WEC Energy Group and
Alliant Energy announced plans Thursday to delay the planned retirement of several coal-fired power plants in Wisconsin, citing concerns about a tight energy supply in the Midwest.
We Energies, the southeastern Wisconsin subsidiary of WEC Energy Group, said it would push the planned expected retirement of Units 5 and 6 at its Oak Creek plant back by a year to May 2024 and the retirement of Units 7 and 8 would be delayed 18 months to late 2025.
As recently as June 15, the company released an investor presentation calling for the retirements to come in 2023 and 2024.
"The decision to postpone the retirement dates for these units is based on two critical factors: tight energy supply conditions in the Midwest power market and supply chain issues that will likely delay the commercial operation of renewable energy projects that are currently moving through the regulatory approval process," said Scott Lauber, president of We Energies.
Madison-based Alliant Energy also said it would shift the retirement of its Edgewater Generation Station in Sheboygan from the end of the year to June 2025 and would now retire the Columbia Energy Center units in Portage by June 2026. The Columbia plant, which Madison Gas and Electric and WEC Energy subsidiary Wisconsin Public Service have an ownership stake in, was scheduled to be retired by the end of 2024.
"Shifting the retirement dates for our coal-fired facilities in Wisconsin helps ensure we can weather multiple uncertainties while continuing to add cleaner, renewable energy to the grid," said David de Leon, president of Alliant Energy’s Wisconsin energy company.
A recent survey by the Midcontinent Independent System Operator or MISO suggested a potential capacity deficit of 2.6 gigawatts for the summer of 2023 across Manitoba and the 15-state MISO footprint. In announcing the survey results, MISO noted new capacity or deferred retirements may be needed to meet energy requirements.
Tom Content, executive director of the Citizens Utility Board of Wisconsin, said utilities have provided assurances that energy supplies will be adequate for this summer.
“It seems there’s more of a vulnerable picture emerging for next summer,” he said.
“It does cry out for a better planning process,” Content added. “In Wisconsin, our planning process is very reactive and not proactive from a customer point of view.”
The potential tight energy supply comes as power companies across the Midwest
shift their power generation toward more renewable sources and away from coal plants.
WEC Energy Group, for example, plans to build nearly 2,400 megawatts of new solar, wind and battery storage generation capacity from 2022 to 2026. While around 461 MW of that capacity has been approved by regulators, another 712 MW is currently in the approval process and around 1,200 MW is in planning.
“The delay for the retirement of large power plants appears to be a prudent decision. We’ve all heard the warnings of the potential for reliability issues this summer in the Midwest,” Todd Stuart, executive director of the Wisconsin Industrial Energy Group, said. “Given the amount of all the fossil fuel retirements in the region, plus the rising costs and supply chain issues, now is a good time to raise questions regarding the speed and cost of the massive utility capital spend in Wisconsin.”
Content noted that the transition to clean energy sources has been complicated by rising prices for both solar components and fuel used in existing plants.
He also questioned what the delayed retirements could mean for We Energies’ pending rate cases. The utility is currently
seeking approval from regulators to increase electric rates by 5% to 6% starting in January.
“They were projecting savings from shutting these plants down,” Content said, acknowledging the utility needs to weigh the risk of needing capacity from the plants against the savings.
Brendan Conway, a spokesman for WEC Energy Group, said the utility does not anticipate the delay would have an impact on the company’s rate case.
“Extending the operating lives of these units ensures critical reliability and will help keep costs for customers down by avoiding the need to purchase tens of millions of dollars a year in high cost energy in the market,” Conway said in an email.
Delaying the retirement also offers various stakeholders more time to address the recovery of previous investments in the plant. We Energies invested hundreds of millions of dollars in the Oak Creek plants for emissions controls and is still in the process of recovering those costs with a profit approved by regulators.
The prospect of paying for those costs on a shut down plant has been a point of contention for customer groups like CUB and WIEG. In the case of the Pleasant Prairie power plant, the groups and utility reached an agreement to securitize some of the costs while WEC executives have suggested a levelized approach could work.
“The fact is these coal plants are still slated for retirement,” Content said.
“We will still need to address the problem of rate recovery for power plants that are about to be retired. The current total for all the ‘zombie’ power plants in Wisconsin is over $2 billion,” Stuart said.
There are also environmental implications from continuing to run the Oak Creek plants. WEC Energy Group is aiming to cut it carbon dioxide emissions by 60% by 2025 and by 80% by the end of 2030 compared to a 2005 baseline.
"Because we plan to operate the older units at Oak Creek largely during the days of highest customer demand, we're confident that we can remain on track to achieve these industry-leading targets," Lauber said.
In a statement, Renew Wisconsin policy director Michael Vickerman said Thursday announcement "underscores the risks involved in putting all of our clean energy eggs in the utilities’ basket."
Vickerman said the state will need more community solar projects service large and small customers along with third-party solar projects to meet its carbon reduction goals.
"Utility-supplied solar power will be a significant contributor to achieving carbon reductions in Wisconsin, but we need all flavors of solar power, in particular, distributed solar, to get the job done," Vickerman said. That will require adopting new policies for providing customers with more financing options as well as facilitating customer-driven community-scale solar developments such as the recently announced Yahara Solar project in Dane County.”
