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Revamped Presque Isle plant could be backbone of future power grid

November 29, 2012
By KYLE WHITNEY - Journal Staff Writer ( , The Mining Journal

MARQUETTE - A deal to keep the Presque Isle Power Plant operating in the long term is an important piece of a larger Michigan energy puzzle, according to the state's top executive.

Gov. Rick Snyder said this week the move will allow Marquette's coal-fired plant to provide the backbone for an improved electrical generation and transmission system in northern Michigan.

"I think it's an important cornerstone. It's part of a strategy, but it's a great starting point in that it's actually generation capacity right in the Upper Peninsula," said Snyder, while in town Tuesday for a press conference announcing the power plant agreement. "We want to clearly look at bringing more transmission, better transmission, systems into the Upper Peninsula, but as a starting point it's great to say we actually have power being created here. This doesn't answer all those questions, but it creates a foundation that's already here, that's going to continue to be here, to enhance and to build on."

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Under the deal announced Tuesday, the Cadillac-based Wolverine Power Cooperative will invest between $130 million and $140 million to help the plant meet shifting federal pollution regulations.

In exchange, Wolverine will acquire a minority interest - between one-third and 40 percent - of the plant. Current owner We Energies will maintain majority control and will continue to oversee the plant's operation.

Snyder has spoken before about the importance of strengthening the state's energy grid, but his most recent and most specific comments came Wednesday during his statewide message on energy and the environment.

In the message - the text of which can be found on his website at - Snyder praised the continued operation of the Marquette plant and said energy reliability is a state issue.

A state goal, according to Snyder, should be to connect Michigan's two peninsulas with a "robust connection" that will create development opportunities, while lowering the cost of electrical transmission.

"But that's not just for the Upper Peninsula. That actually would be to the benefit of the Lower Peninsula, in terms of better redundancy and reliability, so that's a win for all," Snyder said Tuesday. "Actually, I'm surprised it's taken us that long to put a priority on getting this done."

The Midwest Independent Transmission System Operator - the regional transmission planning authority, which monitors the high-voltage electrical system throughout the American Midwest and Manitoba, Canada - is currently working long-term to address reliability concerns in the area.

The organization is conducting a study, set to wrap up in May, in order to "determine if transmission investment is necessary to promote economic development in the Upper Peninsula of Michigan." In his Wednesday message, Snyder said he was encouraged by the MISO study.

In addition to helping stabilize the state's power grid, the Wolverine-We Energies deal is a benefit for both companies, according to executives.

The plant will allow Wolverine, a power generation and transmission cooperative, to diversify its energy portfolio, while keeping money in the state.

"We've been looking to build new generation or to add additional generating sources, so this is a very cost-competetive way for us to add a piece of our portfolio that we intended to invest anyway," said Eric Baker, president and CEO of Wolverine. "Sadly, the last round of investments we made were actually in Indiana and Ohio, so this is very rewarding to us to make this investment in MIchigan and keep these dollars local to Michigan."

Allen Leverett, executive vice president of We Energies, said the partnership will allow his company to keep the Presque Isle Power Plant running, while benefiting We customers, which are spread across Wisconsin and the U.P.

"From a cost standpoint, we see this as a big positive for our customers," said Leverett, who said he would expect a decrease in cost. "What's going to happen, effectively, is the $130 million to $140 million worth of capital investment - the carrying cost associated with that investment - will be borne by Wolverine's customers, not the customers here."

Additionally, Wolverine will also bear a large share of the operating cost for the plant.

Kyle Whitney can be reached at 906-228-2500, ext. 250.



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