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We Energies May Switch Coal-Fired Plant to Gas

Wisconsin Energy is considering converting its coal-fired Valley Power Plant in Milwaukee to gas-fired generation, CEO Gale Klappa told shareholders during the company's annual meeting Thursday in Mequon, WI.

The 280 MW plant would be converted to help Wisconsin Energy reduce emissions, Klappa said. No timeline has been set for the conversion, but the company intends to make its first filing with the Wisconsin Public Service Commission (PSC) in the second half of this year, he said. The first step would be to put in a larger gas pipeline to supply the facility. The project would require approvals by the PSC and the city, and it would require Wisconsin Energy to upgrade a more than 60-year-old pipeline.

"The Valley plant is our oldest coal-fired plant. It's a late-1940s vintage plant and some of the plant was, I believe, also put in in the 1950s. We've had significant environmental upgrades; we've invested a fair amount of money to improve the environmental performance of this plant, and today our Valley plant meets all of the federal standards set out by the Environmental Protection Agency. But we believe that over the next several years there will be a need as new environmental regulations become law and get proposed...to convert the Valley plant from burning coal to burning natural gas."

Wisconsin Energy recently completed its "Power the Future" plan to expand its electric generation capabilities in the state. The decade-long plan involved the largest construction program in the state's history and brought four major generating units online, including a 615 MW unit at the company's Oak Creek facility. Oak Creek's 615 MW coal-fired Unit 1 began commercial operation in February 2010 and Unit 2 was gradually brought online last summer and fall (see Daily GPI, Aug. 2, 2010).

Wisconsin Energy plans to invest another $3.4 billion by 2015 to modernize its electric and natural gas infrastructure, meet changing environmental standards and add renewable energy to its generation fleet, Klappa said.

Wisconsin Energy reported 1Q2011 earnings of $170.9 million (72 cents/share), an increase of 31.8% compared with $129.7 million (55 cents/share) in 1Q2010. The company confirmed its 2011 earnings guidance of $2.05-2.10/share as unchanged.

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