(WEC) Wisconsin Energy Corporation Plant to Switch to Natural Gas

Energy utility Wisconsin Energy Corporation (WEC) announced that its unit We Energies is planning to convert the 280 MW, coal fired Valley Power Plant generation unit to natural gas. The primary reason for such a conversion is to make the plant more cost effective and reduce the emission of green house gases.

The company has already filed an application with the Public Service Commission of Wisconsin for the necessary permission to make the switch in fuel source.  On gaining regulatory nod, the company hopes to convert the plant by 2015 or 2016. In the process, Wisconsin Energy will incur costs in the range of $60 million to $65 million.

Utility operators are gradually converting their coal based power plants to natural gas mainly due to nat gas’ clean burning nature, cheaper price, abundant domestic availability and its adherence to the stringent environmental regulation outlined by the authorities. As per Energy Information Administration’s (EIA) reports, 96.65 GW of new electric generation will be added in the U.S. within 2009 -2015, out of which 20% will be natural gas-fired plants.

Another large utility operator Duke Energy Corporation’s (DUK) subsidiary Progress Energy Carolinas has decided to shut down its coal fired generation units earlier than the scheduled 2013. The retirement is a part of the ongoing modernization process and the closed coal fired units will be replaced by natural gas fired units and oil-fired combustion turbines.

Natural gas will gradually become a major source of power generation and along with utilization of alternate energy the carbon footprints for power generation will substantially decline. The share of natural gas for power generation is projected to grow from 24% in 2010 to 28% in 2035, as per the EIA’s long-term outlook.

Besides converting its coal based power plant to natural gas, the company is also working on constructing a biomass-fueled power plant in northern Wisconsin. The Zacks Consensus Estimates for the third quarter and full year 2012 are 57 cents and $2.31, respectively.

Wisconsin Energy Corporation currently retains a Zacks #2 Rank, which translates into a short-term Buy rating.

Based in Milwaukee, Wisconsin, Wisconsin Energy, through its subsidiaries, generates and distributes electricity in Southeastern, East Central, and Northern Wisconsin, as well as in the Upper Peninsula of Michigan. The company also distributes natural gas.

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