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Columbia Environmental Project Construction
9 Months Ended
Sep. 30, 2012
Columbia Environmental Project Construction Disclosure [Abstract]  
Columbia Environmental Project Construction

4.       Columbia Environmental Project Construction - MGE Energy and MGE.

 

MGE and two other utilities jointly own Columbia, a coal-fired generating facility. WPL is the plant operator and permit holder, and owns 46.2% of Columbia. WPSC owns a 31.8% interest, and MGE owns a 22% interest in Columbia. In early 2011, the PSCW issued a Certificate and Order authorizing the construction of scrubbers and bag houses and associated equipment on Columbia Units 1 and 2 to reduce SO2 and mercury emissions. The scrubbers and bag houses are expected to support compliance obligations for current and anticipated air quality regulations, including CAIR or CSAPR, the Utility MACT Rule and the Wisconsin Mercury Rule. The operator's current estimate shows that MGE's share of the capital expenditures required for this project will be approximately $140 million. As of September 30, 2012, MGE had accumulated $42.3 million (excluding carrying costs) related to its share of the project, which is reflected in the Construction Work in Progress balance on MGE Energy's and MGE's consolidated balance sheets. MGE expects to incur capital expenditures as follows: $18 million for the remainder of 2012, $68 million in 2013, and $12 million in 2014. These amounts may change as a result of modifications to the project estimate or timing differences. MGE has recognized $0.7 million (after tax) in AFUDC equity related to this project for the nine months ended September 30, 2012.

 

MGE expects that the costs pertaining to this project will be fully recoverable through rates. Additionally, MGE is entitled to a carrying cost on the related construction costs at 100% of the determined AFUDC rate.