Illinois power problems could spark outages in Wisconsin

Pete Millard Wisconsin's electric utilities are accustomed to dealing with natural disasters when summer heat and severe storms overtake the Midwest.

However, they may face a man-made calamity in Chicago that could determine whether electricity will be interrupted for Wisconsin residents and manufacturers this summer.

A labor disagreement and financial problems involving Midwest Generation L.L.C., a Chicago-based independent power producer, could force utilities from Wisconsin and surrounding states to supply emergency power to the greater Chicago area this summer, should temperatures soar to unusually high levels.

Commonwealth Edison Co., which faced distribution problems in Chicago last summer, was so unnerved by Midwest Generation's pending problems that ComEd petitioned the Federal Energy Regulatory Commission (FERC) to give it authority to monitor the independent power producer's operations.

Wisconsin and other Midwest states could get caught in a crossfire if power shortages are caused by inefficient Illinois electricity suppliers. That would mean Wisconsin's industrial customers who have interruptible service contracts with their utilities may be forced to curtail production this summer.

"Since Wisconsin is dependent on imports, any constraints to the east and south will affect our supply," said Earl Gustafson, energy manager for the Wisconsin Paper Council.

"Disruptions are very unsettling for industries," said Dick Olson, spokesman for the Wisconsin Industrial Energy Group, a coalition of 50 of the state's largest manufacturers.

Contingency plans set up by the Mid-America Interconnected Network Inc. (MAIN), Lombard, Ill., call for utilities throughout the Midwest to bail out Chicago because the region is tied to the same electricity transmission system. MAIN is a reliability council established by the federal government to monitor the flow of electricity.

Although temperatures have been unseasonably cool this spring, Wisconsin Electric Power Co. (WEPCO), a public utility subsidiary of Wisconsin Energy Corp., Milwaukee, is closely monitoring the Chicago area's power supply.

"If it comes down to a decision between somebody going dark or us taking interruptibles off the system, we would take the interruptibles," WEPCO spokesman Mike John said.

If Chicago and northern Illinois have supply problems, the same problems are automatically felt in neighboring states. Blackouts in Chicago could mean rolling blackouts in adjacent regions.

"What happens in Chicago will have an impact on Wisconsin," said Sen. Rod Moen (D-Whitehall), chairman of the Wisconsin Senate's utility committee. "It's impossible for us to plan for what might happen outside the state."

Midwest Generation, which generates 10,000 megawatts of electricity for Chicago-based ComEd in northern Illinois, is at the epicenter of the potential Illinois problems.

About 1,150 members of the International Brotherhood of Electrical Workers Local 15 voted to walk off the jobs at Midwest Generation if their negotiating team can't reach a labor agreement with the company. Negotiations are ongoing.

A union official said no date has been set for a strike. The union is hopeful a compromise contract will be reached.

Local 15's contract with Midwest Generation expired April 1. The company believes the current contract should be extended to June 1, 2002.

"If there's a strike, we'll staff all critical operations with experienced managers and supervisors," said Doug McFarland, a Midwest Generation vice president.

Midwest Generation also would bring in people from its 75 other plants around the world if a strike occurs at its Chicago plant, McFarland said.

In addition to the labor problems, Midwest Generation's financial health also is a concern for ComEd. Midwest Generation is a subsidiary of Edison Mission Energy, a wholly owned unit of Edison International.

Edison International is a utility holding company that faces bankruptcy proceedings stemming from the energy crisis in California.

Exelon Corp., the parent company of ComEd, filed a petition with the Federal Energy Regulatory Commission in late May, claiming that the California energy crisis would shift money from Midwest Generation's Illinois operations to its cash-strapped, California-based parent.

ComEd Ed fears that Midwest Generation would be unable to maintain and properly operate its generation plants if the company was required to help bail out its California brethren.

Exelon wanted FERC to require Midwest Generation to keep a minimum level of working capital on hand and report to ComEd weekly on staffing and other operational details. FERC denied the request.

An official for Midwest Generation dismissed Exelon's FERC petition as a ploy to assert control over the power plants Exelon sold 18 months ago and to gain access to proprietary information that would be used in negotiating a new power contract in 2004.

A spokeswoman for the Illinois Commerce Commission, which oversees energy issues in Illinois, said the commission may file its own petition because FERC failed to consider how electricity reliability in the state and region would be affected if Edison Mission Energy has severe financial problems.

Midwest Generation produces roughly half of the power required to keep the Chicago area's lights on and air conditioners humming in the summer. Midwest Generation bought 12 power plants from ComEd for $4.8 billion in December 1999. The plants have a generating capacity of 10,000 megawatts.

As for the fears that Midwest Generation could be dragged into Bankruptcy Court because of its corporate parent's problems, McFarland said Midwest Generation and all other units of Edison Mission are financed separately, making it unlikely for Midwest Generation to get roped into the bankruptcy proceedings.

If Chicago has an electricity shortage, Wisconsin utilities would be unable to import power from the south and east, Gustafson said. The majority of high-voltage transmission lines leading to Wisconsin from the south and east come through Chicago and would not carry electricity to Wisconsin if there are shortages in Chicago.

This is not the first time Wisconsin has been forced to plan around a potential electricity shortage in Illinois, said Steve Hiniker, executive director of the Citizens Utility Board, Madison.

"Our electricity problem (in 1997) started out in Illinois, when ComEd's nuclear plant in Zion was taken out of commission," Hiniker said.

Even if Wisconsin utilities manage to keep their plants operating and the state doesn't have a hot summer, they will face pressures from Illinois and Minnesota that might require shutting off power to Wisconsin industrial customers who subscribe to interruptible rates, Hiniker said.

"We don't need the aggravation," Olson said. "This underscores our need to shore up (Wisconsin's) transmission system and add even more generation."

http://milwaukee.bcentral.com/milwaukee/stories/2001/06/11/story3.html

-- Martin Thompson (mthom1927@aol.com), June 11, 2001