MADISON, Wis. -- The University of Wisconsin-Madison's chancellor said that he's irritated that a university-operated power plant has been allowing coal runoff to pollute one of the city's lakes.

However, John Wiley rejects calls from the Sierra Club and other environmentalists to close the 50-year-old plant and said that the university instead is exploring ways to make the coal burn cleaner.

Wiley said that he has ordered officials in charge of the Charter Street plant to better contain a coal pile that is releasing dust into the neighborhood. When it rains or snows the coal runoff enters storm sewers that drain into Monona Bay, a popular fishing and recreation spot.

The state Department of Natural Resources warned the university last week the plant's failure to stop the runoff into Lake Monona was violating the Clean Water Act. The DNR warned of fines of up to $10,000 per day unless the problems were solved.

Wiley said that the university wants to fix them quickly, but the university has no choice but to continue burning coal there because of cost of reliability issues.

UW-Madison official John Harrod said on Tuesday that the university is already taking actions to make sure the coal dust is contained.

Sierra Club lawyer Bruce Nilles said on Tuesday that the revelation shows the plant should be retired.

The Sierra Club has sued the university for allegedly violating the Clean Air Act by failing to install modern pollution controls when making upgrades to the plant, which was built in the 1950s.