PSCW Approves Application for Largest Biomass Plant in Midwest

Mon Nov 2, 2009 11:33am EST

* Reuters is not responsible for the content in this press release.

ASHLAND, Wis.--(Business Wire)--
The Public Service Commission of Wisconsin (PSCW) has unanimously approved Xcel
Energy`s application to install biomass gasification technology at its Bay Front
Power Plant in Ashland, Wis. When completed, the project will convert the
plant`s remaining coal-fired unit to biomass gasification technology, allowing
it to use 100 percent biomass in all three boilers and making it the largest
biomass plant in the Midwest. Currently, two of the three operating units at Bay
Front use biomass as their primary fuel to generate electricity. 

The project, estimated at $58.1 million, will require additional biomass
receiving and handling facilities at the plant, an external gasifier, minor
modifications to the plant`s remaining coal-fired boiler and an enhanced air
quality control system. The total generation output of the plant is not expected
to change significantly as a result of the project. 

"We appreciate the PSCW`s fair and thorough review of the application and
believe that their decision recognizes the benefits of this project to provide
environmentally-responsible, cost-effective energy to our customers and
communities," said Mike Swenson, president and CEO, Northern States Power
Company-Wisconsin, an Xcel Energy. "The Bay Front project demonstrates our
continuing commitment to the environment and a clean energy future. We`re
helping our customers and communities practice sustainability while increasing
local economic development." 

Through its purchases of wood residues and related services, the Bay Front Power
Plant has a $20 million annual economic impact on a six-county region around
Ashland. That economic impact will increase as the plant purchases more wood
residues from area contractors. 

The Bay Front Power Plant was originally constructed and began operation in
1916. In 1960, it operated five boilers and six turbines. Since then, two of the
boilers, and three of the turbines, have been retired. The three remaining
boilers feed into a combined steam header system that can support three
turbine-generator sets. 

In 2008, Xcel Energy installed NOx (nitrogen oxides) emission control equipment
on the two boilers that primarily burn wood, allowing both to continue to
operate into the foreseeable future. When evaluating various alternatives for
the remaining boiler, which primarily burns coal, it was determined that
expanding Bay Front as a biomass resource was preferred over incurring
significant increases in coal costs, and also environmental compliance costs
relating to the Clean Air Interstate Rule and regulations on mercury emissions. 

In addition to reducing carbon dioxide emissions by switching from coal to
biomass in the remaining unit, the project will drastically reduce other air
emissions, including nitrogen oxides by more than 60 percent and sulfur dioxides
and particulate matter by more than 80 percent. 

The primary source of biomass at Bay Front is expected to be the lower quality,
unused materials that are currently left in area forests following traditional
harvests, such as treetops, logging slash, damaged trees, underutilized species,
and the cull and mortality classed trees. Initial investigations conducted by
Xcel Energy show more than ample supplies of this lower quality biomass within
the area. 

"We will require our contractors to use the sustainable harvesting guidelines as
developed by the Wisconsin Council on Forestry and implemented by the Wisconsin
Department of Natural Resources (WDNR)," Swenson said. "We will also continue to
work closely with the WDNR and other local organizations to ensure the highest
environmental standards are followed now and in the future when harvesting
biomass in the region." 

Engineering, design and construction work is expected to begin in 2010 and the
unit could be operational in late 2012. 

Xcel Energy (NYSE: XEL) is a major U.S. electricity and natural gas company with
regulated operations in 8 Western and Midwestern states. Xcel Energy provides a
comprehensive portfolio of energy-related products and services to 3.4 million
electricity customers and 1.9 million natural gas customers through its
regulated operating companies. Holding company headquarters are located in
Minneapolis. More information is available at www.xcelenergy.com.

Xcel Energy Media Relations
715-737-2565
www.xcelenergy.com

Copyright Business Wire 2009