In Docket No. ER19-103, Wisconsin Electric Company (WEC) sought approval: (1) to amend its Formula Rate Wholesale Sales Tariff (Generation Formula Rate) to include amounts recorded in Account 182.2 (Unrecovered Plant and Regulatory Study Costs) as an adjustment to rate base; and (2) to recover in the Generation Formula Rate a return of and on the unamortized balance that is transferred to Account 182.2 and amortized to Account 407. WEC claims that its request is consistent with FERC precedent that allows utilities to recover 100% of the return of and on prudently incurred unamortized investment remaining when a generating plant is retired after many years in service. WEC refers to the treatment provided the retired Yankee Atomic Nuclear Plant in New England.
WEC recently retired Pleasant Prairie, a two-unit, coal-fired generating facility located in the Pleasant Prairie, Wisconsin, with a capacity of 1190 MW (595 for each unit). Pleasant Prairie’s Unit 1 entered service in 1980, and Unit 2 entered service in 1985. Pleasant Prairie has served WEC’s customers for nearly 38 years and has produced approximately 250 million MWh of power for WEC’s customers during those years. Pleasant Prairie has provided reliable service at reasonable cost and has performed well when compared to its counterparts in the WEC generation fleet and to similarly sized coalfired generating facilities. For most of its service life, Pleasant Prairie was an economically desirable Plant. Beginning around 2008, however, several factors outside of WEC’s control began to diminish the value of having Pleasant Prairie. These factors include a significant loss of WEC’s industrial load due to both the recession in 2007-08 and improvements in energy efficiency; declining energy prices in MISO due to declining costs of alternative sources of generation, particularly natural gas and renewable alternatives; and a corresponding reduction in the dispatch of the plant in MISO markets. Subsequently, after WEC determined that its customers would benefit substantially from Pleasant Prairie’s retirement, WEC requested approval from MISO under Attachment Y to retire Pleasant Prairie. MISO approved the Attachment Y request, finding no reliability impediments to retirement. Pleasant Prairie was then retired in April 2018. At the time of its retirement, Pleasant Prairie had an unamortized plant balance of approximately $665 million.
Dr. Paul Dumais
CEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates.