Wisconsin Energy Corporation's (WEC) subsidiary Wisconsin Electric Power Company and Wisconsin Gas LLC (trade name “We Energies”) has entered into joint-ownership and air quality control agreements with the Wolverine Power Cooperative.
Per the contract, Wolverine will obtain a minority interest in this facility by funding roughly $130 - $140 million and installing state-of-the-art emission control equipments at the Presque Isle Power Plant in Marquette, Michigan. We Energies will continue to activate the plant and the air quality control operations. These new installations are subject to numerous government approvals.
In January 2012, both the companies signed a letter of intent to assess the creation of this joint venture and investment in environmental enhancements at the Presque Isle power plant. In the future, this exercise could lead to the joint-ownership of the Presque Isle facility and construction of state-of-the art emission controls. Over the next couple of months, the two companies worked together to determine the practicality of this contract for fulfilling the expected environmental legislations.
The Presque Isle Power Plant is situated on 65 acres of land at the shore of Lake Superior. It consists of five coal and two diesel-fueled units, which have the capacity to generate roughly 431 megawatts. The units were built between 1974 and 1979.
The U.S Environmental Protection Agency (“EPA”) is continually rolling out new regulations for providing clean energy to customers. To follow these environment-related legislations, the state and local bodies and utility companies invest substantial amounts for upgrading their existing set-ups and installing new renewable carbon-free assets to meet environmental regulations.
In the present context, this public-private-partnership not only improves environmental conditions of the locality but also economic situations of the region. In the future, this contract will create new jobs and protect the local tax-base for the community along with providing clean utility.
We expect more such agreements in the near term as these kinds of contracts would help We Energies to develop more pollution-free assets and provide higher quantity of emission-free utility to its customers.
In addition, we believe these types of transactions create a win-win situation for both the parties. As these agreements allow one party to leverage its strong position in the utility sector backed by the requisite funding, the other party benefits from obtaining a minority interest in these facilities.
Milwaukee, Wisconsin-based Wisconsin Energy Corporation engages in generation and distribution of electricity in southeastern, east central, and northern Wisconsin, and upper peninsula of Michigan.
With a market capitalization of $8.44 billion, the company has 4,595 full time employees. Both Wisconsin Energy Corporation and one of its peers DTE Energy Company (DTE) currently have a short-term Zacks #2 Rank (Buy rating).
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