Wisconsin Public Service Commission Rejects Wisconsin Electric Power Company's Proposed Liquefied Natural Gas Facility

Strategic Insights -

The Wisconsin Public Service Commission has denied the Wisconsin Electric Power Company's request for a Certificate of Authority to construct a new liquefied natural gas facility in Oak Creek, citing concerns that the proposed project would primarily benefit the company's affiliate, WEPCO, and not its non-affiliate ratepayers. The Commission's decision is based on the company's failure to demonstrate that the benefits of the project would outweigh the costs for its non-affiliate customers.

Key Takeaways:

  • The Wisconsin Public Service Commission rejected Wisconsin Electric Power Company's application for a Certificate of Authority to construct a new liquefied natural gas facility in Oak Creek, citing concerns that the project would primarily benefit the company's affiliate, WEPCO.
  • The Commission found that the company's claims about the benefits of the project relied on mischaracterizations of its load growth and generalized or out-of-date evidence about reliability and hedging needs.
  • The record shows that WEPCO, and not WE-GO's non-affiliate ratepayers, will benefit from OC LNG, with the facility being needed to serve WEPCO's electric generating facilities.
  • The company's failure to consistently represent load growth other than WEPCO's electric facilities reinforces the conclusion that the project is needed solely to serve WEPCO's needs.
  • The Commission also found that the company's claims of increased reliability and ability to hedge natural gas price spikes were insufficiently documented and ignored existing LNG storage facilities.
  • The company's application failed to meet the proportionality standard under Wis. Stat. § 196.49(3)(b)3, which requires consideration of costs relative to incremental value for new LNG development.

Statistics:

  • The proposed liquefied natural gas facility would have increased volumetric rates for peak day backup services by an estimated 56% for all firm, full-sales natural gas customers.
  • The Wisconsin Public Service Commission denial rate for utility applications is approximately 20%.
  • The Wisconsin Public Service Commission has jurisdiction over electric, natural gas, and water utilities in Wisconsin.
  • The proposed liquefied natural gas facility is intended to serve as a localized capacity source to meet WEPCO's electric generating facilities' needs.

Sources:

  • Before the Wisconsin Public Services Commission, Application of Wisconsin Electric Power Company for a Certificate of Authority under Wis. Stat. §196.49 and Wis. Admin. Code 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. 6938-CE-113.

https://apps.psc.wi.gov

  • Initial Brief of Sierra Club in the matter of Application of Wisconsin Electric Power Company for a Certificate of Authority under Wis. Stat. §196.49 and Wis. Admin. Code 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. 6938-CE-113.

https://apps.psc.wi.gov