Foxconn project prompts We Energies to move up plans for natural gas upgrades

Submitted plans for $32 million project this week

M7 co-chair Gale Klappa with Louis Woo of Foxconn

Last updated on July 2nd, 2019 at 09:12 pm

WE Energies plans to accelerate its plans for natural gas upgrades to accommodate the Foxconn development in Racine County.

A $140 million natural gas project in planned for the area around Foxconn, WEC Energy Group chairman and chief executive officer Gale Klappa said Tuesday.

“Our natural gas project is another source of reliability to existing customer in southeast Wisconsin,” said Amy Jahns, spokeswoman for We Energies. “This project was planned prior to the Foxconn announcement. We recently accelerated our timetable for this project to coordinate with the Wisconsin DOT road work being planned for the area near Foxconn.”

M7 co-chair and WEC Energy chairman and CEO Gale Klappa with Louis Woo of Foxconn at the MMAC all-member meeting in 2017.

Wisconsin Electric Power Co., a subsidiary of WEC doing business as We Energies, submitted plans this week to the state Public Service Commission for a nearly $32 million project to install 8.8 miles of distribution main primarily along Highway KR from Meachem Road to a little more than three-quarters of a mile west of Interstate 94.

Construction on the project is scheduled to begin in October and be complete by October 2020. The company is asking the commission to issue an order on the project by June.

The project will not include any customer contribution because the project is intended to improve the capacity of the natural gas system, according to the We Energies application. The company also doesn’t expect any reimbursement from local municipalities.

“The company believes that the construction of this project is the best alternative and most advantageous means of meeting its obligation as a public utility. The project will not result in facilities in excess of present and probable future requirements,” the application says.

During an earnings call Tuesday, Klappa said the Foxconn project will benefit form $140 million in natural gas projects, in addition to the $120 million in transmission upgrades being planned by American Transmission Co.

“In addition to the filing we made Monday (with the PSC for the $32 million project), in mid-May we anticipate seeking Commission approval to build a natural gas lateral,” said Jahns. “This lateral project will maintain a reliable gas supply for southeast Wisconsin by connecting our existing distribution system with an interstate pipeline. Early estimates for these two projects would equal approximately $140 million.”

“There will be and there are incremental investment opportunities for us, both related to electricity and natural gas, but the bigger surprise for us really is the level of natural gas demand,” Klappa said. WEC Energy will begin to see increased demand from Foxconn in late 2020 or 2021, he added.

The natural gas system improvements will benefit all of southeastern Wisconsin, so the costs will be passed on the ratepayers, Jahns said.

Klappa, a co-chair of Milwaukee 7 who was involved in recruiting Foxconn to the state, said he expects announcements about potential suppliers in the next few months, including companies choosing to move or establish operations in the state.

“I am encouraged by one other development and that is Foxconn is really looking hard at a number of Wisconsin companies to become part of their supply chain,” he added. “I think it’s going to be a combination of a number of companies moving to the state, but also a number of companies that are going to get additional business from the fact that they will be suppliers to Foxconn.”

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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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