We Energies will start to close Oak Creek Coal Plant in May. Here's what's involved. - Milwaukee Journal Sentinel
We Energies will start to close Oak Creek Coal Plant in May. Here's what's involved.
When a coal-plant closes: Inside We Energies' Oak Creek Power Plant as it is prepped for shutdown
Karl Ebert
In about five months, We Energies will shut down two coal-fired generators at Oak Creek Power Plant, kicking off a series of plant closures and conversions that will make Wisconsin's largest utility coal-free in eight years.
The decommissioning of Units 5 and 6, the oldest coal-fired generating units at Oak Creek, has been years in the making. It comes in response to the age of the units, which went into service in 1959 and 1961, as well as changing energy economics that have made coal more expensive than other power sources.
Units 7 and 8, built in the mid-1960s, are set for retirement in late 2025, after which the plant will be demolished and the land turned to new uses.
Paul Spicer, senior vice president for energy generation at We Energies' parent company, WEC Energy Group, described Oak Creek as 1960s construction using 1950s technology. At over 60 years old, he said, the generating units are nearing the end of their useful life, and the cost of maintenance and complying with new air pollution rules make continuing to operate them cost prohibitive.
The shutdowns, originally scheduled to begin this year, were postponed for about a year due to concerns that regional electric generating capacity was inadequate to meet demand as utilities across the Midwest built new renewable energy resources to replace the coal plants that for generations had been the backbone of electricity production.
When the word came to the plant that We Energies would stick to its revised shutdown timeline, the initial reaction was, "Oh, wow, here we go...," said Pat Lawlor, who, as Oak Creek's asset manager oversees the plant's operation. Lawlor previously was at We Energies' Pleasant Prairie Power Plant when it was closed in 2018.
Massive network of equipment from the 1960s shows its age
Inside the power plant, there's a steady hum of coal grinders, boilers, turbines and other massive equipment, all of which shows its age. Other than a modern control room, the plant has a decidedly analog feel - it's all needle gauges and hand cranked valves, and equipment designs that are very much of the time between the post-World War II era and the early Space Age.
"All of these plants have a finite life," Lawlor said. "And, and one of the lessons we learned at Pleasant Prairie was, the sooner we could start working on this, get everybody engaged, figure out all the different things that have to happen, the better for employees, the better for the company, the better for everybody."
More: WEC moves up date to stop burning coal, reaffirms 2024 shutdown for first Oak Creek units
Inside the plant, everything looks static, belying the fact that the guts of the plant are in constant motion: conveyors bring coal inside, grinders pulverize it and send it to boiler furnaces where constantly circulating water becomes steam that spins turbines that, in turn, crank the generators that produce the electricity.
In the past, all that movement meant constant maintenance and a regular schedule of shutdowns of each unit for inspections, parts replacement and other upkeep.
Now, employees focus on the more immediate tasks of keeping each unit running productively and safely, Lawlor said.
"This place is old, but it is safe," he said. "Every machine out there is well understood and has intervals for maintenance, how many hours or calendar periods it might run between inspections, and so we had to figure out which ones are going to come due and is it necessary that we spend $2 million to open up a generator we're going to retire in six months," Lawlor said.
Shutting down affects operations at remaining plants
The actual shutdown, as Lawlor described it, is deceptively simple: shut down the conveyor that brings coal into the plant and, when the last of it has burned, shut off the power supply and the systems that support the units. Of course, it is more complicated than that. Water intakes from Lake Michigan, wastewater treatment and the conveyor system need to remain operational - they also serve Units 7 and 8 as well as the newer Elm Road Generating Station to the north.
And, even as they're planning for a future that will eliminate their jobs, Oak Creek's employees need to remain as focused on their work as they were before the shutdown was announced, Lawlor said.
"Everybody that worked here was used to running this place full tilt and thought they were going to run it forever, 24 hours a day, seven days a week, and then all of a sudden, it's, whoa, we're going to retire it," he said.
"And we have to turn on a dime and respond to what's happening now and keep everybody engaged and keep everybody informed, letting everybody know why it's important what's going on. They have to be thoughtful about how they work here, and they have to really pay attention – it's critical safety work for themselves and for everyone else."
Most employees will move to new jobs with We Energies
Spicer said postponing the shutdown allowed the company and the employees' unions to fine-tune a plan it developed to move employees who want to stay with the company into new jobs at Elm Road Generating Station, the newer coal plant just north of Oak Creek, or in other We Energies operations. Severance and retirement packages are available for workers who are ready to move on.
About 150 people work at Oak Creek. They are represented by two unions: the International Brotherhood of Electrical Workers Local 2150 and International Union of Operating Engineers 420.
Local 2150 Business Manager James Meyer said there's still some nervousness, but the plan developed with the company ensures Oak Creek's shutdown won't result in layoffs.
"We think in this particular case, everything is going to work out where nobody will be negatively impacted," he said. "But looking to the future, as we close more and more of these plants down and transition to green energy that runs more efficiently and with less workers. It's obviously a concern that we want to make sure everybody has a place to go to."
The company appears committed to that. In fact, We Energies is hiring new workers at Oak Creek even as the shutdown looms. The new hires will, at least initially work at the Elm Grove Generating Station, but they're part of a broader strategy to bring in new workers and train them in anticipation of retirements and future needs throughout the business, Lawlor said.
However, recruiting against the backdrop of a soon-to-close power plant and a renewable energy transition has been a challenge, said Mike Bruening, Local 2150's assistant business manager. In response, he said, recruiting pitches have focused on the wide and growing array of jobs for electricians, including construction, gas-powered plants, renewable energy sites and other work.
"There's unending opportunities for these folks f they're willing to join us and come into work for We Energies," he said.
Future power generation will take place on the site, but plan not yet public
Closing Oak Creek won't spell the end of electric power generation - or a quick end to burning coal - on the 1,000-acre lakefront site.
The Elm Road Generating Station, which opened in 2010, will be converted from coal to natural gas over the next eight years.
We Energies says it expects to be using coal as a backup fuel only at the site by 2031 and to be coal-free by 2032.
Much of the post shutdown work that will need to be done before the Oak Creek Power Plant can be demolished will involve modifying shared systems like water intakes from Lake Michigan and the wastewater treatment and discharge system that Elm Road will continue to rely on.
One of the challenges will be transferring control of those systems from Oak Creek to Elm Road, Lawlor said.
"We don't want to maintain these buildings and equipment forever once it's closed, so that's a big job because it's all kind of site integrated," he said.
Demolition of the power plant will open about 400 acres to redevelopment with new power sources that would use the existing substations and transmission lines, Spicer said.
He said it's too early to say what that future use of the land might entail.
Move away from coal started in 2005
WEC began moving away from coal with the conversion of We Energies' Port Washington Generating station to natural gas in 2008.
Subsequent reductions of coal use have included:
- We Energies' Valley Power Plant in Milwaukee was converted to natural gas in 2015.
Pulliam Power Plant in Green Bay, operated by WEC subsidiary Wisconsin Public Service Corp., was shut down in 2018 and demolished.
Unit 4 at Edgewater Generating Station in Sheboygan was retired in 2018. The Edgewater station is owned by Alliant Energy, WPS owned about one-third of Unit 4's capacity.
- We Energies closed the Pleasant Prairie Power Plant in 2018.
- We Energies closed its Presque Isle Power Plant in Marquette, Michigan in 2019, and construction of new gas-fired units.
To become coal-free by 2032, WEC also will shut down Columbia Energy Center near Portage, jointly owned by WPS, Alliant and Madison Gas and Electric Co., in 2026, and a coal-burning unit at the Weston Power Plant in 2031. Like the Elm Road Generating Station in Oak Creek another coal-fired generating unit at Weston will be converted to natural gas.
In all, the planned retirements will eliminate about 1,700 megawatts of coal-powered generating capacity - an amount that can power about 1.5 million homes. Oak Creek represents about two-thirds of that total.
That capacity will be replaced by solar, wind, battery and natural gas power sources, including about 600 megawatts of solar power that will come online in 2024 from Paris Solar-Battery Park in Kenosha County, Badger Hollow Solar Park in Iowa County and Darien Solar Energy Center in Walworth and Rock Counties.
The transition is expected to accelerate under WEC Energy Group's recently updated five-year plan. It includes $6.8 billion in spending starting in 2024 to expand its renewable energy generating capacity and battery storage, and another $1.5 billion in spending on natural gas-powered generation.
The company has said its investment in smaller, on-demand natural gas sites is needed to create a reliable backup system that will allow We Energies and WPS to meet customers' power needs at times when wind and solar resources are not operating at capacity or when demand for electricity spikes.
Those gas-powered generators in the future would be switched to hydrogen or biofuels, assuring they will continue to be useful for decades, Spicer said.
WEC estimates its transition to renewables will, over time, produce $2 billion in customer saving compared to sticking with the status quo.
Decisions next year on who pays for coal plant retirements
While Oak Creek is at or near the end of its useful life, its retirement is still coming sooner than anyone would have expected a decade ago.
Dramatic decreases in the cost of wind, solar and battery power, as well as reduced natural gas prices, have made coal more expensive than the alternatives.
The switch will yield long-term customer savings in the billions of dollars, but in the short term it means a "double whammy" for rate payers who must cover the cost of building new power sources as well as that of shutting down the coal plants, said Tom Content, executive director of the Citizens Utility Board of Wisconsin.
Those shutdown costs include hundreds of millions of dollars of investments in pollution controls in the past decade or so that have not been fully paid for.
We Energies' next rate case, to be filed with the PSC in spring, is expected to be a test of how well utility customers can be protected from some of those costs. The company still owes $656 million on the Oak Creek power plant, including $407 million related to pollution-control equipment.
Consumer advocates and industry groups are eyeing a debt refinancing tool known as securitization as a way to take some of those costs, specifically the nearly 10% profit that the utilities are allowed to earn on their investments, out of the rate equation.
Securitization involves converting the existing debt to state-backed environmental trust bonds. It was previously used to refinance $100 million of pollution-control debt at Pleasant Prairie, resulting in an estimated $40 million in customer savings over 15 years.
More: Consumer groups, lawmakers seek to reduce impact of $2 billion cost of closing Wisconsin coal plants
No guarantee that coal plants' pollution-control debt will be refinanced
How much of the Oak Creek might be eligible for refinancing is a moving target.
In 2022 the PSC rejected a proposed rate settlement that would have refinanced $100 million, with a majority of commissioners questioning why the number wasn't larger. During utility rate hearings this year, the commissioners sent a clear signal to the companies that they will be looking for proposals to reduce customer costs related to coal plant retirements.
However, it's up to the utilities, under state law, to decide whether to pursue securitization and, if so, how much would be refinanced. As PSC Chairwoman Rebecca Cameron Valcq pointed out during Alliant Energy's recent rate case, the law does not empower the commission to require refinancing.
"All of the noise about requiring them to securitize, requiring them to use environmental trust financing, all that time and energy, in my opinion, would be better utilized, lobbying for changes to the statute, because we're not within our authority to order securitization," she said at the time.
That lobbying effort is now taking place in Madison on a bill co-sponsored by state Sens. Robert Cowles, R-Green Bay, and Duey Stroebel, R-Saukville. The bill would give the PSC authority to order securitization, while also expand its use to all costs associated with retiring a coal plant - not just the pollution controls.
Supporters of the bill include CUB, Clean Wisconsin, the Wisconsin Industrial Energy Group and Americans for Prosperity.
The state's investor-owned utilities have lined up in opposition to the bill through their lobbying entity, the Wisconsin Utilities Association.
Bill Skewes, executive director of WUA, said the bill is at odds with the initial intent of using securitization "to give utilities another tool to use, not as a way for regulators to control them."
"When you take the planning and financing out of the hands of the utilities, it ties their hands from making the best decisions in real time for their customers," he said.
Spicer, of WEC, said it would be premature for the company to discuss whether securitization would be part of We Energies' 2024 rate proposal.