Utility asks grid operator to end subsidies for U.P. coal plant

Editor’s note: This story was updated to include comments from MISO and Gov. Rick Snyder.

Wisconsin-based utility We Energies and its major mining company customer in the Upper Peninsula reached an agreement today that effectively ends the need for ratepayer subsidies to keep an aging coal plant open in Marquette.

Cliffs Natural Resources announced today that it will stay on as a We Energies customer until the Presque Isle Power Plant is sold, allaying the utility’s concern that Cliffs would leave for an alternative energy supplier before that happened.

Out of that concern, We Energies said it needed to keep collecting System Support Resource payments to keep Presque Isle open, despite claims last week by top Michigan officials that We Energies was “double dipping” by doing so.

“Cliffs Natural Resources is pleased to have reached an agreement with We Energies which positively impacts our costs,” Lourenco Goncalves, CEO of Cliffs Natural Resources, said in a statement. “The signature of the agreement also benefits the electric consumers in the Upper Peninsula, with the elimination of the onerous SSR payments. We continue to work with Governor Snyder’s office as we pursue other power related initiatives to the benefit of Cliffs and the U.P. community.”

A We Energies spokesman said in an email today that the utility has officially asked the grid operator MISO to terminate the SSR payments, retroactive to Feb. 1, when Cliffs returned to We Energies as a customer after spending the past two years with an alternative energy supplier.

Gov. Rick Snyder praised the today today for avoiding the nearly $8 million monthly payments from U.P. and Wisconsin ratepayers.

“We Energies and Cliffs are to be commended for reaching this agreement that will end system support resource payments for the Upper Peninsula as of Feb. 1, and they both have my thanks and that of the entire Upper Peninsula,” Snyder said in a statement.

Presque Isle is expected to be sold to the Upper Peninsula Power Co. (UPPCO) by the end of July as part of a more comprehensive solution to reliability concerns throughout the U.P.

“The iron ore mines have committed to remaining a full requirements customer until either the sale of the Presque Isle plant is completed or July 31 — whichever is sooner,” We Energies spokesman Brian Manthey said in an email.

A MISO spokesman issued this statement following the announcement: “MISO has received a notice from We Energies to rescind its request to retire Presque Isle which will eliminate the need for it to continue operating as a System Support Resource (SSR).  MISO will work with We Energies to promptly make the appropriate filings at FERC to terminate the SSR agreement. MISO is pleased that parties in the region have reached a solution that will ensure reliability while providing greater certainty for customers across the Upper Peninsula.”

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