In mid February, Wisconsin Governor Jim Doyle announced his proposals for the state’s 2009-11 biennial budget. Plans for dealing with the state’s projected $5.7 billion deficit include a combination of $597 million in state agency spending reductions, utilization of several billion in federal stimulus dollars and $2.2 billion in new and increased taxes.

The cuts, not including reductions in state agency requests, amount to $597 million in general purpose revenue (GPR) spending. The budget also proposes a lapse of $334 million to the general fund from other fund sources and permanently shifts $106 million in GPR spending to other fund sources. The budget relies heavily on federal resources through the federal stimulus package. The Governor proposes maintaining GPR spending at 2007-08 levels. He plans to rely on a return to more normal revenue growth in future budgets to replace the “one time” federal infusion of cash.

Problematic tax increases include $215 million in higher corporate taxes, $344 in higher taxes on tobacco products, a three percent gross receipts tax on oil companies ($272 million) and a new top income tax bracket on married filers earning more than $150,000 per year. The income tax increase is estimated to bring in an additional $312 million. Other increases include a $181 million increase in capital gains taxes, higher sales taxes ($82 million) and a $650 million tax on hospital services. The proposals raise troubling questions at a time when taxpayers are already being adversely affected by painful economic conditions.

Following more than a year of study and planning, Xcel Energy has announced that it has filed an application for a Certificate of Authority with the Public Service Commission of Wisconsin to install biomass gasification technology at its Bay Front Power Plant in Ashland, Wisconsin. When completed, the project will convert the plant’s remaining coal-fi red unit to biomass gasification technology, allowing it to use one hundred percent biomass in all three boilers and making it the largest biomass plant in the Midwest. Currently, two of the three operating units at Bay Front use biomass as their primary fuel to generate electricity.

When complete, the project will reduce emissions of nitrogen oxides by more than 60 percent, sulfur dioxides by more than 80 percent and particulate matter by more than 80 percent.

The project, estimated at $58 million, will require additional biomass receiving and handling facilities at the plant, an external gasifier, minor modifications to the plant’s remaining coal-fired boiler and an enhanced air quality control system. The total generation output of the plant is not expected to change significantly as a result of the project.

Last year, Xcel Energy installed NOx (nitrogen oxide) emission control equipment on the two boilers that primarily burn wood, allowing both to continue to operate into the foreseeable future. When evaluating various alternatives for the remaining boiler, which primarily burns coal, it was determined that expanding Bay Front as a biomass resource was preferred over incurring significant environmental compliance costs relating to the Clean Air Interstate Rule and regulations on mercury emissions.

When complete, the project will reduce emissions of nitrogen oxides by more than 60 percent, sulfur dioxides by more than 80 percent and particulate matter by more than 80 percent. In addition, displacing coal with sustainably harvested biomass will also reduce net carbon dioxide emissions, contributing to the company and State of Wisconsin’s carbon management goals.

The primary source of biomass at Bay Front is expected to be the lower quality, unused materials that are currently left in area forests following traditional harvests, such as treetops, logging slash, damaged trees, underutilized species, and the cull and mortality classed trees. Initial investigations conducted by Xcel Energy show more than ample supplies of this lower quality biomass within the area.

Despite a double digit drop in sales among nearly half of its top twenty customers, Wisconsin Power and Light Company (WPL), a subsidiary of Alliant Energy Corporation, will hold base rates fl at in 2009.

Barbara Swan, President, Wisconsin Power and Light

“While we believe the facts support the filing of an emergency rate relief request, we recognize the challenges the current economic downturn has placed on many of our customers,” according to Barbara Swan, President-Wisconsin Power and Light. “We are hopeful this decision provides some stability to our customers – large and small – during this challenging time.”

In December, 2008, it was announced that WPL’s projected retail sales were expected to be about six percent below the levels assumed in retail customer rates. Given the forward-looking test year that Wisconsin regulators use for rate-making purposes, the dramatic sales decline makes it nearly impossible for the company to recover costs authorized by the Public Service Commission of Wisconsin in its recent rate case. Barbara Swan, President, Wisconsin Power and Light