Two natural gas power plants to replace Presque Isle Power Plant

Reliable energy in the U.P. has been shored up for the next 23 years thanks to a collaboration between Cliffs Natural Resources, WEC Energy Group, Gov. Rick Snyder and the state of Michigan.

A new 20-year energy agreement between WEC Energy Group, parent company of We Energies, and Cliffs Natural Resources will support two natural gas engine power plants in the U.P. These plants are expected to be built by mid-2019 and will replace the coal-fired Presque Isle Power Plant. That plant will shut down in 2020.

Thursday afternoon, Snyder, Executive Director of the Michigan Agency for Energy Valerie Brader, Cliffs Natural Resources CEO Lourenco Goncalves and WEC Energy Group CEO Allen Leverett spoke at a press conference in Marquette.

"We're going to have something new that will be more reliable, more affordable long term and really environmentally sensitive," Syder said.

Brader said having two plants instead of one is inherently more reliable.

"You can't have an event like happened here in the U.P. where the Presque Isle Plant was flooded out, and one location caused a peninsula-wide problem," Brader said.

Leverett said combined, the new plants will employ no more than a dozen people. He said 100 employees currently working at the Presque Isle Plant will be at retirement age in the next five years, so roughly 40 employees will need jobs when the plant closes.

Snyder said the high demand for skilled trades workers gives the state a good runway to help people get jobs.

"We're going to work really hard, and it is nice to say that we actually have two or three years to work through this process," Snyder said.

State Rep. John Kivela (D-Marquette) said he's been working to fix the U.P.'s energy problem since he was mayor of Marquette. He said this agreement will ensure reliable energy for the U.P.

"It's really the large piece to the solution we've been looking for, for the energy issue we've faced for many years," Kivela said.

This project will cost roughly $255 million.

Leverett broke down the cost of the plant at the press conference.

"Our utility would invest the capital," Leverett said. "I mentioned the 20-year agreement with Cliffs Natural Resources, so they'd have a 20-year offtake agreement, a power purchase agreement if you will, with the utility. That'll cover part of the cost, and then the remainder of the cost would go into retail rates for the customers in the U.P. of Michigan, our customers at least, about 28,000 customers."

With WEC Energy Group's investment in new electric power generation in the region, Goncalves said the new plants will create a more cost-effective energy future. He also said there is no possibility of a future System Support Resource (SSR) related to the operation of the Presque Isle Power Plant.

"The households will not only be saving money, but also the problem of the SSR has been put to bed," Goncalves said. "It's not going to happen anymore. So that's the beauty about the solution that we adopted."

Not only did officials talk about the money-saving aspects, Brader said creating the new plants will act as a transmission substitute for when the Presque Isle Plant shuts down.

"If Presque Isle were too close and there was nothing built in its place, we expect that hundreds and hundreds of millions of dollars of transmission would have to be constructed to keep the lights on in the U.P. and the cost for that would be determined in Washington, D.C.," Brader said. "What we have seen is that when costs are determined here in Michigan, we think that they're much more competitive. The ability to avoid that big spend and then also build something that's the right size for the U.P. We don't have to build something too big and hope we'll grow and we don't have to build something so small we can't grow. That modularity lets us go forward in a very affordable fashion and avoid big fixed expenditures hat are determined by folks in Washington, D.C. instead of here in Michigan."

The locations of the plants have yet to be determined. Leverett said at this time, he's unsure what will happen to the Presque Isle property once the plant shuts down.