Source: http://www.jsonline.com, April 22, 2013
By: Thomas Content
Wisconsin utilities are spending $1.2 billion to clean up aging coal-fired power plants and shutting down older plants under a settlement announced Monday with federal environmental regulators.
Under the settlement, filed in federal court in Madison on Earth Day, the utilities will be assessed a civil penalty of $2.45 million for alleged violations of air pollution laws over the years.
Wisconsin Power & Light Co. and the other utilities also agreed to pay $8.5 million to fund a series of environmental projects over the next five years. The projects include a $5 million investment in solar power and a $2 million investment to boost power production at wind and hydroelectric projects in Wisconsin.
But the big-ticket item in the settlement is the nearly $1.2 billion the utilities are spending to keep the largest of the coal plants operating by adding more modern pollution controls.
The settlement was filed in federal court in Madison Monday and then announced by EPA, the Sierra Club and Alliant Energy Corp., parent company of WPL.
The settlement, in the works for months, primarily involves Madison-based WPL, but also includes utilities that co-own or previously co-owned coal-fired power plants with WPL. Others named in the settlement are Wisconsin Public Service Corp. of Green Bay, Madison Gas & Electric Co. of Madison and We Energies of Milwaukee.
“This settlement will improve air quality in Wisconsin and downwind areas by significantly reducing releases of sulfur dioxide, nitrogen oxide and other harmful pollutants,” said Ignacia Moreno, an assistant U.S. Attorney General, in a statement.
The reduction in coal-fired generation prompted by the settlement will reduce emissions of those pollutants — linked to smog, asthma, heart attacks and premature deaths — by 54,000 tons per year, according to the EPA.
The agency alleged that the utilities had failed to comply with the Clean Air Act by not installing modern pollution controls at the time that they performed upgrades to the power plants.
The case is similar to those EPA has filed around the country and in Wisconsin. It reached similar deals last year with Wisconsin Public Service and Dairyland Power Cooperative of La Crosse, and a federal judge in Milwaukee approved a similar settlement for We Energies’ coal plants in 2007.
Under the settlement, Wisconsin Power & Light has agreed to shut down its coal-fired power plant in western Wisconsin, on the Mississippi River in Cassville.
In a new development, the settlement is requiring that additional pollution controls be placed on one of the two boilers at one of the state’s largest coal plants, the Columbia power plant near Portage, said Steve Schultz, a spokesman for WPL. The utility a subsidiary of Alliant Energy Corp
Under the agreement, the utility has committed to repower, refuel or add environmental controls to power plants in Sheboygan and Portage. MG&E and WPS are co-owners of those two plants, while We Energies formerly owned part of the Sheboygan plant, known as Edgewater.
In addition to the civil penalty, the consent decree spells out a series of environmental mitigation projects that the EPA is requiring as part of the settlement.
As part of the settlement, the Sierra Club agreed to drop lawsuits against the utilities that sought to have EPA move more aggressively to have them cleaned up.
By agreeing to stop burning coal at the Nelson Dewey plant in Cassville and two of the three boilers in Sheboygan, that means 590 megawatts of coal will be retired, or the equivalent of one large modern coal plant.
Statewide, including other coal plant settlements, the Sierra Club estimates that over 1,500 megawatts of coal power have been retired, or about 17% of the state’s fleet of coal plants.
“Over the last several years, Wisconsin has effectively begun to transition away from our oldest, dirtiest sources of coal-powered electricity and made way for 21st-century clean energy technology,” said Jennifer Feyerherm, a Sierra Club organizer, in a statement. “Today’s settlement marks yet another victory for clean air and healthier Wisconsinites.”
Utilities are increasingly turning to natural gas-fired power plants, given the low price of natural gas and the EPA’s moves to improve air quality and public health by moving to shutter old coal-fired power plants.
WPL last year bought the Riverside Energy Center, a natural gas-fired power plant in Beloit, and Wisconsin Public Service bought a natural gas plant in Kaukauna.
Utility ratepayers won’t have to pay for the civil penalties, Schultz said. But it’s possible they could pay for the environmental mitgation costs.
And over time they will be on the hook for paying for the construction of environmental controls at the coal boilers that will remain open.
Those projects include a $627 million project at Columbia, a $153 million project at Edgewater, a $410 million project also at Edgewater, as well another project at Columbia. The exact cost of that project isn’t yet available, Schultz said.
In a statement, WPL President John Larsen termed the settlement a “win-win” for the utility and the communities it serves, noting it’s consistent with the generation strategy that the Madison power company outlined last year. The company said at the time it was agreeing to shut down the Cassville power plant and the oldest boiler at the Sheboygan plant.
WP&L, which owns a bigger stake in these plants than the other utilities, will shoulder the biggest investment in the pollution upgrades. WP&L customers’ electricity rates are currently frozen through 2014. The pollution control upgrades were factors in a rate hike approved last year for MG&E, and is a key factor behind a 7% rate increase being sought for electricity customers of Wisconsin Public Service Corp. of Green Bay.