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We Energies To Pursue Conversion Of Valley Power Plant To Natural Gas

Stocks in this article: WEC

MILWAUKEE, Aug 17, 2012 /PRNewswire/ -- We Energies today announced plans to convert the fuel source for the Valley Power Plant from coal to natural gas.  The Valley plant is a cogeneration facility located along the Menomonee River in Milwaukee that generates electricity for the grid and produces steam for heating hundreds of downtown Milwaukee buildings. 

"For decades, the Valley plant has served a critical role – producing electricity, providing voltage support for the downtown Milwaukee business center, and delivering a reliable steam supply for some 450 customers, ranging from Northwestern Mutual to the Marquette University campus," said Gale Klappa, chairman, president and chief executive officer of We Energies. 

"Our analysis shows that converting the fuel source for the plant will reduce our operating costs and enhance the environmental performance of the Valley units," Klappa added.

The company plans to file an application with the Public Service Commission of Wisconsin (PSCW) for approval to modify the plant so that it will be capable of burning natural gas. The electric capacity of the plant is expected to remain at 280 megawatts.  If approval is received from the PSCW, We Energies expects the conversion to be completed in 2015 or 2016.

The cost of the conversion project is expected to total between $60 and $65 million.  Approximately 50 positions at the plant are likely to be eliminated in connection with the conversion to natural gas.  However, the impact on current employees will be minimized through reassignment to other We Energies sites and through retirement and normal attrition.

Over the past decade, emissions from the Valley plant have decreased significantly, including a 65 percent reduction in sulfur dioxide emissions.  In October 2010, the U.S. Environmental Protection Agency commented on the air quality improvements noting that the monitor closest to the Valley plant -- the 16th Street Health Center monitor -- has the lowest monitored ozone levels in southeast Wisconsin.

Klappa said that the conversion plan will secure Valley's role in meeting the energy needs of a vibrant downtown Milwaukee.

We Energies recently obtained a Certificate of Authority from the PSCW to upgrade an existing natural gas main to meet the future needs of natural gas customers in and along the Menomonee Valley and to provide a possible supply of fuel to the Valley plant.  Engineering of the gas main replacement and extension of the main west of Menomonee Valley is under way, with completion planned for 2014.

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