Wisconsin Energy Corp. and Bechtel Power Corp. have worked out an arrangement to keep a construction team in place on a $2.2-billion powerplant project while legal issues that delayed the job’s start are resolved in court.

Bechtel was to receive a notice to proceed on a two-unit, 1,200-MW coal-fired plant in Oak Creek on March 1, with construction to begin May 1. The project, first awarded in April 2004 under a lump-sum contract, was delayed in November. Opponents objected partly because there is no state law requiring the state public service commission to consider lower-cost power options.

A circuit court judge vacated the building permit issued by the commission and remanded the case back to it. But the utility petitioned the Wisconsin Supreme Court to hear an appeal. It agreed, and should rule by June 30. The utility has asked for an expedited ruling by mid-May.

Under an amendment to the EPC contract, the notice to proceed was moved to July 1. But the utility must now pay Bechtel delay-related escalation costs of $150,000 a day from March 15 to April 30, and $200,000 a day from May 1 through June 30. "We’re paying to keep the subcontractors available until July 1," says a Wisconsin Energy spokesman. The extra cost will only be paid if the project proceeds.

Bechtel projected its delay-related expenses on a daily basis but "the amount does not cover our costs," says a Bechtel official. The agreed amount represents 2.6% annual escalation, but the true costs are much higher. Escalation is at least double a 3% annual escalation rate, with boiler prices up 15% last year, says an industry official.

Calpine Corp. is among the opponents of the plant’s building permit, claiming that lower-cost options exist. Calpine has a gas-fired powerplant permitted in Wisconsin that would provide power at $600 per installed kW, far below the $2,000 installed kW cost of the Wisconsin Energy plant.