RockGen's future uncertain

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New York City’s
CIT Group is set to take over the RockGen Energy Center in Dane County within
60 days.

However, it will have to close the five-year-old power plant down
if it can’t get a Wisconsin utility to purchase the electricity it would
generate.

CIT, a financial services company, owns the building itself and
the property in Christiana. Calpine Corp., a private power generation company
that sells electricity to utilities, has leased the plant and sold its power to
the Alliant Energy Corp. for the past five years. The 460-megawatt plant only
provides power during times of heavy electricity demand, which usually come in
the summertime.

Calpine, based in San Jose, Calif., filed for bankruptcy
in December, so its purchasing agreement with Alliant is off. It’s trying
to give CIT its rights to operate the plant, and CIT has unsuccessfully approached
every Wisconsin utility trying to find a new buyer, said Dan Morash, CIT managing
director and head of project financing.

Alliant and CIT met to discuss
inking a new deal, but Alliant spokesman Scott Smith said CIT’s selling price
was higher than the one Alliant had with Calpine. Morash said CIT had offered
to match the deal.

In order to fill the gap RockGen would leave behind,
Alliant put out a request for proposals on May 16 asking other power producers
for offers. It received 11 responses. The company plans to finalize negotiations
and contracting by June 30.

Overload feared

However, both CIT and
the American Transmission Co. are concerned that, by importing power, Alliant
would overload Dane County’s already congested power lines. Morash said he
believed that Alliant could get a cheaper price by importing power from out of
state but that the state’s power lines couldn’t safely handle the increased
traffic.

“We’re a little bit frustrated that the states’
utilities are willing to compromise that reliability,” Morash said. “We
prefer to just do our business and move on. If there weren’t a public interest,
our general pattern would be not to make a public statement.”

No studies
have been done to gauge whether the transmission system could or couldn’t
handle the between 200 and 400 megawatts that Alliant could import during the
summer months, said Mark Williamson, American Transmission vice president of major
projects. However, ATC shares CIT’s concern, he said.

“It’s
hard to say until you get to the day where someone wants to bring in the incremental
power,” he said. “The transmission system is full here. If you try to
import more power through a full system, it’s like trying to put more water
through a full hose.”

American Transmission plans to spend $110 million
upgrading Dane County’s power lines between 2002 and 2007.

Although
there are a lot of factors in play, Alliant CEO and President Bill Harvey recently
said the company is willing to discuss purchasing RockGen from CIT. The company
is looking for a more short-term way to secure power as it progresses with plans
to build a new power plant in Cassville or Portage to handle daily electricity
demand, Smith said.

CIT is awaiting Federal Energy Regulatory Commission
approval to assume management of RockGen from Calpine. It filed the application
on May 26 and is expecting an answer in 30 to 60 days.