Customer fuel-switching, growing gas-fired generation needs tied to more reliance on renewable power and pipeline infrastructure expansions in the western parts of the state have Wisconsin’s major combination utility anticipating a growing role for natural gas, according to the CEO of Wisconsin Energy (WE).

While reporting increased third quarter profits compared to the same period last year ($156 million, or 67 cents/share, compared with $129.8 million, or 55 cents/share in the year-ago quarter), WE CEO Gale Klappa said his utility has experienced a 14% growth in gas customers while overall gas and power consumption has experienced “modest” growth of less than 1% on an annual basis.

“Connections of new natural gas customers are up more than 14% from where they were for the same quarter last year,” said Klappa, adding that the low-price natural gas market continues to have a major impact on WE’s generation portfolio.

“Our natural gas use nearly doubled [quarter over quarter] from 28.5 MMcf/d last year to.more than 50 MMcf/d this year,” Klappa said. “Our gas-fired generation has operated at a 56% capacity factor this year, compared to a 22% capacity factor last year. As our natural gas use has gone up, our coal burn has come down [8.1 million tons of coal this year vs. 10.7 million tons last year].”

During the third quarter WE said it was converting an existing coal-fired generation plant to natural gas and that it would pursue gas pipeline expansion projects totaling $150-200 million in western Wisconsin, where it is experiencing stepped-up customer conversions to natural gas from propane.

In August, WE announced plans to convert the fuel source for its Valley Power Plant from coal to natural gas (see Daily GPI, Aug. 20). The facility is a cogeneration plant located along the Menomonee River in Milwaukee that generates electricity for the grid and produces steam for heating hundreds of downtown buildings.

WE’s utility has a filing with the Wisconsin Public Service Commission for an initial $150 million pipeline extension, with the possibility it will seek a second phase for another $50-55 million project, said Klappa, who stressed that the projects were needed for reliability as well as meeting customer growth.

“We’re seeing considerable numbers of customers moving from propane to natural gas, and even with modest growth our existing system would begin to be stressed in a few years without these pipeline expansions,” Klappa said.

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