WisBusiness: PSC turns down ERCO request

By Brian E. Clark

MADISON – The State Public Service Commission today rejected a bid by a Port Edwards chemical company that would have given it a significant break on its electricity rates. The firm, ERCO Worldwide, would have used the savings to pay for conversion of it chlor alkali plant to a mercury free system.

Mercury is classified as a poison by state and federal agencies. When used in making chemicals, it often vaporizes and then washes into lakes, rivers and groundwater when it rains. Because it’s an element, it doesn’t break down and its toxins flow into the water supplies. Pregnant women and children are discouraged from eating the tainted fish.

ERCO is the state’s largest airborne mercury emitter. ERCO argued that it needed the reduction to finance the conversion. The vote was 3-0. Commissioners ruled that existing law prohibited them from approving special rates for specific customers.

In order to do the expensive conversion, ERCO had asked the PSC for relief on its power rates from Wisconsin Power & Light — an Alliant subsidiary — and guaranteed cost increase limits for the next decade.

In an interview with WisBusiness.com late lasts year, ERCO plant manager Steve Hieger said his company was paying $49 per megawatt of power. It sought a $45 rate from Alliant, with escalation of no more than 4 percent a year for the next decade. Alliant’s response was to offer a rate of $53 per megawatt hour. To make up the shortfall to Alliant, residential customers would have paid about a $2 annual surcharge under the deal, while major industrial users would have paid about $450 more per month.

Contacted this afternoon, Hieger said he was “very disappointed” with today’s PSC decision. But he did not rule out the company moving forward with the conversion, which could cost as much as $85 million.

“We continue to believe we have an opportunity to have an historic impact on environment, preserve jobs and grow our economy,” he said. “However, the justificiation is now much more difficult. We will look at other options in coming weeks, but time is not our friend.”

Hieger said the plant, which employs 100 full-time employees and has an annual payroll of $7 million (including benefits), will stay open. It is a major supplier of chemicals for paper and pulp mills in the region.

“Closing it is not an issue,” he said. “The question is positioning it with state-of-the-art technology. We will make a decision in first quarter how we will go. No stone will go unturned.”

Charley Higley, executive director of the Citizens Utility Board, praised the PSC decision.

Though Higley said the goal of reducing mercury pollution is worthwhile, he said ERCO should not get a special subsidy from other ratepayers to finance it.

“We are very happy the PSC upheld existing law that prohibits deals like this,” he said. “All the commissioners noted that. The vote was unanimous.

“This is one of the most important reasons the PSC was created about 100 years ago,” he said. “If ERCO had gotten this break, we would have expected other companies to come in with similar requests.”

Higley said he hopes ERCO will move forward with its plan to convert to a mercury free process.

“They should be encouraged to do so and it is extremely important,” he said. “We understand that. But this was the wrong way to do that. We hope they stay in Wisconsin and modernize their plant. Perhaps they should seek another form of relief from the Legislature.”

Corky Meyer, president of the Wisconsin Wildlife Federation, said he was dismayed with the PSC decision.

“We strongly supported ERCO because their plan would have eliminated all the mercury they were emitting,” he said. “This is a real shock.”

He said his group will work to either get the law changed or to help lobby for some kind of state aid to help pay for the plant conversion.

“They need some kind of incentive to convert or it won’t get done,” he said. “This mercury pollution is bad for the state of Wisconsin. I’m sad that this proposal didn’t make it through the PSC.”

In a separate statement, Mercury Free Wisconsin urged ERCO to move forward with its plant conversion even without the utility rate discount.

“Other companies in the country and around the world have installed and implemented mercury-free technology without any public assistance,” the statement said.

“If ERCO is committed to improving Wisconsin’s public, economic, and environmental health then company officials should move forward to meet the gap between the funding proposal at the PSC and the PSC’s final determination.”