Projected cost for new Alliant coal plant soars past $1 billion

Jeff Richgels  —  6/15/2008 4:34 pm

The cost for Alliant Energy's controversial proposed new coal power plant has soared to a range of $1.1 billion to $1.2 billion, the company stated in a regulatory filing.

Alliant previously said the new plant proposed to be the third unit of the Nelson Dewey Generating Station in Cassville would cost $850 million to $950 million. When initially proposed in 2007, the plant's cost estimate was under $800 million.

The company is facing heavy opposition from environmental groups as it seeks approval from the state Public Service Commission to build the 300-megawatt plant. Cassville is its top site option, while the Columbia Generation Station at Portage is No. 2.

Alliant also said in the filing that its cost estimate for capital expenditures for sulfur dioxide air pollution controls at the two existing coal units at Nelson Dewey would be about $200 million, nearly double the previously disclosed estimate of $116 million.

Company officials said the increases stem from soaring construction costs that include big cost hikes for items such as concrete and steel.

Alliant also announced that it would take several steps to reduce greenhouse gas emissions if the new plant is approved. The changes would be implemented by the time the proposed new plant would become operational in 2013 and would more than offset the carbon emissions from the new coal plant, the company said.

The company said late Thursday the changes are expected to cost about $500 million to $550 million, if all the necessary regulatory approvals are received.

Changes include the shut down of its oldest coal-fired generation unit, Edgewater Generating Station unit 3; ramping up its wind power segment; doubling its proposed renewable energy investments; and "aggressively" focusing on energy efficiency measures.

Under its new proposal, WPL aims to generate 500 megawatts of new wind power by 2013, compared with a previously announced plan to produce 300 megawatts of new wind power by the end of 2010.

Sites for the wind farms have not yet been determined, but the company said a possible site is southwestern Wisconsin.

Alliant also plans to double the amount of renewable resource fuels -- including switch grass, waste wood, or corn stalks -- to be used at the proposed new coal plant to 20 percent.

The company said analysis by researchers from the University of Wisconsin-Madison has shown that could create economic development revenues for Wisconsin exceeding an estimated $50 million annually.

"Alliant Energy is committed to reducing greenhouse gas emissions," Barbara Swan, president of Alliant's state utility unit, Wisconsin Power & Light Co., said in a statement. "We believe our proposal addresses the critical balance of meeting important environmental objectives with the equally important goal of providing reliable and affordable power to our customers."

Alliant said its customers' two main concerns are protecting the environment while keeping the cost of electricity affordable.

Alliant's plans, though, were slammed by Clean Wisconsin, the state's largest environmental advocacy organization.

Clean Wisconsin said even with the moves, the new plant still would be one of the state's dirtiest power facilities.

"Alliant continues to repackage their proposal in an attempt to sell this dirty coal plant as an environmentally friendly option," Katie Nekola, energy program director at Clean Wisconsin, said in a statement. "Replacing a nearly retired coal plant that emitted less than 500,000 tons of carbon dioxide in 2006 with one that would emit more than 2.3 million tons of greenhouse gas annually for at least 50 years is not a solution to global warming."

Even at 20 percent biomass, the Cassville plant would emit more greenhouse gas emissions than other, more efficient, power plants fueled exclusively by coal in Wisconsin, Clean Wisconsin said in a news release.

The organization also noted that the PSC has questioned many details of Alliant's previous commitment to burn even 10 percent biomass in the recent environmental impact statement.

And Clean Wisconsin noted that the announcement comes one month after the PSC released a draft environmental impact statement that said Alliant's proposal was "not the optimal generation choice," and "not the least cost option under any scenario."

"The estimated costs of Alliant's expansion plans are skyrocketing and the construction of the coal plant alone will likely cost over $1 billion," Nekola said. "If this plant is built, Wisconsin energy users will shoulder the burden of the construction costs and future greenhouse gas regulations."

"While Alliant is once again trying to repackage this coal plant, the fact remains that it is a coal plant at heart," Nekola added. "The high costs and substantial greenhouse gas emissions of this plant make it a bad investment for Wisconsin's economy and environment."

Groups opposed to the plant, including the Citizens Utility Board, have called on Alliant to beef up spending on energy efficiency and renewable energy instead of building a more costly coal plant.

Alliant has said that its analysis and analysis by the PSC has shown the need for a new power plant, given the rising demand for energy.

The PSC is expected to vote on the plant proposal by the end of the year.

A week earlier, Alliant-WPL filed an application with the PSC for a new wind farm in Freeborn County, Minnesota, where the company said there are "the strong and persistent prairie winds of southern Minnesota."

The Bent Tree Wind Farm, near Albert Lea just north of the Iowa border, could produce up to 400 megawatts of power for about 100,000 homes. The application seeks approval for a $450 million to $475 million project to develop approximately 200 megawatts of power beginning in 2009.

Assuming approvals by the PSC and the Minnesota Public Utilities Commission, the wind farm would be operational by 2010, the company said.

"Developing Bent Tree Wind Farm is the next logical step in WPL's commitment to not only wind energy, but all renewable energy," Swan said in a statement. "We will continue to seek environmentally friendly alternative sources of energy to complement our baseload generation initiatives, which furthers our goal of providing reliable, affordable and environmentally responsible power to our customers."

In April, WPL executed a letter of intent to purchase Bent Tree from Wind Capital Group LLC. WPL currently anticipates the purchase of the site to be complete by October 2008.

Bent Tree would be WPL's second fully owned and operated wind farm. The company's first such project, the Cedar Ridge Wind Farm, a 68-megawatt project in Fond du Lac County, is expected to begin commercial operation later this year.

WPL expects the PSC to rule on its Bent Tree application by the end of the year and the Minnesota PUC to rule by late 2008 or early 2009.

To fulfill its anticipated wind needs, Alliant announced that it will buy 303 wind turbines from Vestas-American Wind Technology Inc. for about $817 million. Deliveries will begin next year and continue through 2010.

The turbines, to be used by WPL and Alliant's Iowa utility unit, Interstate Power and Light Co., will have a total installed capacity of 500 megawatts. IPL is developing a 200-megawatt wind farm in Franklin County, Iowa.

A one-megawatt plant running continuously at full capacity can power 778 households each year, according to the U.S. Department of Energy.

"Our company is pleased to partner with Vestas, who is a recognized leader in the wind generation industry," Kim Zuhlke, Alliant Energy vice president of new energy resources. "Vestas will play an important role in our company's next step in expanding its renewable energy supply portfolio. Given our company's aggressive wind generation expansion plans, we believe it is important that we procure the infrastructure necessary to complete the generation build-out on-time and at a reasonable cost to customers."

Jeff Richgels  —  6/15/2008 4:34 pm