$370 million We Energies project would build natural gas facilities near Ixonia, Whitewater

WEC Energy Group headquarters building
WEC Energy Group's Milwaukee corporate headquarters.

Last updated on March 17th, 2020 at 01:37 pm

We Energies is seeking approval from the Wisconsin Public Service Commission to build liquefied natural gas peaking facilities in Walworth and Jefferson counties at a cost of $370 million.

The subsidiary of Milwaukee-based WEC Energy Group has not selected specific sites for the two plants, but said one would likely be on agricultural areas near Ixonia and the other in Bluff Creek, just southeast of Whitewater.

The plants would take delivery of natural gas via existing pipelines, cool it to -260 degrees to liquefy it and then store it. The utility would then be able to heat the liquefied gas to vaporize it and incorporate it in the distribution system during high demand periods, often in winter. The Ixonia plant would serve the greater Milwaukee area while the Bluff Creek facility would serve southeastern Wisconsin operations.

We Energies plans to begin construction in late 2020 and place the facilities into service in 2023 or 2024.

Gale Klappa, executive chairman of WEC Energy Group, told analysts Wednesday that the need for the company to invest in its natural gas infrastructure became especially clear during the polar vortex in early 2019.

He later added that the company needed to tap into its full array of power generation sources, including solar, wind, natural gas, coal and nuclear to provide power reliably during the cold snap.

“If we hadn’t had the full array of capacity … it would have been a life and death situation,” Klappa said.

The proposed plants would be able to provide a supply for up to 10 days in winter. It also provides a supply option for colder than normal days in April when winter supply contracts have expired. The rest of the year the plants would serve as a back-up to planned or unplanned supply issues.

The utility says the plants would eliminate the need to purchase higher priced gas for short-term supply during peak demand and would eliminate the need for additional pipeline capacity. Customers would save more than $200 million over the current base case, according to the company’s estimates.

Building liquefied natural gas peaking facilities would also give the utility control and the PSC oversight of the facilities instead of using interstate pipelines controlled by third parties with federal oversight. We Energies also says the plants would help hedge against volatile natural gas prices and their ability to expand would hedge against the cost of future interstate pipeline expansion.

The utility also argues, in a letter to state regulators, that the plants will have less environmental impact than interstate pipeline expansions.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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