Wisconsin Public Service seeks okay of Manitoba Hydro contract from Michigan PSC

Wisconsin Public Service Corp. argued in Sept. 28 testimony filed at the Michigan Public Service Commission for approval of a contract to import power, from 2016 to 2021, from Manitoba Hydro in Canada.

WPS Corp applied Sept. 28 for authority from the Michigan PSC to implement its annual Power Supply Cost Recovery (PSCR) plan and establish a PSCR factor for the calendar year 2016. Additionally, WPS Corp is seeking approval under Act 304 of capacity charges associated with the Manitoba Hydro power purchase agreement.

WPS Corp is a wholly-owned subsidiary of WEC Energy Group (NYSE: WEC), and is engaged in the generation, distribution, and sale of electric energy in service areas located in Northeastern Wisconsin and in Menominee County in the Upper Peninsula of Michigan.

WPS Corp said that it was reasonable and prudent to enter into the agreement with Manitoba Hydro because the agreement was the company’s most reasonable cost option and the agreement will serve to meet WPS Corp’s capacity needs.

John G. Guntlisbergen, the Manager of Electric Fuel Cost Recovery in the Regulatory Affairs Department of WEC, said in supporting testimony: “WPS Corp entered into a system power purchase agreement, both capacity and energy, dated February 26, 2014, with Manitoba Hydro for the purchase of electric energy and capacity. This agreement is effective, beginning June 1, 2016, through May 31, 2021 and has capacity purchases exceeding six months.” Details of the contract are redacted from the public version of this testimony.

Guntlisbergen added: “WPS Corp issued a Request for Proposal (‘RFP’) for capacity for the period starting June 1, 2014, through May 31, 2019. There were no conforming responses to the RFP, and only one viable non-conforming bid. The non-confirming bid lead to a capacity purchase for Planning Year 2015-2016 with Exelon for which WPS Corp  received Section 6j(13)(b) approval in case U-17672. Following the results of the RFP, WPS Corp analyzed the cost associated with converting the Weston 1, and Pulliam 5 and 6 [coal] units to natural gas relative to the Manitoba Hydro contract. Based on the analysis performed, Manitoba Hydro was the lowest cost option to secure capacity and energy for the months of June 2016 through May 2021.”

Asked what was the capacity forecast was indicating at the time WPS Corp executed the power purchase agreement with Manitoba Hydro, Guntlisbergen responded: “The forecast was indicating a capacity shortage for WPS Corp driven by the retirements of Weston unit 1 and Pulliam units 5 and 6 stemming from the [clean air] Consent Decree with the EPA as discussed earlier in this testimony. The Manitoba Hydro contract was put into place as an intermediate supply source to delay the need for additional capacity resources.”

The Manitoba Hydro deal covers 108 MW of capacity and on peak energy purchases starting June 1, 2016, through May 31, 2021.

Under a separate, current contract, Manitoba Hydro is providing 100 MW of energy through May 31, 2016, at an approximate total cost of $6,699,801 in 2016. WPS Corp is settling the energy provided by this agreement outside of the MISO Energy Market.

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.