Regulatory Update: Public Service Commission of Wisconsin Rejects Wisconsin Electric Power Company's Request for LNG Facility

Strategic Insights -

The Public Service Commission of Wisconsin has issued a regulatory update rejecting Wisconsin Electric Power Company's (WEPCO) request for a certificate of authority to construct a new liquefied natural gas facility and associated natural gas pipelines in the City of Oak Creek, Milwaukee County. The commission's decision is based on WEPCO's failure to demonstrate the need for the LNG facility, citing concerns about projected economic development and the role of WEPCO's own customers in driving demand. Additionally, the commission noted that WEPCO's arguments on the Energy Priorities Law are misplaced, and its failure to comply with the Wisconsin Environmental Policy Act (WEPA) process is evident.

Key Takeaways:

  • The Public Service Commission of Wisconsin has rejected WEPCO's request for a certificate of authority to construct an LNG facility, citing concerns about projected economic development and demand.
  • WEPCO's arguments on the Energy Priorities Law are misplaced, and it has failed to demonstrate that energy efficiency cannot meet the identified demand.
  • WEPCO's failure to comply with the Wisconsin Environmental Policy Act (WEPA) process is evident, with the commission noting that the projects are interconnected and mutually dependent and should have been evaluated collectively through the WEPA process.
  • WEPCO's reliance on data centers as a source of economic development is uncertain, with projected energy needs being speculative and constantly evolving.
  • The proposed LNG facility is not proportional to the needs of WEPCO's customers, and its value to residential customers is inflated.

Statistics:

  • 450 MW of new demand from one developer has been confirmed, accounting for the entirety of the $3.3 billion in economic development Microsoft has promised in Phase I.
  • The energy needs of data centers as an industry are uncertain and constantly evolving, with a risk of reduced demand in Wisconsin due to incentives in other states.
  • The proposed LNG facility's capacity is 545,000 dekatherms per day, which is 5.5 billion cubic feet per year.
  • The facility's construction cost is estimated at $250 million, with operational costs expected to be approximately $150 million per year.

Sources:

  • Public Service Commission of Wisconsin, "Application of Wisconsin Electric Power Company for a Certificate of Authority under Wis. Stat. SS 196.49 and Wis. Admin. Code SS PSC 133.03 to Construct a New Liquefied Natural Gas Facility and Associated Natural Gas Pipelines in the City of Oak Creek, Milwaukee County, Wisconsin"
  • Walnut Way Conservation Corp., "Reply Brief"
  • WEPCO, "Opening Brief"
  • Citizens Utility Board, "Opening Brief"
  • Sierra Club, "Opening Brief"
  • Clean Wisconsin, Inc. v. Pub. Serv. Comm'n of Wisconsin, 2024 WI App 74, P 26, 15 N.W.3d 507 (unpublished)