WisBusiness: Calpine pushes natural gas for state’s energy needs

By Brian E. Clark

Bob Fishman doesn’t doubt that Wisconsin will need more electricity in coming years.

How the state gets that energy is where Fishman – a senior executive for the California-based independent power producer known as Calpine – and We Energies differ.

Fishman said he believes We Energies should be required to buy electricity from Calpine’s fully permitted, but as yet unbuilt, natural gas plant in Fond du Lac. The 550-megawatt facility would cost about $350 million. We Energies, for its part, doesn’t want Calpine’s Fond du Lac energy, which it says would be too expensive.

The state’s Public Service Commission sided with We Energies in November 2003 when it gave the utility permission to build a 1,000-megawatt, $2.15 billion coal plant at Oak Creek. Though it lacks a water permit from the U.S. Army Corps of Engineers, We Energies officials said they hoped to begin construction by this summer.

In December, however, Dane County Circuit Judge David Flanagan threw a monkey wrench into those plans when he overturned the state’s approval of the Oak Creek plant. He ruled on combined suits by Calpine and environmentalists including Clean Wisconsin and S.C. Johnson and Sons. In part, Flanagan’s ruling said the PSC made procedural errors and did not properly consider alternatives to Oak Creek.

We Energies executives decried the ruling and said delays could increase cost of the project by $260 million and cause it to miss its opening dates at the end of the decade.

The squabble is now before the state Supreme Court, which is scheduled to hear oral arguments on March 30. It could issue a ruling on the future of Wisconsin’s biggest power project in decades within several months.

If Fishman gets his wish, the Supreme Court will send the case back to the three-member PSC, which might then tell We Energies to contract with Calpine for the Fond du Lac natural gas plant’s energy.

Because much has changed since the PSC made its decision, the panel could start its decision-making process over. And that might delay construction of any new plants for several years.

"Every utility feels its proposals are best," acknowledged Fishman, whose company operates gas plants in Beloit and the town of Christiana. It is building another in Kaukauna, which will produce energy for Wisconsin Public Service. Calpine also sells electricity to We Energies from a gas facility it runs in Illinois.

He said his company has not taken a stand on Oak Creek. We Energies said Oak Creek is needed because a baseload plant has not been built in Wisconsin since 1984.

"We are not for or against Oak Creek," he said. "But we do think that We Energies should be held to the same standards as we are."

Fishman said natural gas plants are cheaper to build – less than half the cost per megawatt – and maintain than coal facilities. He acknowledged that the main question about natural gas is the long-term cost of the fuel.

"We Energies believes is has the better solution to the state’s long-term needs," he said. "We don’t agree with that. We think We Energies wants to build its own plant because that is more profitable for it. What we propose is better for both ratepayers and the environment.

"Eventually, scientists will figure out how to gassify coal and it will be much cleaner," he said. "But that is a long way off and for now, gas is better for the environment."

Fishman said he believes his company could have be producing power from the Fond du Lac facility by 2007.

"It would be an excellent interim solution to power needs," he said. "It is also a good idea for the long-term, too.

"It would be a very efficient and clean plant and be competitive with coal," he said. "That’s what the technical staff at the PSC said, but the commission didn’t consider that."