We Energies plans to spend $62 million over the next couple of years to double coal storage capacity at the 2,400-MW Oak Creek baseload power plant in Wisconsin, partly so it can burn more low-sulfur Powder River Basin coal.
Oak Creek, located on Lake Michigan near the town of Oak Creek, currently burns a blend of PRB and Appalachian coal. Test burns, some still underway, indicate the plant could increase its use of PRB coal and save the Milwaukee-based utility on fuel costs.
Since PRB coal's heat content is lower than Eastern high-sulfur coal, more storage would be needed if the plant boosts its use of PRB coal.
"By being able to reliably run these plants, that helps on the fuel cost side and we're looking at an annual net benefit of $9 million to $12 million a year," company spokesman Brian Manthey said in a Tuesday interview.
Manthey declined to disclose Oak Creek's existing coal inventory level, but said stocks dropped to concerning levels during extreme cold weather last winter.
The expansion project will increase storage capacity at Oak Creek from 313 st/MW to 626 st/MW, he said.
"Storage is pretty low," he added. "When you have disruptions to delivery, it then puts you in a difficult position with the running of your plant when you're dispatched by MISO," a reference to the Midcontinent Independent System Operator, a Carmel, Indiana-based independent system operator.
He added: "You're going to have floods, cold weather, things that affect your ability to keep the plant running."
Once Oak Creek has a larger coal storage capacity, the plant will be in a better position to be dispatched more frequently by MISO, the utility believes. "That should allow units to run and have sales into the MISO market," he said.
We Energies expects to file a formal applications for the storage expansion in a couple of weeks with the Wisconsin Public Service Commission and Wisconsin Department of Natural Resources.
The utility hopes to receive the necessary regulatory approvals in early spring of 2015 and complete the Oak Creek modifications by 2017.
