Agreement signed between Cliffs Natural Resources and WEC Energy Group for potential energy generation

Settlement could produce long-term, reliable, clean and affordable energy solution for Upper Peninsula residents

Monday, August 15, 2016

LANSING, Mich. - An agreement providing for a potential long-term, clean energy electric power solution for the Upper Peninsula has been reached between Cliffs Natural Resources and WEC Energy Group, Michigan Governor Rick Snyder announced today. The proposed solution is expected to be cost-competitive for Cliffs and save money for residential customers of the Upper Peninsula, after the new generation goes into service.

This new agreement, if approved, would result in 170 megawatts of new natural gas-powered generation across two sites in Michigan’s Upper Peninsula. In addition, these plans will allow for the retirement of WEC Energy Group’s Presque Isle Power Plant (PIPP) in Marquette by 2020 as provided for in the 2015 merger settlement agreement. 

“Many parties worked together to develop alternatives to provide the U.P. an affordable, reliable, and environmentally protective solution,” Snyder said.  “The solution being proposed today is extremely promising, especially given the ability to easily adapt to changing demands.”

The establishment and operation of new generating facilities is expected to resolve long-term reliability concerns associated with the planned retirement of PIPP and will preclude any need for additional and unnecessary transmission costs borne by Michigan ratepayers.  

The agreement will be subject to review by the Michigan Public Service Commission in the Certificate of Need process.  Pending regulatory approvals, commercial operation of the facilities is expected to commence in 2019.

“Cliffs Natural Resources is pleased to continue our partnership with Governor Snyder’s administration toward providing long-term resolution of the Upper Peninsula’s electric reliability concerns,” said Lourenco Goncalves, chairman, president and chief executive officer of Cliffs.  “This agreement with WEC Energy Group will provide Cliffs’ Tilden Mine and the ratepayers of the Upper Peninsula with a clean, stable and cost-effective source of electric power. Cliffs views this agreement as critical to sustaining and enhancing the long-term competitiveness of our Tilden Mine and we look forward to working with the state of Michigan and WEC Energy Group to ensure timely regulatory review and approval.” 

“WEC Energy Group is delighted to have successfully collaborated with Cliffs and the state of Michigan to arrive at this cost effective, clean-fueled, long-term viable solution for the electricity issues facing the Upper Peninsula,” said Allen Leverett, chief executive officer of WEC Energy Group.

The agreement between Cliffs and WEC Energy Group was the result of a settlement reached with the State in early 2015 to resolve issues arising from the closure of PIPP and other challenges to the Upper Peninsula’s electricity supply. As the settlement agreement provided, Michigan ratepayers will continue to be protected from additional System Support Resource (SSR) costs arising from the operation of PIPP until the facility is retired.   

“It is vital that Upper Peninsula families have access to electricity at reasonable rates, and I am hopeful that the agreement between Cliffs Natural Resources and WEC will help achieve that goal,” said Michigan Attorney General Bill Schuette, a signer of the settlement agreement. “My office will be engaged in the process to ensure that the solution is reviewed and all ratepayers have their voices heard.”

“When I began my service with the state of Michigan in the fall of 2011, there were discussions of PIPP’s closure as soon as 2017, but no generation solution was in the process of development and costs were predicted to be enormous,” said Valerie Brader, executive director of the Michigan Agency for Energy.  “I am very grateful to all the private partners who met over a series of years to explore alternatives. Residents and businesses of the UP will now be able to examine an option that is more adaptable, affordable, reliable, and environmentally protective than appeared possible just a few years ago.”     

Snyder, Goncalves and executives from WEC Energy Group also are planning to participate in a media event regarding this announcement later this week. 

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