Commission grants certificate for Oak Creek LNG facility with reporting and consumer‑protection conditions

The Public Service Commission on July 17 voted to grant Wisconsin Electric Power Company a certificate of authority to construct a liquefied natural gas (LNG) facility and associated pipelines in Oak Creek, conditioned on multiple reporting, safety and cost‑allocation requirements.

The nut graf: Commissioners found the record supported a need for additional firm natural‑gas capacity to serve electric generation customers and existing gas customers, and they approved the Oak Creek LNG project on the condition that the utility provide enhanced reporting, safety training, and future rate‑case cost‑allocation information. The commission also added a project‑specific notification requirement tied to the Elm Road Generating Station conversion and the Lakeshore Western firm‑deliverability estimate.

What the commission approved and why: Wisconsin Electric (described in the record as Wisconsin Electric Power Company gas operations or “WEGO/WIGO”) sought authorization to build an LNG plant tied to the Lakeshore pipeline system and the proposed Rochester lateral. The applicant told the commission the combined plan would address growing firm peak‑day natural‑gas demand; the record showed an expected increase in firm peak‑day demand on the order of 477,000 dekatherms per day and that the proposed Oak Creek LNG plant would provide 300,000 dekatherms per day of peak‑day firm capacity for electric generation facilities.

Chair Strand said the record included economic analysis supporting the proposal. The applicant’s testimony in the record projected net‑present‑value savings under base‑case assumptions of about $346 million compared with the first alternative and about $645 million compared with a second alternative; the record also contained worst‑case‑scenario savings estimates presented by the applicant. Commissioner Nieto said the record showed the project’s characteristics met the applicants’ needs and that staff’s review supported the conclusions.

Conditions and contested points: The commission attached standard construction and safety conditions and accepted staff‑proposed project‑specific conditions for wetlands, waterways, specialized LNG training for first‑responders and final design subject to federal pipeline and safety codes. The commission declined to adopt a 10% hard cost‑overrun cap proposed by the applicant and declined to adopt CUB’s proposed cost‑recoverability cap; instead commissioners said cost‑overrun reporting and force‑majeure topics will be addressed in a separate, generic cost‑overrun investigation and in future rate proceedings.

Commissioners also required the applicant to provide cost‑allocation detail “in a future rate case proceeding,” modified from staff language to expressly require information including an assessment of current hedging levels for existing gas customers and an assessment of how the applicant’s firm‑gas customer mix is expected to evolve over the coming decade. Chair Strand said this requirement is intended to ensure future rate proceedings include substantive information about who benefits and how costs should be allocated.

A project‑specific notification condition was added: if the applicant’s anticipated or actual firm‑deliverability requirements for 2027–2028 fall “significantly” below the Lakeshore Western point estimate of 1,058,474 dekatherms per day, or if the applicant decides not to pursue or modifies the scope of the planned conversion of the Elm Road Generating Station to natural gas, the applicant must notify the commission within 30 days and detail changes in project scope and measures it will request in its gas‑supply plan to prudently avoid or mitigate economic impacts of excess capacity to customers. Commissioners also added a quarterly reporting item to require updates on the status of the applicant’s planned Elm Road conversion.

Record participation and interventions: The docket drew interveners and public comments; the commission granted intervention requests to Clean Wisconsin, Sierra Club, Walnut Way Conservation Corp., the Wisconsin Industrial Energy Group and the Citizens Utility Board (CUB). Commissioners thanked interveners and members of the public for participation.

Votes and next steps: Commissioner Nieto moved approval of the certificate with the conditions described; Commissioner Hawkins seconded, and the commission recorded the motion as approved with “All in favor. Aye.” The commission also moved into and out of closed session later in the meeting for unrelated litigation matters.

Ending: Commission staff will incorporate the approved conditions into the final order and monitor compliance via quarterly reports and the future rate‑case submissions specified in the order.