The $640 million We Energies project to convert the coal-fueled Port Washington power plant into a natural gas-fueled plant could provide a spark for new commercial real estate development in the city. We Energies will relinquish about 15 acres of lakefront property to the city after the project is completed, providing a unique opportunity to enhance the downtown area.
In addition, Port Washington will receive a financial windfall from the converted power plant. We Energies will pay $12.5 million, or $500,000 annually, over 25 years to compensate the city for hosting the power plant.
The city also might receive an additional $750,000 to $1 million in shared revenue from the state for hosting the power plant, according to Port Washington Mayor Scott Huebner. State officials are still considering the additional shared revenue.
The money from We Energies will be used to keep tax rates down,
Huebner said. Some of the additional shared revenue would likely be used to reduce the city’s debt load, but Huebner also hopes to use some of it for lakefront and city improvements.
The Port Washington power plant conversion means the huge coal pile near Lake Michigan will be eliminated. The 15-acre coal pile site will be turned over to the Wisconsin Department of Natural Resources and then to the city of Port Washington.
The project will be completed in 2008. The first natural gas unit will be in service in 2005.
The land where the coal pile sits was created by dirt dumped on the lakebed. Therefore, the DNR must approve its use, which could be affected by environmental issues.
Huebner is forming a blue ribbon commission to study possible uses for the land, so a plan will be in place once the city inherits the site.
Possible uses for the site include commercial development and docks for boats or a large dock for Lake Michigan cruise ships, Huebner said.
"Anything other than a coal pile is going to look more attractive," Huebner said. "We’re trying to get something that will attract people year-round to Port Washington."
Two natural gas units will be installed in the power plant, where construction began last year. The south end of the power plant already has been demolished to clear space for the first natural gas unit, while the north end is still operating on coal.
The Port Washington project is part of the $7 billion We Energies "Power the Future" plan to increase power production for Wisconsin. The conversion from coal to natural gas will increase the power plant’s generating capacity from 348 megawatts to 1,000 megawatts.
"We need to put additional generating capacity on our system," said Margaret Stanfield, spokeswoman for We Energies. "Electric demand is growing in Wisconsin, particularly in southeast Wisconsin. We need new power plants in order to meet that demand."
However, the project hit a snag last week when a Dane County judge rejected the Wisconsin Public Service Commission’s approval of the natural gas units for the Port Washington plant. The court ruling requires the PSC to better evaluate the environmental impact of the natural gas units and consider alternative sources of power.
Stanfield said We Energies will work with the PSC to alleviate the problem, and the company still expects the project to be completed on time.
"We have not received any order to stop construction," she said. "Construction on the site continues, and we expect it to continue. It is vital we move forward in order to meet the energy needs of the state."
An average of 300 people will be working on the Port Washington project during construction, Stanfield said. At peak times, there will be up to 500 workers on the site.
The general contractor for the project is Washington Group International of Princeton, N.J.
However, several smaller local firms also are receiving business from the project, she said.
"There are a lot of facets to this project that can be done by local firms," Stanfield said. "We are using local laborers and local suppliers whenever possible on this project."
Huebner said he has heard from area hotels, concrete plants and sheet metal plants that have benefited from the power plant project.
"A lot of the local businesses in the area are picking up work," he said. "It’s creating a lot of jobs for Ozaukee County and the surrounding counties as well."
Fewer workers will be needed at the plant after the conversion to natural gas. More than 100 people currently work at the power plant. After the conversion, fewer than 30 will work there, Stanfield said. Some workers will be reassigned to other We Energies facilities, and other positions will be eliminated by attrition, she said.
The power plant, first built in 1935, is a major landmark in downtown Port Washington. For years, the two 500-foot tall smoke stacks have been used as a guide by Lake Michigan ships.
Both stacks will be removed and replaced by four 200-foot tall stacks. A portion of the original building will be preserved as part of the rebuilt power plant.
Feb. 6, 2004 Small Business Times, Milwaukee