From a blog post by Tom Content in the Milwaukee Journal Sentinel:

Xcel Energy Corp. is rethinking its plans to build the largest biomass power plant in the Midwest after the projected cost rose by one-third.

The power company, which has a Wisconsin utility based in Eau Claire, was planning to build a biomass gasifier that would replace an existing coal-fired power plant on the shore of Lake Superior in Ashland.

The company initially pegged the project at $58.1 million, but after more work it was determined that it would cost $79.5 million – an increase of nearly 37%.

The company will assess whether to use a different technology to burn wood at the power plant, said Don Reck, Xcel director of regulatory and government affairs.

Costs rose during a more detailed engineering review that concluded more work would be needed to retrofit the coal boiler to gasify biomass than the company and its consultants first concluded.

“We’re looking at all the options that we had included in the application, as well as at least one or two new ones that have surfaced since the application was filed,” Reck said.

The Wisconsin Paper Council and Citizens’ Utility Board expressed concern about the escalating price tag.

“This project was sort of a mixed bag for us,” said Charlie Higley, executive director of the Wisconsin Citizens’ Utility Board. “We want to see alternative projects developed using alternative fuels, but this project definitely raised some concerns regarding costs and feasibility.”

Xcel’s analysis follows a recent meeting of the Public Service Commission at which commissioners expressed concern about the cost of the project and said that in light of the rising price the agency would likely need to take a second look at whether to allow the development to proceed.

The PSC had attached a condition requiring the utility to come back if the cost of the project went above a commission cap of $63.9 million, or 10% higher than the utility’s projection.