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Wednesday, March 2, 2011

From an article by Tom Content in the Milwaukee Journal Sentinel:

Utility customers could be on hook for extra cost

We Energies customers may be on the hook for more money to pay for the Oak Creek power plant, based on latest estimates that indicate the project came in 8.7% over budget - adding $191 million to the price tag for the largest construction project in state history.

The project initially was approved with a budget of $2.19 billion. Project delays blamed on litigation and permitting delays, as well as weather-related construction problems, have contributed to rising costs. The total price tag is now pegged at $2.38 billion.

A report by R.W. Beck & Co., a consultant hired by We Energies to review the progress of the construction, indicated that the cost for the second phase of the plant would come in about 9% over budget. An earlier report said the cost of building the first unit and facilities - including coal-handling machinery and a giant pipe beneath Lake Michigan that draws water to cool the plant - was projected to go 7% over budget.

In a filing with securities regulators on Friday, Wisconsin Energy Corp. announced the $191 million in overruns. The amount to be collected from We Energies customers is expected to be provided to the PSC in coming months as part of a proceeding to set rates in 2012 and 2013, utility spokesman Brian Manthey said.

The utility maintains the plant is a bargain based on rising steel and construction expenses that boosted the costs for similar projects around the country in recent years. The utility was able to lock in prices before steel and other commodity prices soared in the middle of the decade.

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