Michigan regulators greenlight pair of gas plants for Upper Peninsula

Dive Brief:

The Michigan Public Service Commission this week approved the development of two new gas-fired power plants on the state's Upper Peninsula, expected to cost $277 million and be in service within two years.
Regulators determined the proposal, submitted by Upper Michigan Energy Resources Corp. (UMERC), was the "most reasonable and prudent means of meeting the utility’s power needs." Efficiency, renewables and demand response solutions were also considered.
UMERC is a subsidiary of We Energies, and was created to solve the power issues on Michigan's UP. Construction will begin at two sites in the spring of 2018, and once completed the new plants will partially replace the Presque Isle coal plant.

Dive Insight:

Michigan regulators have approved new generation for the state's Upper Peninsula, moving the Presque Isle coal plant a step closer to closure.

“This new gas-fired generation is a critical piece in shaping the future of energy supplies in the U.P. – a future that is cleaner, more reliable and affordable,” PSC Chairman Sally Talberg said in a statement.

The Upper Peninsula Generation Project will supply a total of 183 MW from the two facilities, one in Negaunee Township and a smaller one in Baraga Township, to serve the Tilden Mining Co. and non-mine customers. Both plants are expected to run for three decades.

Once construction is complete, UMERC said the Presque Isle Power Plant will close, ending the system support resource (SSR) payments necessary to keep it running.

Last week in an Oct. 19 order, FERC concluded that Wisconsin Electric Corp.'s collection of nearly $24 million to keep the plant running was not just or reasonable, and that the company altered the date of an invoice to recover certain costs. However, the agency stopped short of accusing the utility of fraud or manipulation, instead referring the case to its Office of Enforcement for additional review.

Wisconsin Electric proposed shutting down the plant in 2013, but Midcontinent ISO determined Presque Isle was needed for reliability. Last year, FERC determined SSR costs must be allocated to the load-serving entities that require the plant to continue operating.