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Wisconsin Electric Power Company Defends Liquefied Natural Gas Facility Against Citizens Utility Board Criticism

Strategic Insights

— 2 min read

The Public Service Commission of Wisconsin is considering an application from Wisconsin Electric Power Company to construct a new liquefied natural gas facility and associated natural gas pipelines in the City of Oak Creek, Milwaukee County, Wisconsin. Citizens Utility Board (CUB) witness Mr. Burgess has testified against the project, suggesting that battery energy storage systems (BESS) could replace the Oak Creek Combustion Turbine Project. However, Jody Arendt, Director of Planning for WEC Energy Group, has submitted sur-surrebuttal testimony in defense of the project, arguing that BESS is not a direct replacement for dispatchable natural gas generation and would expose customers to further reliability and cost risk.

Key Takeaways:

  • Jody Arendt, Director of Planning for WEC Energy Group, testified that BESS is not a direct replacement for dispatchable natural gas generation and would expose customers to further reliability and cost risk.
  • Arendt disagrees with Mr. Burgess's assumption that Wisconsin Electric could pause its development process and replace the Oak Creek Combustion Turbine Project with battery energy storage systems.
  • According to Arendt, BESS is fundamentally limited by its short duration and round-trip efficiency, and cannot provide all of the system attributes needed to effectively operate the grid.
  • Arendt also testified that BESS is not a mature technology, citing a 2024 BloombergNEF blog post that states the U.S. and European markets for BESS are "relatively immature."
  • The current tariffs on products from China, which provided cells for 90% of the U.S. BESS market in 2024, will affect the economics of BESS.
  • Thermal resources, like the proposed OCCT Project, have been operating for many decades and their attributes are well understood by planners, reliability engineers, and market operators, unlike BESS.
  • Mr. Burgess has advocated for alternative replacement options in other dockets, including 1,050 MW of wind generation that would cost upwards of $3.4 billion.
  • Wisconsin Electric and WE-GO have an obligation to provide adequate service to all of their customers, and delaying development and construction of the OCCT Project would not be prudent.

Statistics:

  • According to Arendt, BESS is not a direct replacement for dispatchable natural gas generation, and approximately $240 million in costs could be exposed as a result.
  • The cost of wind generation to replace one CT unit in the OCCT Project would be upwards of $3.4 billion.
  • 90% of the U.S. BESS market in 2024 relied on cells from China.
  • The U.S. prices for BESS are 31% higher than in China.

Sources:

  • 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 Docket No. 6630-CG-140
  • Surrebuttal-CUB-Burgess-21
  • BloombergNEF, 2024 blog post (citation in sur-surrebuttal testimony)
  • MISO website, real-time chart of the current fuel mix (without any BESS listed)
  • Docket 6630-CE-317 (Witness Burgess's testimony)

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