(Updates brief, adds dateline, detail)
HOUSTON Nov 11 Alliant Energy Corp (LNT.N)
said state regulators on Tuesday rejected its Wisconsin utility
unit's plan to build a $1.26 billion coal/biomass unit at an
existing power station in Wisconsin.
The Public Service Commission of Wisconsin denied Wisconsin
Power and Light's application for a certificate of need for the
300-megawatt Nelson Dewey Unit 3 near Cassville, Wisconsin, in
a 3-0 oral decision.
Regulators said the expansion project was too costly when
weighed against other alternatives such as natural gas
generation or purchased power from existing sources.
Concerns over construction costs and uncertainty over the
costs of complying with future carbon dioxide regulation were
contributing factors to the denial, the commission said in a
WPL president Barbara Swan said the utility was "extremely
disappointed" with the decision and "the opportunities lost
The proposed Nelson Dewey 3 unit was designed to burn not
only coal, but also switch grass, corn stalks and waste wood,
the Madison-based utility said.
The company had agreed to offset greenhouse gas emissions
from the new unit by retiring an old coal plant, adding wind
power and boosting the amount of biomass to be burned at the
Regulators applauded WPL's decision to burn up to 20
percent renewable biomass, but found that total risk tied to
the project was "unacceptable to ratepayers."
"We are at a unique juncture in this country, and in
Wisconsin, and decisions regarding new sources of electric
generation need to account for the likely future costs of
complying with constraints on carbon emissions," said Eric
Callisto, commission chairman.
Cost estimates for Nelson Dewey 3 had risen from $850
million to $950 million to more than $1.2 billion. WPL had
hoped to bring the unit online in 2013.
The utility may add more wind power, but the coal-plant
retirement and other greenhouse-gas cuts were contingent on
approval of the new unit, said utility spokesman Rob Crain.
Crain said the regulatory process showed that WPL, which
serves 450,000 electricity customers in Wisconsin, needs
additional baseload generation to meet growing demand.
"What wasn't agreed on was how to serve that load," he
Increased opposition to coal-fired plants and the higher
levels of carbon dioxide they emit forced U.S. utilities to
cancel or delay more than 30,000 MW of coal generation between
2002 and 2007, according to a government report. More than
3,500 MW were canceled or deferred in the first half of 2008.
Even so, more than a dozen new coal-fired plants, totaling
8,700 MW, are under construction while permits for dozens more
are being considered.
(Reporting by Eileen O'Grady; Editing by Marguerita Choy)