Environmental groups have been pressing ERCO to stop using mercury in its manufacturing process.
The company is the state's largest source of mercury emissions, releasing 1,300 pounds a year or 25% of the state's total.
The proposal is backed by environmentalists including George Meyer, the former Department of Natural Resources secretary who now leads the Wisconsin Wildlife Federation.
Current DNR Secretary Scott Hassett also supports the plan. "That decision would eliminate 1,100 pounds per year of mercury air emissions from Wisconsin's single largest source of mercury released to the environment," he wrote the commission.
Another environmental group, Mercury-Free Wisconsin, and the national conservation group Oceana support the proposal if the PSC determines it won't harm other ratepayers.
The group has one concern: that neither ERCO nor WP&L be allowed to sell pollution credits for eliminating use of mercury that could delay or prevent utilities from taking steps to reduce emissions of mercury at Wisconsin power plants.