related ore processing facilities in Marquette County.

“The Special Contracts will not impede the development of competition in Wisconsin Electric’s service territory,” the utility told the PSC. “The Mines have had adequate opportunity to explore competitive alternatives to the Special Contracts and have previously received service from an Alternative Electric Supplier, and other customers are actively participating in Wisconsin Electric’s Retail Access Service option.”

These contracts are one part of a larger, complex picture. Wisconsin Electric had at one point a few months ago lost these major customers in Michigan’s competitive power market, forcing it to say that it would retire its coal-fired Presque Isle Power Plant in this region of Michigan’s western Upper Peninsula (U.P.) due to this loss of load. Now it is gaining these customers back, and has agreed to keep Presque Isle open until late this decade, when a new gas-fired power plant would be built by Invenergy at a Cliffs Natural Resources iron ore operation in the region to help replace the Presque Isle Power Plant (PIPP).

Wisconsin Electric alluded to that situation in its March 20 application by saying: “There are clear benefits in the Special Contracts for Wisconsin Electric and its customers. Approval of the Special Contracts is conditioned on the Commission’s approval of the Amended and Restated Settlement Agreement in Case No. U-17682, which sets the framework for new generation in the Upper Peninsula. See ‘A Special Message from Governor Rick Snyder Ensuring Affordable, Reliable, and Environmentally Protective Energy for Michigan’s Future,’ dated March 13, 2015 (page 8-9), appended as Attachment C, discussing transactions intended to result in the construction of a new combined heat and power plant in the Upper Peninsula.” That plant is the Invenergy project.

Said the attached March 13 statement from Michigan Gov. Rick Snyder about changes to a deal first announced in January: “Today, I am announcing that the transactions have changed slightly, but overall, the outcome is still very positive for U.P. residents. Despite the best efforts of the Upper Peninsula Power Company and Cliffs Natural Resources, they were unable to come to terms on a contract for service. However, WE Energies has now agreed to provide service without seeking extra system support revenues, and Cliffs has agreed to remain with WE Energies until the new plant can be built. Just as before, the new plant to replace PIPP will be constructed no later than 2020, and will be supported by a series of business agreements.”

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.