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Michigan utility gets pushback on gas plant plans

Highlights

A plan by Upper Michigan Energy Resources Corp to build two natural gas-fired power plants totaling 183 MW capacity has drawn criticism from several quarters, including a Michigan electric co-op.

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UMERC, created early this year by Milwaukee-based WEC Energy Group, is seeking a certificate of need for the project from the Michigan Public Service Commission.

A final PSC order is expected in late October.

The plants would be built at Negaunee in Marquette County and Baraga in Baraga County and would replace We Energies' 431-MW Presque Isle coal-fired power plant near Marquette.



We Energies is a WEC subsidiary.

If approved this autumn, construction would begin by early 2018, with the two plants in commercial operation in 2020, spokeswoman Amy Jahns said Tuesday. That would allow for the orderly retirement of Presque Isle.

PSC staff found that UMERC has demonstrated that the power is needed and that the proposed plants are the "most reasonable and prudent means of meeting that need."

But pushback is coming from stakeholders as diverse as the Environmental Law & Policy Center, a Chicago-based national environmental group, and Cloverland Electric Cooperative, an electric co-op in Michigan.

ELPC said in newly filed comments with the PSC that UMERC's application should be denied because the utility failed to consider other "increasingly viable options" such as energy storage and renewables to meet the UP's energy challenges and was too quick to embrace a fossil fuel solution.

Jahns refuted that assertion, saying UMERC "did consider renewable resources," but "they were not a reliable source of power that can be dispatched when needed to support our customer load."

Wind and solar are intermittent power, she noted, and "do not meet the need. We also believe the advances in battery storage have yet to meet our need for this project."

Cloverland said in its comments that UMERC "has not demonstrated that the proposed generating facilities will not have negative impacts on Cloverland's customers or on service in the Upper Peninsula.

Indeed, there is scant evidence that the facilities are in fact necessary to provide safe, reliable and adequate service to the Upper Peninsula."

Cloverland suggested the Midcontinent Independent System Operator "may need to become involved" in UMERC's CON process at the PSC.

Critical comments by Michigan Technological University, located in Houghton, centered on natural gas supply.

An interruptible gas customer, MTU said it has "serious concerns about natural gas capacity constraints" if the two gas plants are built, "and the consequences that will result to MTU and others similarly situated if these concerns are not addressed."

Michigan's Republican attorney general, Bill Schuette, said he supports the project but wants the commission to attach several conditions to its approval to address his financing concerns.

They include, he said, that UMERC finance the debt portion of the capital cost for the plants "at the lowest-cost rate among the following financing options based on the indicative pricing from financial institutions solicited for the transaction: UMERC stand-alone debt; UMERC and WEC guarantee; and WEC stand-alone debt."

--Bob Matyi, newsdesk@spglobal.com
--Edited by Lisa Miller, lisa.miller@spglobal.com