MARQUETTE – The Federal Energy Regulatory Commission has approved an agreement allowing We Energies to begin collecting monthly payments as compensation for continuing to operate the Presque Isle Power Plant.
The April 1 decision by the FERC approves an agreement between We Energies and the Midcontinent Independent System Operator Inc., which oversees the electrical grid in the Upper Midwest and part of Canada.
Under the pact, We Energies will receive monthly payments of $4.35 million for one year. The term must not exceed one year except in exigent circumstances, the agreement states.
“FERC has accepted the agreement and payment schedule filed by the regional grid authority (MISO), subject to a further order,” said Brian Manthey, senior communications specialist for We Energies. “Based on that acceptance, MISO has agreed to start payments for the agreement retroactive to Feb. 1st.”
Manthey said the “further order” means the FERC still has the option to review aspects of the agreement in the future.
The Presque Isle plant, which employs 170 workers, was built from 1955 to 1979, originally with nine operating units, five of which remain and have a combined production capacity of 431 megawatts of power. The agreement covers units five through nine.
Units five and six are coal-fired 55-megawatt steam generators. Units seven through nine are coal-fired 78-megawatt steam generators, supported by two diesel generators to supply emergency auxiliary power for only the generating units.
The units burn low-sulfur sub-bituminous coal and No. 2 fuel oil is used for the diesel generators and for boiler start-up. Unit five was put in service in 1974, unit six in 1975, units seven and eight in 1978 and unit nine in 1979.
The units are situated on 65 acres along Lakeshore Boulevard. Coal storage includes an 800,000-ton capacity pile and 1,200- to 1,600-ton coal bunkers within the plant.
Last year, Cliffs Natural Resources announced it would be getting power for its two Marquette County mines from another provider. The Empire and Tilden mines were the biggest consumers of power from the plant. Cliffs consumed 270 to 280 megawatts of power from the Presque Isle plant each day, according to the Michigan Public Service Commission.
In September, given Cliffs’ decision, We Energies filed a request with MISO to suspend operations at the Presque Isle plant beginning in February 2014. In October, MISO concluded the Presque Isle Power Plant should remain operating, at least through 2014, and denied We Energies’ request to suspend operations at the plant.
MISO determined all five units at the plant needed to remain operating to maintain a reliable electric system for electric customers in the Upper Peninsula. We Energies applied for the system support resource subsidy payments from MISO for operating a plant the utility wants to close.
The future of the plant remains uncertain after no bidders submitted proposals to buy the plant from We Energies during a recent proposal solicitation effort.
Last year, We Energies and the 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.
No additional companies have publicly expressed an interest in buying the power plant.
“We will continue to operate the plant in the short-term under the agreement with MISO,” Manthey said Tuesday.
Meanwhile, a federal appeals court Tuesday upheld the Environmental Protection Agency’s emission standards for hazardous air pollutants from coal- and oil-fired power plants. The EPA proposed the rules in 2011.
The Associated Press reported the new regulations were designed to remove toxins from the air that contribute to respiratory illnesses, birth defects and developmental problems in children.
Some industry groups have criticized the standards, saying the EPA overstated the benefits and argued it would cost billions of dollars annually to comply with the rules.
John Pepin can be reached at 906-228-2500, ext. 206.