A power plant proposed for the west end of campus got the green light Thursday morning. The Public Service Commission of Wisconsin unanimously approved the application for the construction of the cogeneration plant to be used for electricity and steam production.

Construction is set to begin in the fall of 2004.

Another issue on the table was the rate of return for investors in the Madison Gas & Electric Company, the firm who applied to construct and run the facility. The PSC lowered the rate of return from 12.9 percent to 12.1 percent, saving MGE ratepayers $11 million.

“We need to encourage creative solutions to meet energy needs in Wisconsin by providing a fair rate of return to individuals who are willing to invest in energy infrastructure and also by watching out for the ratepayer’s pocketbook,” commission chairperson Burnie Bridge said.

Other discussion during the PSC meeting regarded the existence of an energy priority law. Under the law, the PSC is required to consider alternatives to any proposed utility to be cost effective, technically feasible and environmentally sound with respect to conservation and efficiency and also renewable resources. What this means is the PSC has to look for alternatives to the Walnut Street facility, whether this particular power plant is fiscally responsible to both investors and taxpayers and if it is technically viable and safe to the environment in respect to what it produces.

The PSC discussed how they came to their decision in accordance with the energy priority law for almost an hour. The Commission asserted that MGE was committed to the ordinance, and applauded MGE’s dedication to renewable energy and the creative way such a plant is going to be set up by providing both steam and electricity.

The medium load plant will use the steam produced in the electrical production to distribute to University of Wisconsin buildings for heating and to power air conditioning. The power plant will use natural gas as the primary fuel source.

“Using the steam produced by the electric generation to provide heat to the university just makes good common sense,” Public Service Commissioner Ave Bie said. “It’s an efficient answer to long-term needs.”

Even though the PSC applauded MGE for working with the community, some groups are still concerned that the plant is too large. They say a plant that size is unnecessary. One such group, Friends of Responsible Energy, also raised concerns of a possible water contamination issue remaining from closed dry cleaners.

The approval of the estimated $178.5 million project comes with a bill for Wisconsin taxpayers to pay $79.3 million. UW will pay a portion for maintenance of the plant and production of the steam and electricity used. The plant will also provide electricity to private houses not affiliated with UW.