Louisville, Kentucky (Platts)--5Nov2012/708 pm EST/008 GMT

A coal-fired power plant in Michigan's Upper Peninsula is close to securing a second lease on life under a proposed joint venture agreement nearing completion between current owner We Energies and Wolverine Power Cooperative.

A deal between the two utility companies to install pollution controls on the 431-MW Presque Isle plant near Marquette on the shore of Lake Superior could be announced before the end of 2012, Brian Manthey, a spokesman for Milwaukee, Wisconsin-based We Energies, said Monday.

The pending joint venture means Presque Isle, whose five operating coal units were placed in operation between 1974 and 1979, would not be retired or converted to natural gas, as had been considered.

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In October 2011, We Energies began evaluating options for the baseload plant, including retiring the facility, switching it to gas or adding new air quality controls because of new US Environmental Protection Agency rules.

None of the plant's units are scrubbed to reduce sulfur dioxide emissions.

Manthey quoted We Energies CEO Gale Klappa as saying that under the proposed agreement, Wolverine would pay for the environmental upgrades and receive an ownership interest in the plant.

Preliminary work already is under way. "We've completed the second phase of engineering, and a detailed scope of work has been developed," Klappa said. "If the joint venture moves forward, we would not expect our rate base to be reduced. The transaction would, of course, be subject to customary regulatory approvals."

We Energies says any decision must make economic sense for its customers and ensure a robust and reliable power supply for the Upper Peninsula.

Wolverine is a member-owned generation and transmission cooperative based in Cadillac, Michigan. Wolverine officials could not be reached for comment Monday. Wolverine supplies power to seven members who serve about 260,000 customers in Michigan.

According to Manthey, Presque Isle burns about 1.6 million st of low-sulfur bituminous and subbituminous coal annually.

We Energies owns nearly 7,000 MW of capacity, of which 4,300 MW is coal-fired. Its largest coal plants include the about 2,365-MW Oak Creek plant on Lake Michigan at Oak Creek, Wisconsin, and the 1,200-MW Pleasant Prairie station in Kenosha County, Wisconsin.

--Bob Matyi, newsdesk@platts.com
--Edited by Keiron Greenhalgh, keiron_greenhalgh@platts.com

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