Associated Press

Editor's note: This was a key permit environmentalists had been hoping to beat for months. A memo found in the Army Corps files had become the holy grail among green-thinkers, because it seemed to indicate displeasure with We Energies plans for Oak Creek. Guess not. This conflict is far from over, but this is a major win for We Energies.

Here's the story:

MILWAUKEE — The U.S. Army Corps of Engineers approved a We Energies' plan Wednesday to build two new coal-fired power plants south of Milwaukee, including a two-mile pipeline into Lake Michigan.

The permit is the last the company needs as part of the $2.2 billion project that could power 650,000 homes. Still, the state Supreme Court is expected to rule soon on a challenge that could thwart the plan, and several other lawsuits are pending.

The legal challenges have delayed construction on the plants in Oak Creek, located between Milwaukee and Racine.

The permit from the Army Corps of Engineers allows the company to fill in 20 acres of wetlands and 15 acres of lake bed and conduct dredging and construction operations in Lake Michigan.

Environmentalists led by Clean Wisconsin have fought the project at every step, arguing it would pollute the air and destroy the ecosystem of Lake Michigan.

One of the most controversial aspects of the project is the pipeline into the lake that would suck up 2.2 billion gallons of water every day and return it to the lake 15 degrees warmer after cooling the plants.

Clean Wisconsin's energy program director, Katie Nekola, said she was disappointed in the latest permit decision, which the group would review for another potential lawsuit.

We Energies spokesman Thad Nation called Wednesday's decision "a significant step forward."

"This is the last permit that we needed before construction could begin," he said.

The company missed a May 15 deadline with Bechtel Co., which it hired to build the project, and is paying $200,000 a day in construction delay costs. Construction will be on hold until the Supreme Court ruling, which must come before the end of its session June 30.

Plans call for the first plant to start running by summer 2009, with the second ready the following summer.

We Energies, which first proposed the project in 2000, says the plants are needed to meet southeastern Wisconsin's growing energy needs.

The Corps of Engineers is requiring the company to complete at least $3 million of environmental preservation work before construction can begin. The work includes restoring and enhancing more than 36 acres of wetlands and establishing more than 51 acres of natural areas to serve as wetland buffers.

The Corps of Engineers, under the Clean Water Act, must grant a permit allowing any project in navigable waters to move forward.

On the Net:

U.S. Army Corps of Engineers: http://www.usace.army.mil

We Energies: http://www.we-energies.com