Presque Isle plant up for sale

MARQUETTE – Wisconsin Electric Power Co. officials are looking for buyers for the Presque Isle Power Plant and in the meantime, the utility will receive subsidy payments to keep the plant operating.

“For the long-term, we will need to rebalance our power supply. To that end, we recently issued a request for proposals to solicit interest from potential purchasers of the plant,” said Brian Manthey, senior communications specialist with We Energies in Milwaukee, Wis. “We have asked interested buyers to respond by the beginning of March.”

Interested parties are being asked to sign a confidentiality agreement, after which participants will receive a confidential memorandum to review. After reviewing the memo and completing discussions with We Energies, the parties will be invited to submit a bid for purchasing the plant.

We Energies expects successful bids to include purchase of 100 percent of We Energies ownership in the power plant, retention of the current workforce for at least 18 months, continued operation of the plant, assuming of any long-term contracts in effect at closing and all historic and future liabilities.

A timeline for the sale includes responses due to We Energies by March 3, notification to a short list of bidders by March 17 with final proposals due by May 9.

The utility wants final offer negotiations completed by Aug. 1, with required regulatory approvals gained by March 13, 2015, and the sale closed a week later.

In July, largest Presque Isle Power Plant customer Cliffs Natural Resources told Wisconsin Electric that as of Sept. 1 the mining company was switching its electric provider service to Integrys Energy Services Inc. of Chicago.

State officials estimated the switch would save Cliffs roughly $25 million annually, assuming a 3-year deal. Cliffs spent about $120 million with We Energies in 2012.

Michigan’s utility choice law allows customers to choose their energy provider, but the amount of departing customers is capped at 10 percent of a company’s state retail sales. In 2008, Cliffs’ mines were exempt from that cap.

Michigan Public Service Commission officials said that when Cliffs switched, We Energies’ cap was filled up and Cliffs was 75 percent of the company’s Michigan load. Cliffs consumed 270 to 280 megawatts of power from the Presque Isle plant each day.

In September, in response to the Cliffs decision, We Energies filed a request with the Midcontinent Independent System Operator,Inc., which oversees the electrical grid in the Upper Midwest and part of Canada, to suspend operations at the Presque Isle plant beginning this month.

In October, the MISO concluded the Presque Isle Power Plant should remain operating, at least through 2014, and denied We Energies’ to suspend operations at the plant.

“The regional grid operator determined that all five units at the Presque Isle Power Plant are needed to maintain a reliable electric system for customers in the Upper Peninsula,” Manthey said. “For running the plant in the short-term, we will receive payments from MISO. The payments will be detailed by MISO in a filing with (the) Federal Energy Regulatory Commission.”

Judy Palnau of the Michigan Public Service Commission said that filing on the “system support resource payments” was expected by Friday. She said the FERC will then allow two weeks for responses, which will include the commission. After that, the MISO will respond.

The FERC will then make a decision on approval or amendment of the filing, with any payments made retroactive to a Feb. 1 effective date.

Late last year, We Energies and Cadillac-based Wolverine Power Cooperative could not come to terms on a deal to install $140 million of pollution controls at the plant. Wolverine had also considered buying the plant, but decided not to.

The Presque Isle plant employs 170 workers. The facility was built from 1955 to 1979, originally with nine operating units, five of which remain, producing a combined 431 megawatts of power.

John Pepin can be reached at 906-228-2500, ext. 206. His email address is jpepin@miningjournal.net.