ReGenco symposium looks to future

WEST ALLIS, Wisc., August 17, 2004 — ReGENco, an independent steam and combustion turbine and generator repair organization, hosted a Customer Symposium that attracted 70 guests from the United States and Europe. The opening session involved a panel discussion on the future of the utility industry, entitled “Vision 2010”. The panel members included Thomas Fehring, VP & General Manager of We Energies, Stephen Easley, VP Generation Services, Kansas City Power & Light Company and Philip Adams, Sr. Bond Analyst, Gimme Credit Publications.

During the panel discussion, Steve Easley, of KCPL said that the existing coal fleet will require major emissions retrofits to comply with environmental legislation. In terms of the value of availability of older units, Easley said, “Pressure on O&M expenditures will remain, however the value of availability is justifying investment of both capital and O&M dollars in these older plants.” He also felt that gas prices would remain high, leading to numerous new coal-fueled units.

Tom Fehring of WeEnergies agreed with Easley, commenting, “Half of the capacity of existing coal and nuclear units will have exceeded 40 year design lives by year 2010. That means we need to maintain these aging units in service into the indefinite future or determine what to replace them with. Wisconsin Energy’s plan for the future includes: retiring older coal units, building super critical pulverized coal units, upgrading existing power plants for improved environmental performance, and continued investment in alternative energy sources.”

Fehring noted that the U.S. has an ample supply of coal, it can be used cleanly and efficiently in central station power plants and that it is affordable. He said that Integrated Coal Gasification Combined Cycle (IGCC) has the potential to preserve coal as an option because of the potential for lower emission rates, potential for higher efficiency and the potential for addressing CO2 emissions. Fehring did admit that in order to be successful, IGCC would need to reduce installed cost, improve operating reliability, and meet ever-demanding environmental constraints. Fehring told of a trip to Germany sponsored by the Wisconsin Department of Natural Resources during which they studied the German method of meeting tough environmental standards. Basically, the Germans are replacing existing coal-fired generation with a combination of new, more-efficient, coal-fired base load generation and renewable energy.

Philip Adams, Sr. Bond Analyst, Gimme Credit Publications, said that despite poor performance in recent years, the market still wants utilities’ paper. He said that financing generating assets would likely be easier to do with a larger utility than an independent merchant generator. He described the “ideal” utility from an investors point of view as: a pure wires distribution company, whose regulatory regime permits recovery of all costs of distribution, with an adequate return on equity and a high percentage of equity in its capital structure, with provider of last resort power supply provided by a highly rated captive merchant generating affiliate, backstopped by a deep, liquid market, with robust transmission capacity into the service territory. But then he noted, “Of course no such thing exists.”

The Symposium continued with presentations by S. Bradley Peterson of Strategic Asset Management and Sal DellaVilla of Strategic Power Systems. The program was rounded out by Case Studies of turbine and generator projects completed by ReGENco. The ReGENco Engineers, who act as project managers for the company, presented the Case Studies.

ReGENco also celebrated the Centennial of the manufacture of the first steam turbine at the former Allis-Chalmers facility. The mayor of West Allis and other city officials participated in the ceremony. The celebration included the unveiling of a refurbished 1919 Allis-Chalmers steam turbine generator donated by Wisconsin Public Service. Also present at the unveiling was Gerry Ulschmid, a retired 38-year employee of Allis-Chalmers, who told stories of working at the facility beginning in June of 1952. The celebration wrapped up with a tour of ReGENco’s 160,000 square foot facility.

ReGENco, which repairs turbine and generator equipment for power plants, was formed in November of 1999 after the announced plant shutdown by its previous operator, Siemens Power Corporation. ReGENco successfully maintained the capabilities of the service facility by retaining a large pool of skilled craft labor, experienced engineers and project managers that would otherwise have been dispersed to other areas of the country or absorbed by non-related industries.

Located in the historic Allis-Chalmers, West Allis facility, ReGENco began with 23 employees and now employs over 100. In four short years, they have increased their shop facility square footage from 75,000 to 160,000.

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